Metacoin

Covering Bitcoin, the Blockchain, Altcoins, and Fintech

Crypto: Down. Stocks: Down. Inflation: Up. So What Do You Buy?

Here’s yet another post with a couple blatant caveats: (1) THIS IS NOT INVESTMENT ADVICE and (2) NOBODY KNOWS WHAT’S GOING ON.

We’ve had a couple weeks here in CryptoLand. You name it, it’s down. Take our 2022 Growth Portfolio: a hypothetical $10,000 investment with $1,000 each in ten different crypto assets. Thank God it’s only hypothetical.

Screenshot from May 20, 5:30 a.m. CDT

It was a bloodbath. It still is kinda sorta a bloodbath, in that nobody knows if BTC saw the bottom, or if ETH’s move to Proof of Stake (known colloquially as “The Merge”) is going to be all that, or if stablecoins will stabilize.

And whether or not you’re better off throwing darts.

At Least the Stock Market Is Okay, Right?

Let’s answer the question in the meme with a screenshot.

Stock market, one-month performance.

The problem, though, is that to keep propping up the stock market, The Fed is going to need to thread the needle on interest rates. Too much of an increase and the stock market tanks. Too little of an increase and you can’t catch up with inflation.

So you’re painted into a corner because the stock market is so important to everyone’s 401(k) plan and the inflation rate — which is caused, DUH, by ALL THAT PANDEMIC MONEY PRINTING — is so important to everyone’s standard of living that it really REALLY stinks to be Jerome Powell right now.

Now, Let’s Talk Inflation. Cue Karen Carpenter…

“We’ve Only Just Begun…”

As David Stockman — President Reagan’s former Budget Director, native Midwesterner (shout-out to Michiana!), and future guest on my YouTube channel (call me!) — told us on Doug Casey’s Dispatch a couple weeks ago, we are collectively screwed. And it’s mostly thanks to central bankers.

That part about J-POW having a rough job is not an understatement; the corner we have been painted (printed) into is troublesome. Investors don’t know which assets to invest in, and the average Joe is more worried about real-life things like gas prices or the cost of food.

So…What DO You Buy?

We follow a few financial people on Twitter, on YouTube, and elsewhere. We’re nailing Jell-O to a tree here.

Here’s Joe from Heresy Financial, telling us (SPOILER ALERT) that Treasurys might be the way to go. Here’s another YouTuber — one we found from typing in “where to invest 2022” into the YouTube search bar, then going with the first one we found from the month of May — suggesting individual stocks. And here’s CNBC, taking a break from its “How This [NUMBER] Year-Old [JOB DESCRIPTION] Made [LARGE AMOUNT] By [ZAGGING WHEN EVERYONE ELSE ZIGGED AND/OR INHERITING MONEY]” template (shown here) to give us a whole host of ideas of where to invest in an inflationary environment.

Feel free to grab any of these ideas and batten down the hatches, right?

We’d refer you back (AGAIN) to our series called SHTF. Volume 1 is here and Volume 2 is here. But these are *mostly* crypto-related ideas (with a break for some precious metals and cash on hand). And that isn’t even guaranteed, if the last few weeks are any evidence.

TL;DR: See Elmo

Elmo Fire

Buckle Up. Good Luck.

Reputation Laundering in Crypto

To say that Do Kwon — the man behind $LUNA and $UST and the precipitous drop of both this past week — is a bit of a pariah might be the understatement of the year. It’s time, then, to launder his reputation.

On the website Ordinary Times, Dave recently shared his “Own The Narrative” framework in the context of student loan forgiveness. We put together a list of 8 rules — guidelines? concepts? — for owning the narrative, and we showed how the plan could unfold. Other real world issues took precedent in the various news cycles, but we think the framework still makes sense.

We mention that because we’re watching Do Kwon’s Reputation Laundering take place in real time (Sunday Morning, CDT in the USA), and we’re going to see which of the rules he’s applying already.

We’ll have to re-order these rules for today’s Reputation Laundering, but we’ve found half of them already being employed.

Be The Name Dropper (Rule 5)

We think Laura Shin is one of the top journalists working in crypto today. She certainly has the industry bona fides and has a popular podcast with thousands of listeners. You could argue that there is no better choice to go live with than Laura.
This is exactly what Do Kwon is doing right now. It’s “Name Dropping,” but raised to the nth degree. I’ve been watching for 40 minutes already at 9 a.m. Central Time.

If you are in reputational trouble, you need to associate with someone like Laura, and you need to do so quickly.

Start at the Finish Line (Rule 1)

“UST will repeg and LUNA $1 per LUNA next Week.” That is a bullish “Finish Line” statement. It is not very believable right now — if your coins drop to the tune of the below graphic, telling us that you’re going to be on the medal stand isn’t something we can bank on.

