Mad Hedge Bitcoin Letter
March 31, 2022
Fiat Lux
Featured Trade:
(EVEN CHARLIE WARMS TO BITCOIN)
(DOGE), (SHIB), (BTC)
Posts
One of the biggest promoters of the U.S. economy for the past 50 years has been vice chairman of Berkshire Hathaway Charlie Munger.
Lately, he has taken his privileged position to opine about almost everything under the sun.
At some stage, people like us like to infuse the generation behind us with the right tools to navigate the global economy, and sharpening these instruments goes a long way in determining who became the ultimate winners and losers.
Charlie came out with sharpened elbows today describing a world in which “it’s never been harder for young people to make and keep their money.”
He then begins to dive into the topic of inflation and the financial destruction beset on a young population who are not only asset scarce, but whose salaries are lower in real terms than the young person 40 years ago.
Essentially, Charlie is encouraging young people to avoid the traditional financial system that benefited him so much in order to look for greener pastures.
Sometimes it really is greener on the other side of the fence and the first generation of crypto Billionaires can attest to that.
Becoming a crypto whale usually entails getting in early before the rest pile in.
Munger also lamented the hardship of young people purchasing property in a “desirable neighborhood in a city like Los Angeles.”
Mortgages backed by the US dollar and Fanny Mae have been instrumental in helping millions of hardworking Americans realize the American dream of owning their own home.
Obviously, the US property market in many parts of the country these days is out of control and even though it’s not directly linked to cryptocurrency, it’s directly linked to the US dollar which Bitcoin is an absolute competitor.
Munger couldn’t be righter that young people will not be able to copy and paste what worked before and that the ones who don’t adapt will not be able to achieve a life in a desirable city.
In a roundabout way, Charlie is espousing the virtues of Bitcoin even though he doesn’t know it.
Part of the bias he presides over is in the way young people get rich and age doesn’t make you want to get rich all over again in crypto after getting rich through the US dollar and stocks.
Investing in alternative strategies has never been more attractive, but there is a smart way to do it and an irresponsible way to do it.
In the last few years, Bitcoin has proved itself to be a great store of value and it appears that no matter what you throw at it lately, it won’t go down that much.
But then there is the scarier side of crypto that isn’t Bitcoin and things get suspicious quickly like somebody following you down a narrow, shady alley.
Many have thrown their life savings in these coins that are fashionably new and low cap and obscure thinking that they can get rich quickly when all that will actually happen is they'll lose their money in these coins that either fail or get the rug pulled.
Seeing coins like SHIB, DOGE, which were altcoins that actually did build a substantial market cap in the past, has only encouraged these people in their thinking that they can make a lot of money off of these coins when the reality is that these were only 2 among thousands of coins that got lucky.
Investing should be done with a purpose, otherwise, it becomes pure gambling and you'll likely fail.
That purpose could be Bitcoin as a means of decentralization, as a means of inflation hedge, or just as a currency that's easy to transfer. As long as you know what you support in your coin, you have a purpose that you believe in which is what investing is about, not closing your eyes and picking a coin.
Not only that you won't get rich, but you'll also lose your money in these coins. The only people getting rich will be those controlling the coin with their bags that are ready to sell.
But of course, there still are those projects with a purpose that can change the market, but you'll need a lot of time on your hands to find those new ones.
Mad Hedge Bitcoin Letter
January 25, 2022
Fiat Lux
Featured Trade:
(SELL THE SHORT TERM RALLIES)
(BTC), (ETH), (SHIB), (DOGE), (ADA)
Bitcoin must be treated as a sell-the-rally asset at this point.
I am not giving up on crypto, but I must acknowledge what is happening in the markets.
Suffering from a broad-based risk aversion move with investors dumping literally everything is something that happens when investors need to meet margin calls.
It’s not about Bitcoin at this point, it’s just caught up in the wash, as asset prices around the world readjust to the new Central Bank policies.
The market is looking through the tailwinds crypto possesses from store of value, inflation hedge, limited supply, and an alternative asset to the US dollar.
It doesn’t matter in the heat of the battle and when everything sells off.
Bitcoin hitting the very lower limit of $30,000 means that investors aren’t ready to ditch the dollar for this high-flying digital currency.
In fact, the US dollar has held up quite strongly in the face of trillions of debt issuance.
Look around the globe and the US dollar has absorbed the Fed’s action in stride reflecting little depreciation stemming from the decision to pump massive amounts of liquidity into the system.
The dollars’ strength means that the transition into digital currencies will take longer than first estimated.
Bitcoin won’t take over in one day, but it will experience a gradual adoption phase with the bruises to show for it.
With Russia's move to ban crypto assets lighting the fuse of the latest plunge, Bitcoin's price moves have become closely linked to technology shares, which have slumped on rate hike fears.
The culmination of Netflix warnings of sagging growth triggered another wave of risk aversion in the markets hitting crypto again to knock it down deep into the lower $30,000 range.
In the short term, traders need to play Bitcoin from the $40,000 level and sell rallies until conditions change.
Ethereum, one of the hottest digital coin trades that have soared in popularity thanks to the non-fungible token (NFT) boom, has halved down to the mid-$2,000 level.
Bitcoin, even with its massive underperformance, is still outperforming the minnows of cryptocurrency.
