Winter Isn't Over

Just Beginning

In December, I wrote that Crypto Winter was coming. It’s here and it’s in full force. Do you feel it? Brrrr. The South Pole is balmier. I looked at a Bitcoin chart Thursday evening. You can see when the crypto hype cycle started on this chart.

I think BTC prints $12K before the end of the year. Traders are going to find out how liquid Bitcoin and crypto markets really are. If I needed to move a few billion in BTC, think I could do it without moving the price much?

When Covid first hit, venture capitalist Marc Andreesen wrote an editorial. It was entitled, “It’s time to build”. This can be said for crypto right now.

If cryptocurrency is going to be more than just a speculative instrument, it needs to have actual businesses behind them that do something and create value for people. A lot of the pitches I have heard, and the businesses I have seen merely replicate stuff that’s already done. It’s an iteration, not a revolution.

For example, I have seen lots of pitches that price the bond market better. Anyone in the industry knows that things like corporate and muni bonds are very opaque when it comes to pricing and trading them. It truly sucks. But, nothing I have seen is a revolution that will bring opportunity to the masses. It’s just a system to replace a system.

If no one builds anything, crypto is tulip bulbs. I don’t think it will be. But, we have been a number of years since the Satoshi paper. It’s not only time to build, but it’s time to see some widespread adoption.

Right now, everything is hypothetical. It works on a white board. When I go fishing this summer in Minnesota, my fishing buddy who is an attorney will ask me about crypto. I won’t have much to tell him.

If you scroll through crypto charts, many of them have been totally decimated. A lot of money has been lost. I don’t delight in it any more than I delighted in the 2001 collapse of internet-based companies. It just means things got over done, money was too easy, people speculated and chased return, and it didn’t work.

Coinbase actually built a crypto business. Even they didn’t escape the carnage. I own some and expect that 10 years from now, I will be up some money.

Here is another one I own. Helium. My friend Brian Lund called almost the top. I didn’t sell. I didn’t want to pay the tax and buy and sell. For me, this is not that much different than investing in a startup. If it works, I will make money. It’s also not a huge part of my portfolio and doesn’t figure into my daily financial life. That’s the way to play crypto. If you can flush the money down the toilet and wouldn’t miss it, go ahead and wade in.

Looks like technically the token put in a bottom. What Helium has going for it is they are actually building a business. They could disrupt and compete with the big telecom companies. There is a big difference between Helium and a stablecoin or Bitcoin.

Helium hasn’t been perfect in the way they have run their business. They screwed over initial adopters and I have faith they will figure it out. They outsourced the building of mining equipment, and I have heard mixed reviews on it. One of the biggest issues is waiting to get it. You can find a lot of it for sale on the internet now since people are frustrated.

Do you know what hasn’t hit a bottom yet? I think QQQ prints 240 at some point this year. Inflation is that bad, and leadership is worse. America is waking up to the fact that the leadership actually wants to bring suffering to us. S+P will trade down to 320.

When baby formula is basically out of stock and the administration used the bureaucracy to try and bring Abbot Labs to heal by shutting a plant down, you know they don’t have compassion or care. Plus, shipping pallets of baby formula to feed illegal aliens over citizens is kind of a slap in the face no?

I guess “learn to breastfeed” is the new “learn to code”. After all, we are working from home a lot more now.

Based on these charts, there should be a lot of blood on the street somewhere.

I also have seen lots of tweets about valuations coming down in venture. That’s a good thing because they were way overvalued. Too much money chasing too few good companies. A lot of funds have been raised in the last two years and many of them have been raised on a flimsy thesis. I won’t go into it but to give you a hint I was advising a potential startup the other day and I told them to remove ESG from their pitch.

Funds that raised money on a flimsy thesis and because their marketing was on point and the current thing will deploy their capital and most will fail. They aren’t solving real problems.

I received an email today to attend a startup conference. Here is the hook. Would you go?

Dive into this year’s theme, Revolution, Responsibility, Opportunity, with 150+ top-tier speakers representing the top companies in fintech globally, all providing insights on the most important trends and how to thrive. 

The action takes place across the Fintech South Mainstage and nine Deep Dive Track Sessions including:

Revolution

• Identity & Cyber

• Metaverse & E-Commerce

• Fintech Gaming

Responsibility

• Financial Inclusion

• Sustainability

• Diversity & Inclusion

Opportunity

• Banking Revolution

• Payments

• Digital Health Uprising

I love to invest in entrepreneurs that compete, want to win, and are solving real-world problems for people who will part with something of value to get. Those kinds of people are precious and I hope that more and more of them are finding their way into crypto.

That doesn’t mean I am not “inclusive” etc. I just don't care who you are, what skin color you have, or you “orientation”. Can you build a company and return capital? Are you trustworthy? Can we build a relationship? Will you stab me in the back? It’s really all you care about as an investor.

I have confidence that crypto can figure it out. There is no time limit, but it would be good for the entire sector if there was a breakthrough somewhere. Until then, everyone will look for signs of a thaw.