Getting There
Just a Little Patience...Yeah...Yeah
…I’ve been walking the streets at night, just trying to get… [Record scratch]
Oh, hey. What’s up?
Just wanted to squeeze one more edition of the newsletter in while things are still quiet for both me and the markets.
Lots of people talking about the impending recession. Sadly, the Fed has put us in a place in which it’s either that or we just continue to devalue the dollar in efforts to continue to prop up the stock market. We went through something similar when Paul Volcker, Fed Chair from 1979 to 1987, had to break the back of inflation in the late 1970s/early 1980s.
So, now, markets continue to react to the words of unelected bureaucrats who have somehow come to convince people that trade-offs are no longer a thing in our economy. These are the same people who will likely soon come out to tell you that the more permanent target inflation rate in the United States will likely jump from 2% to 3%. One percent doesn’t sound like much, but it’s a 50% increase. What does this mean for you? Your dollars/fiat will continue to lose purchasing power.
Because real rates of return on safer investments like bonds are now -6% or so, my guess is that people will pile back into equities and probably gold and crypto. This will induce a “melt up,” followed by the type of correction that will make the 2008 crash seem like child’s play. Do I want this to happen? No. Will this definitely happen? No. It’s just the thesis that I subscribe to. Don’t take this as financial advice.
However, for what it’s worth, I wouldn’t recommend that you fold just yet. (Again, though, I am not a financial advisor. Please make decisions with which you are comfortable.) Like some others in this space, I don’t think this cycle has concluded.
Plus, I wouldn’t recommend that you sell all of your bitcoin even when the cycle does conclude.
Based on what I’ve seen over the past four or so years, quiet times like this are often good times to buy or hold.
When the retail speculators leave, price lows often get put in. Plus, if you are just in this for speculative purposes, you’ll probably end up losing money anyway. So, my advice is similar to both the great philosopher Axl Rose as well as the gentleman behind the DeFi Edge account below, and that is to exercise a bit of patience.
The Fed may just bleed the market out from here, in which case, the next crypto bull market will happen some time around the next Bitcoin halving in 2024-2025. Or maybe we melt up in the next few months, in which case, I recommend taking some profits. Or maybe we experience something new, something really cool that I don’t even know about.
Either way, my gut tells me that some patience is in order right now. So, maybe take a seat, criss cross applesauce those legs, touch your middle fingers and thumbs together, shut those eyes and take some deep breaths. And after that, here’s some homework for you…
Homework
Dan Morehead is the founder and CEO of Pantera (Super rock news letter today, huh?) Capital Management, an investment firm that invests in digital assets and that is up 65,900% since inception. Like Jeff Booth, the interviewee in your last homework assignment, Dan is calm, collected, and highly intelligent (though, maybe not quite as zen as Booth). He’s been involved in financial markets for decades and offers some excellent perspective in the above interview. As always, feel free to leave a comment about something you learned from listening!
Lastly, tomorrow is my first day as “New York Cryptocurrency Staff Writer” for Finder.com. Wish me luck!
Best,
Frank
Twitter: @frankcorva
Currently Listening To:
Wishing you all the best tomorrow! 👏👏👏👏👏👏
Crypto shouldn’t be seen as a get rich quick thing. It should be viewed as an investment that will probably pay off in ten years if we can survive all the dangers.