5 Comments

Good insight with a few flaws. The biggest, I think, is the # of wallets owning BTC. Lots of folks hold BTC in an exchange and don't take it off exchange. And of course, there is GBTC. The question I would ask is, how many investors have some BTC and how do they hold it? The wild fluctuations are mostly heavily leveraged traders moving in and out.

Agreed, however, Tether is a leveraged problem. I could be cute and say the same about the Banking system and the Fed (25x leverage backed up by...an IOU from a money printer) but that would negate the value of the BTC network (when leveraged by the problem child, Tether).

As an investment, the question you should ask (and that I asked myself) before investing? How much do I risk and how do I evaluate that risk versus the "traditional" investments available to me. When I survey the landscape I see bonds that are artificially kept at low interest rates by the Fed, equities that are inflated by low interest rates by the Fed and skewed by govt policies (e.g. forcing small business to close while Amazon, Facebook, Google, Pharma made bank) and commodities, driven through the roof, again, by govt. policies (e.g. oil, metals, lumber, etc.) The housing market is artificially inflated with low interest rates. Most home owners buy based on what they can afford per month...historically low interest rates during inflation means they can pay more for a smaller monthly payment.

Gummi, have enjoyed your feed and suggest your next deep dive is comparing the choices for an independent investor, or say, a massive pension fund that has to make 7%-9% returns on a weighting of bonds and stocks or possibly default/reduce its "guaranteed" payout. The current global debt is 4x global GDP. The numbers are not sustainable and this weighs on me more than anything tether is doing. Regulation is coming, at least in the US, perhaps causing another BTC/Crypto correction (a la the China FUD, having China out of BTC will be a good thing, btw). I'm guessing, educated guess here, that the regs will most likely decimate the thousands of late-coming blockchain coins. Gensler sort of hinted at that.

In my view, BTC is the Amazon of the early coins through sheer adoption and it's decentralized proof of work is a sight to behold. It has been, will be a bumpy ride, but I don't see anything stopping its continual adoption (similar to Amazon) because it's just better/harder money vs a collection of "eyes wide shut" academics feeding central banks who feed the bankers, at the trough, while the rest of us stand in line.

Expand full comment

Thanks for this Gummi - I think your learning about the religious aspect of the crypto world is as fascinating as anything else. Not saying crypto is bad, but its a big red flag.

Expand full comment

That Tether is a Ponzi is as obvious as the nose on ones face. It all works as long as more US dollars come in than go out, but that changes the instant cryptocurrencies go into a significant bear market that lasts more than a few weeks.

Expand full comment

Thanks for this. Great post.

Expand full comment

Thanks for the write up. I’m staying out of the crypto world; too volatile and opaque for me.

Expand full comment