This morning’s price also tells us how unrealistic this is.

This works hand in hand with another of the rules…

Make Hubris Your Friend (Rule 3)

To get to $1, $LUNA needs to go up not 5, not 50, but 5000 times from here. Meanwhile, Mr Kwon is on the podcast smiling while talking about things like Korean crypto crashes. (9:10 a.m. Chicago time.)

Use Malleable Definitions to Your Advantage (Rule 6)

The definition of “stablecoin” is probably the most malleable one in modern crypto. These coins — they started this whole mess — are supposed to be pegged to real US dollars (or another similar asset) that is then backed by a cryptocurrency equivalent. In other words, if I put the stablecoin up on a blockchain platform, and it’s worth $1, I should then use my Bitcoin to buy US Treasurys or another stable asset. Questions have come up for the last few years about just how much of the asset is parked somewhere with other coins; but where the Do Kwons of the world got into trouble was using their own algorithmic magic AND their own crypto asset as the “stable” asset backing the token.

1 UST equaled 1 USD until it really didn’t, because, instead of having $10,000 in US T-bills to back $10,000 in UST, they had $10,000 of their own coin. It was ready for an exploit, and, if you want a primer on how that went down, watch this video from two months ago.

This Is the Most Egregious Crime

The worst Reputation Laundering crime is being committed, and it’s not any of the above rules, is this:

THIS IS A SCAM. Do not do this. Never send crypto to anyone with the hopes of getting more crypto back.

How NOT to Launder Your Reputation

Since it’s crypto, and it’s perceived to be the Wild West, and Mr Kwon is out in Singapore and is from Korea and has the perception of a world-traveling vagabond, his moves are not surprising.

And they are completely, totally, 100% awful.

He’s torching the reputation of his own coins, his own projects, and his own name in real time. The rest of the industry will have a ton of work to fix this.

Help With Crypto Doom Scrolling

If you’re looking for a bright spot, any bright spot, where do you look? Darn good question. We don’t know, either. But here are a couple things to help. Maybe.

It’s Not as Bad This Morning as It Was Overnight

Our 2022 Crypto Growth Portfolio

Behold, the numbers from the 2022 Crypto Growth Portfolio. The columns next to price are (first) 1-hour change and (second) 24-hour change.

Sell in May and Go Away has been replaced by “buy stuff an hour ago, watch it go up 5% on average, then sell it all and buy some foodstuffs.”

BTW, your $10,000 investment in the 2022 Growth Portfolio is now…$6702.

At Least You’re Not LUNA or UST

(If you are holding one of those or you’re part of the teams behind those…scroll on to the next subhead. Trust us.)

Here’s a chart of what happened overnight to UST.

This is after yours truly thought they had somewhat kinda righted the ship after sorta kinda having one of those weird days the other day.

Still, this is a coin that is pegged to the US Dollar and uses something called “an algorithm” to keep its price at $1.00 Or so we thought; but, as a wise man once told me, sometimes the quants get it wrong.

One year of UST

360 days of being thisclose to $1 each. And then the rug gets pulled. It’s Soros-level market manipulation (Learn more about that here: Soros.) It’s not done.

Below you’ll find a 24-hour price chart for $LUNA, which backs $UST.

We’re being nice. Could have shared the 1-year chart.

Then There’s $COIN

Oy. Coinbase is having a rough go of it, eh? Much will be discussed about the company’s growth — whether too much too quick or the post-IPO blues — but it’s really a yikes moment.

Not a good look.

(We won’t even mention the infamous “Jim Cramer Albatross” rating the stock a buy all the way up to $475.)

Carnage, Carnage Everywhere

The bubbles are popping left and right; not just in crypto. Used-car marketplace Carvana has laid off 12% of its staff. While you’d *think* this has something to do with inflation and used-car demand, you’d be slightly right but actually way wrong.

Read the thread, short the stock.

This is about that “Irrational Exuberance” that the Fed warned us about back before they became a meme.

At Least Inflation Is Better, Right?

Narrative highlights tell you it’s not so bad.

The narrative machine has kicked in already: it slowed (from 8.5% last month, but that’s year-over-year) but it actually went up (0.3% month-to-month). And Gasoline isn’t bad because the index fell, but energy prices went up year-over-year.

Now What?

“RETVRN” is a common cry among trads on Twitter. Better days ahead if we go back to what better days were like before. Or something like that.

Good luck.

Creators Gotta Create (and Announcing Our New Collection)

We saw a maxim somewhere on the internet and decided to share it: “Be brave enough to suck at something new.” If the web3 explosion has taught us anything, it’s that there are completely new ways of making a buck — and creators (like you, perhaps?) are learning new and interesting tactics along the way.

