The Old Man’s Views
Reasons to be Cheerful
There are lots of reasons to be cheerful: cheaper currencies, low interest rates, … AND you are not a central banker!
Firstly, as you are not running a Central Bank, be very happy because those guys are between a rock and a hard place right now. They have been playing with interest rates for a long time for no reason, and now there is a reason, and they don't know what to do for the best.
I don't have much sympathy for any of them, but it is a fool's errand to act responsibly when your government isn't.
For all those talking heads investigating what a 0.25% or 0.5% rate hike will do to the energy price, I will not be holding my breath waiting for the result of your analysis.
And before I move on, let's have a big round of applause for the Canadian Truckers. No, Mr. "I've-gone-into-hiding", Trudeau, they are not right-wing extremists, they are hard-working men who have had enough of your woke BS, and they have much more support from the Canadian people than you do. Time to go, Trudeau, and take that Wally, Boris Johnson, with you!
Back in crypto land, we seem to be holding steady after a sad couple of months. Will Levels hold, or will we have another slide? Who knows?
Because of my views about the frenzied buying last year, I am not surprised about the drop. However, I am interested in how this young, diverse sector will perform when tested by so much craziness in the world.
I am currently underexposed to Crypto and would dearly love to see another sell-off so I could pick up a bit more at bargain prices, but at the current levels, I am not confident of a movement in either direction.
Moreover, I don't think I will be buying BTC because increased government interference makes BTC less attractive. I increasingly feel that governments are getting the upper hand in Crypto, so I need to put my personal view of the ideology of Bitcoin on one side. Therefore, as we stand today, those exchanges promoting NFTs and Metaverse products would seem to offer better long-term profit potential.
I'm not saying there will not be 1,000s of shit NFTs, because there will be. But this is a young industry which is much better suited to young game-players and the younger generation than old guys like me.
This ecosystem has many facets, and the number increases every month. We are seeing capital flow into this sector on a scale that I have never seen before, and there seems to be no end to programmers offering new and improved products. That can only be a good thing.
But that said, from a trading/speculation point of view, there is nothing we can use to justify or estimate pricing and value. That is why we saw many people claiming 10x or 100x profits in a year, or the widely repeated claim that "BTC will trade at 100,000 before last Christmas".
Some will claim their technical analysis justifies their claims. But to be very honest, some of the charts used have so many weird lines on them; they look like an aerial picture of Nazca!
I do not give out trading ideas or recommendations, so it’s not fair to criticize the analysis of others. Still, some of the chart analysis on offer is of very dubious quality.
Many new traders are entering cryptocurrencies with too little knowledge, many on stories picked up from social media. Being an old guy who is learning about Crypto, there is a lot I don't know or will ever know. Still, I have a little bit of knowledge about trading and speculating, and I worry about some of the comments coming from the newbies.
When I look at social media, we have LinkedIn, which is professional and full of people promoting products and ideas. On the other end, we have Facebook groups, where you will still see too many posts saying, "I've got $500 left to invest. Please tell me what to buy so I can make my $5,000 back before my dad finds out I lost it?". God help them!
For what it's worth, if we have learned anything over recent months, it is less about what we buy and more about when and how much we pay!
No one is immune to making mistakes in these markets. Institutions bought heavily towards the end of last year, and a few weeks later, their purchases were worth 50% of what they paid. I am sure their bosses and shareholders asked a few questions. But luckily for the rest of us, I don't think these institutions will be inclined to dump their costly purchases anytime soon.
Likewise, all those celebrities who bought digital monkeys for obscene amounts of money will not be dumping them now. They bought them as a bit of bling, so the monkeys will go in the jewellery drawer next to the gold digital watches if they do go out of fashion.
Dependent on other events in the global economy: Ukraine, oil prices, inflation, stock markets, etc., buying will come back into the sector, but I don't think it will be to hedge against economic decline.
I can understand that we would like to see a correlation between cryptocurrencies and more established assets. Yet, there is too little price history for cryptocurrencies and bitcoin to feel overly confident about making any correlation with equity markets.
Anyway, that's enough for this week.
If you have any questions or disagree with my comments, please email me. I am always happy to learn.