BRF #50 Basic Crypto Stuffs
I originally titled this newsletter the way I did because if you zoom way out and look at the 100 year chart, S&P/NASDAQ etc all going up. There are technical terms to these bigger and bigger layers of a cycle but who cares, the point is expansion is baked into existence and the more we expand the more up and to the right markets go.
The market currently looks like those chickens we been outlining in this newsletter and Empire Alerts coming home to roost. I mean from 20x company valuations to supply chain shock from a global “pandemic”, to historic low rates where do we start. Heck the yield curve inversions (12-24month recession indicator) we saw 2 months ago are like the smallest of talking points in all of this.
Every on CT was bullish till last week, very few shorted the whole way down in fact most lost big, Luna collapse was icing on the cake. Which real quick on that, rolling back the chain to a 2.0 launch never works, we have seen that before too many times but yet that is their presented solution from the sounds of it.
Actually now that the bear market is being fully accepted I wanted to outline a few simple pieces of market reading I feel most still get way wrong with crypto.
Market Cap & Market Volume lies
Market cap and 24hr volume is still so wildly misunderstood by the market participants because the exchanges and ranking sites ALL calculate it wrong.
First off understand the 24hr volume numbers are hyper inflated, the easiest way to spot this is go to bitcoin markets page on any aggregator and you will see BTC-PERP contracts being used to factor in overall volume.
But why? Perps on Binance can be based off your entire wallet holdings or isolated margin, on FTX same so if its based on my $10k USD and I have 0 bitcoin for my $100k Bitcoin position, that is incorrect volume.
Here is an example from Nomics, who I reference because they even have a A-D rating where they claim to catch wash trading, among other algos they run.
I didn’t even talk about wash trading that you see on other exchanges/aggregators. So think we can agree volume numbers are way off at minimum.
This is also why having your coin all over CEXs isn’t all its cracked up to be. Remember when that was a core pumpamental in 2019 ICO craze? Agh the memories of roadmaps and whitepapers.
Look at that risk to keeping your coins on a centralized exchange, Coinbase updated their policy this week to basically tell you that you’re fckd if they run out of money.
In the height of the ICO craze I know people who tried to get listed on Binance and CZ was charging millions just to get listed, not to mention millions of coins for market markers to get to work making fake volume.
Why do we celebrate this? Why do we put up with this?
What about Market cap, surely that can’t be as bad right?
It is…
Market cap (in crypto) is the price X by the total number of coins in circulation. Again lets look at Bitcoin, Satoshi’s 1million coins haven’t moved in 13 years, why is Bitcoin number 1 on ALL aggregators?
Ok so the main metrics that we use to attempt to place “value” on our precious internet coins is completely broken, well unless you aren’t on any CEX and you can clearly see on chain money moving- you can get a better idea of market cap, especially if its one like Hex that already got dropped out of #3 spot down to 8th because they removed OA coins as inactive from Market cap and supply numbers. Nomics did that and made a whole write up about it, check that out here.
Bitcoin ETFs
What’s weird is that 99% of pro-bitcoin people support and openly celebrate ETFs getting launched and countries using Bitcoin as a reserve currency like El Salvador. Talk about great free PR, they knocked it out of the park with that one, I feel like my feed is pro El Salvador 24/7 if I follow bitcoin maxis.
Lets take this piece by piece here…
ETFs are bad because its a form of fractionalizing a currency, you have paper (real paper settled asset) and then physical in this case spot. So we are essentially taking the supply and stretching it out. If this was a good thing, how come Gold and Silver (both have US ETFs) are still work fk all in the middle of a war and the backend of a global “pandemic”? Big banks can manipulate the price of paper and spot by hedging against themselves, on a long enough timeline people start paying more attention to the paper price vs physical. Again look to Gold and Silver which both traded way higher in spot during 2021 vs paper. Why? How?
I thought adoption is a good thing, isn’t the narrative store of value? If all 200+ countries recognized bitcoin as a legal currency ok fine, as a reserve currency not so great because now all banks all the way down to hedge funds have to hold a little bit of it. If this happens I think the price would pump to the moon but then as we have seen before in 2017 the network will probably just seize up, transactions were costing $100s and taking days to settle. If we start talking Layer 2 solutions you realize that isn’t bitcoin anymore right? Lightening network etc which has no adoption, guess they could just jump in the deep end on that if they needed to.
Its just weird how people completely ok with getting rugged by thieves over and over again, as long as they say sorry and disappear for a few months, change avatar and come back launching another NFT or crypto project and everyone cool with it.
Why wee need over 5600 coins?
Is Bitcoin really the finish line? That is laughable but seems to be the safe play for crypto kids and legacy economists, they think that they have to talk crypto- like its expected in their circles so to stay relevant they just talk bitcoin and eth.
I haven’t even started with Eth, we could be waiting years still on ETH 2.0, why would all those validators just rush this out to make less money? The ETH foundation recently put out their first report, thing, WEF document and its clear they only care about optics, which Aya Miyaguchi came from WEF so makes sense. Blah blah, climate change, blah blah, babies, inequality, blah blah eat bugs. Funny enough she is the Executive Director and sits above Vitalik, yuck! How does it feel to be ejected out of your own thing? That is, unless he is in on it.
Anyway crypto is quickly starting to look like Legacy banking/markets 2.0, here’s a few more clippings from the last few days.
Celcius telling you that you’re fkd if it came down to it.
This fits right in line with Coinbase, and then here is CRO- crypto.com telling you how rewards are getting cut.
These are all big red indicators, this exactly how the bear market went down last time.
Here are my thoughts…
They gonna lul this thing to sleep, keep pushing it down- institutions keep punishing retail while they are accumulating, then BOOM regulation hits and gives banks the upper edge along with a CBDC, then BTC runs to god knows where as most alts will be labeled illegal securities and that my friends I think will be the last bullrun to bitcoin and the current market we call crypto.
I am insanely bullish on privatized vertical financial stacks though, I think the concept has some legs.
Oh happy 50th issue!
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