The Crypto Universe Is Imploding
Bitcoin, and cryptocurrencies more generally, were in all kinds of trouble at the beginning of what promised to be a very challenging week for market sentiment.
With short-end US Treasury yields surging above 3% and expectations building for even more aggressive rate hikes from the Fed, speculative assets are in extreme peril. Very much contrary to the claims made by proponents on its behalf, crypto is a speculative asset.
Of course, describing it that way assumes it's an asset at all. A bette
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“A better way to conceptualize of the situation might be to think of Bitcoin as high-beta gold (if you can get past the inherent contradiction), Ethereum as an emerging market currency (where Web3 is a developing country), decentralized finance tokens as equity in Ponzi schemes, stablecoins as debt instruments of varying creditworthiness and all other coins as poker chips.”
Wonderful! Crypto as a zoological pantheon of pseudo-monetary avatars. Whee.
How long before the WSB crowd sees the opportunity in killing BTC price to force deleveraging by MicroStrategy and others?
No different than the early US banks that issued their own private currency in the bank’s name, When the bank became insolvent the notes were worthless.
The days of using tulip bulbs as loan collateral, guaranteed fixed income, and pre-web 1.0 currency are about to end.
Crypto is a form of private currency. That never ends well. Hey I have digital candy crush tokens. Want to buy some?
“So, MicroStrategy took out a loan partly backed by its Bitcoin in order to buy more Bitcoin and also to open the door for more such loans by pioneering a market.”
Blows my mind that people thought this was a good idea.
What I don’t understand is why even bother with the core business at this point? Why not just spin it off or sell it? I’d assume the vast majority of their employees are just mailing it in while hoping to either cash in from bitcoin going to the moon or waiting for the inevitable bankruptcy. If I were a customer, I’d certainly be looking for a new vendor.
Saylor was going to “ban ignorance from the planet.” Maybe he has a plan? No corporate cruise ship parties this time, though.
Crypto always helps me grow my Ponzi scheme prevarication vocabulary: “total value locked” (scheme size), “store of value” (Monopoly money), “inflation hedge” (bag to be held), “decentralized” (no one is responsible), “due diligence” (I don’t want to explain lest you find out this is a scam), “intrinsic value” ($0), “underlying asset” (I want to sound smart but I can’t derive the Black-Scholes equations), “long term investment horizon” (let me enjoy life before you call the authorities)