And some of us — maybe some of you — weren’t very good at it to start. We get better: the more you write, the more often you write, the better you become at writing. The more you make music, the more often you make music, the better a musician you become. We could go on…

We Are Onto Our 4th NFT Collection

A year ago, we started sucking at something new here: our first collection of NFTs. (The first one is here, created on March 14, 2021.) Called the “Obvious Statement Collection,” the goal was to come up with a few pieces — we’ve created 25 of them so far — that told you something that was, well, obvious. (And maybe semi-controversial, like the statement below.)

Collection two, “One Hundred NFTs,” was perhaps a little better but, as art goes, it ain’t great. Three, though, we’re especially proud of: #Sketches2021 is its name (see below about the giveaway!) and here’s a link to all 256 of them: Sketches 2021.

So it’s time for our fourth collection. We’ve entitled it “Collezione” and the plan is 256 pieces (again; that’s a nice number that is definitely attainable.) 26 of them have been created so far. And we’re pretty pleased with how they’ve turned out.

w123 in the Collezione series

We’re Giving Two NFTs Away!

So here’s what’s up with the giveaways*: All you have to do is follow the instructions below by March 31. We’ll pick two at random and one will get a piece from Sketches2021 and one will get a piece from Collezione. Those instructions…

  • Follow @teammetacoin on Twitter or Instagram. (You can do both to increase your chances!)
  • Like at least one of our posts from between March 20 and March 24.

On April 2, 2022, we’ll select one Twitter follower and one Instagram follower at random (* here’s where the asterisk comes in, as this is not a sweepstakes or contest or the like, all decisions final and it’s a gift and there’s no cash value) and we’ll send them a DM and they’ll respond with their ETH address and enjoy their new artwork.

Good luck! Now go create something.

Inflation.

18 months ago, right before the Presidential election, we wrote a two-part series that got a little bit of attention. In it, we discussed a strategy for when things get pretty bad.

Part One (go here for more: SHTF Part One) is probably more endemic to today’s news of an inflation rate that has the risk of spiraling out of control than Part Two.

But, to be honest, we didn’t think, even back then, that we’d see 7.9 percent year-over-year inflation. In the United States.

(Thanks to tradingeconomics.com for the chart; month-by-month figures going back to Jan. 2017.)

The U.S. Dollar Is…Get This…An Inflationary Asset!

To paraphrase George Costanza’s risk management tapes from the show Seinfeld, “in order to understand ‘inflation’ we must first define ‘inflation.'”

When you print way too much money, you get inflation. “Inflation is, always and everywhere, a monetary problem,” according to Milton Friedman. You can throw blame at whichever President or Congress you’d like (they’re all guilty, as we learn in this balanced piece from the website The Balance), or whichever crisis you’d like (though, to be fair, the Federal Government printed a metric crapton during COVID).

Don’t Believe The (Putin) Hype

Listen to Chuck D.

Don’t listen to Joe B.

The seeds were sown ages ago — like, probably three or four Fed Governors and Presidential Budget Directors ago — and the reality is that Vladimir Putin is a mere scapegoat. Gas prices are rising, but they’re not totally his fault; and the rise in food prices to come will be due, in part, to Putin’s war.

But you could get into a host of academic arguments and ask who bears the most responsibility and it won’t solve the problem.

‘Bitcoin Solves This!’

Yes, and no. And maybe.

As Putin’s War Machine and his “Evil Cronies” are learning, if you can’t use the global financial system that exists — if you’re shut out of traditional banking — you have to make do. In Putin’s case, that means calling China. In your case, that means…well, that means a few things.

First up, you’re not Putin, planning on invading another country. But you don’t know if or when you will fall out of favor with the traditional banks. (See “Trudeau, Justin” for an example of just how that could happen to you.) You also don’t know exactly how bad this inflation stuff will get — and you could find yourself using the black market (WHAT???) before you know it.

Seriously.

Venezuelan Black Market Finance

If you live in Venezuela, you have been dealing with this sort of thing for a while. There’s an official exchange rate, then there’s an unofficial black market rate. And there’s always the risk of the government revaluing the currency.

Zimbabwe had to do this, too, creating a 100 Trillion Dollar Bill back in the day.

And on and on…

Upshot: Get In The Game

You don’t know when the time will come where you need some of that stuff in the post — Cash, Precious Metals, some BTC through Coinbase or Crypto.com, and some ETH too (THOSE ARE AFFILIATE LINKS OVER THERE, WE COULD BE COMPENSATED IF YOU SIGN UP THROUGH THEM) — and you don’t know when it might…hit the fan.

But standing on the sidelines, now, is not an option.