On the horizon, sadly, plans of 4 rates hikes is generally going to cause more pain for risk-on assets, and especially crypto as investors have been conditioned to sell crypto at the first sight of trouble.
On the derivatives side, about 200,000 positions were liquidated in the last 24 hours, totaling more than $800 million in losses and growing according to Coinglass.
Forced liquidations enhanced the selloff and there have been few dip buyers who are waiting out for healthier macro signaling.
For the past two weeks, most of the funding rates in crypto futures have leaned to the short-seller side according to data from The Block Research.
Many retail traders that got into Bitcoin at the peak are now rushing to sell everything and even institutional money are looking at raising cash through the sale of Bitcoin.
I do believe that Bitcoin is still in the midst of a secular bull market, but sentiment and conditions must settle before we reignite the bull case.
Inflation is still a secular tailwind for Bitcoin and other crypto’s, but not in an environment of a panicking Fed who has made a policy misstep.
The altcoin picture is gloomy with Ethereum sidechain Polygon’s (MATIC) token down 36% and Cardano’s (ADA) token is down 61% since their all-time highs in September, when the latter project announced the launch of their smart contracts.
Altcoins suffered drawdowns as steep as 90-99% during the 2017-2018 crypto cycle and the same could happen as investors rush to safer assets.
Naturally, the biggest category of altcoin losers is meme coins.
Dogecoin (DOGE) is now nearly 80% down from its all-time high last May, despite a recent tweet from Tesla CEO Elon Musk that temporarily sent DOGE up as much as 33%.
Shiba Inu (SHIB), another dog-themed coin that gained 1,607% last year, is down 71% from its all-time high.
Sell the rallies at $40,000.
Mad Hedge Bitcoin Letter
October 28, 2021
Fiat Lux
Featured Trade:
(SHIBA INU COIN)
(BTC), (SHIB), (ETH), (DOGE)
This article is not a joke — this is an article about a parody token that is now a real thing.
There are meme stocks and there are meme tokens.
There is the argument out there that the flood of liquidity is giving these assets their time in the sun.
I am not saying these assets are great to buy and hold long-term, hardly not, but they do offer the volatility for traders to jump in and out of them for a nice profit.
Shiba Inu Coin (SHIB), a popular meme token based on another alternative coin Dogecoin (DOGE), is a decentralized cryptocurrency created in August 2020 by an anonymous person or persons known as "Ryoshi."
SHIB is red hot and that’s been the case literally this whole year so far.
This dog-inspired cryptocurrency is up 140% in the past 7 days and hit an all-time high of $0.00007592.
Shiba Inu Coin now ranks No. 11 among the top cryptocurrencies by market value capping a surge of over 60,000,000% over the past year.
Before investing in any altcoins, it’s important to understand that these coins are a great deal riskier than something like Bitcoin.
It sounds funny just saying that but yes, there are different degrees of risk with different coins.
There has been a lot of hype surrounding the Fear of Missing Out (FOMO) movement, but I would say, only deploy capital in altcoins if you are willing to write off the entire investment.
And I’ll say this, it’s a speculative investment in general, so at least do a little due diligence before you take the plunge.
Shiba Inu Coin is an Ethereum-based ERC-20 token, which means it was developed on the Ethereum blockchain, rather than its own blockchain.
Ryoshi decided to launch SHIB on Ethereum (ETH) because it’s “already secure and well-established,” according to the SHIB white paper, or, as its community calls it, “woof paper.”
I have gone on record saying that Ethereum will go higher than Bitcoin in the future because it’s that attractive platform that every DeFi developer wants to build on, and SHIB is just one iteration of that.
Developers also choose to roll out their projects using the ETH platform because it’s way cheaper than building a platform from scratch.
SHIB has a total supply of 1 quadrillion.
Ryoshi is on record saying he doesn’t have any SHIB, and nearly half of its supply is locked in a liquidity pool on decentralized exchange Uniswap.
The rest was sent to Ethereum co-founder Vitalik Buterin.
According to SHIB’s white paper, Ryoshi sent tokens to Buterin with hopes that he’d keep the tokens.
However, Buterin did not.
He donated a significant amount to the India Covid Relief Fund and other charities, which goes to show that now all Covid Relief Funds are created equal.
This is not a joke, and some people might be laughing when they read what this coin is based on.
That is why altcoins may require additional caution due to their differences from something like bitcoin, including their structure, supply, and utility.
SHIB supporters might point to a comprehensive ecosystem, which includes smart contract capabilities; NFTs, or nonfungible tokens; and opportunities for liquidity mining, to name a few, that offer utility beyond community.
Another juicy piece of news saw rising support for a Change.org petition urging trading platform Robinhood to list SHIB on the broker’s platform.
The petition has harvested 334,500 signatures so far.
Being able to trade SHIB on a massive platform Robinhood would be another 50% leg up for the price of SHIB.
A Robinhood spokesperson declined to comment on this request.
When asked by analysts, CEO of Robinhood Vladimir Tenev was noncommittal to accommodating SHIB on Robinhood, but the bigger it gets, the more momentum it gains for listing it.
That’s the thing about these altcoins, they can come out of nowhere, and an even “fake it till you make it,” SHIB is making people rich and all that would have taken is a few hundred-dollar investment in January.
Now the secret is out about SHIB, I would scale in slowly, but don’t bet the ranch on this speculative bet and prepare for high volatility.
