Proprietary Data Insights
Financial Pros Top Cryptocurrency Searches In The Last Week
You Would Have Been Better Off In Stocks Or Cash
Source: Google Finance
It’s impossible to overstate the pain we’ve seen in crypto this year. Relative to massive losses in Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE), passive stock market investors should consider themselves lucky.
Going forward, do you feel more comfortable investing in the S&P 500 (SPY) or the above-mentioned coins?
And New Yorkers Made Fun Of de Blasio!
When the Mayor of New York City, Eric Adams, decided to take his pay in BTC and ETH, we wondered why. What was he trying to prove? That he leads a progressive City Hall, distinct from his predecessor. The butt of every joke Bill de Blasio administration.
While it’s a stretch to say de Blasio looks like a genius today, at least he collected his entire paycheck – in cash – every two weeks.
Analysis by the NY Daily News shows Adams lost roughly $5,800 by taking his first three paychecks – totaling $19,215 – in crypto. He brought home about 30% less in crypto than he would have in USD.
At Least He’s Not El Salvador
The country made much-hyped Bitcoin investments. According to Bloomberg, El Salvador has lost approximately $40 million on the deal since September. The country has to make good on $38 million worth of debt to bondholders by mid-June.
Isn’t this the type of stuff government’s supposed to prevent, rather than actively participate in?
Keep Your Dirty Hands Off Of My Sweet, Clean Crypto
These Numbers Didn’t Age Well – And Fast
In March, Bitstamp surveyed 21,113 retail and 5,502 professional investors globally.
If asked the same questions today, we wonder if we’d see the same level of optimism in crypto, given the massive, broad downside and the crash in LUNA and its so-called stablecoin TerraUSD.
It’s important to note that the study showed higher levels of crypto trustworthiness among investors in emerging markets and lower levels in developed nations. Later this month in The Juice we’ll look at a similar study of US-based institutional investors only.
All Is Not Lost
In times like these, you gotta take a deep breath.
What we’re seeing in crypto resembles the dot-com boom and bust of 1999-2000. A wakeup call that spawned startup disasters, but also companies such as Amazon.
So while this doesn’t mean crypto’s dead or you should abandon it, it does mean proceed with caution. And, yes, with things moving so fast and unpredictably, it might be time for regulation, particularly from the SEC.
Cryptocurrency Is An Asset
The other day the head of the SEC said crypto is an asset. Given the definition of an asset, it’s funny he even needs to reiterate this.
There’s a reason why he has to say this. Because he wants the SEC to regulate crypto like it does stocks.
Lots of people don’t want the government anywhere crypto. Federal regulation would feel a lot like the antithesis of what cryptocurrency broadly stands for – digital assets that operate outside of government or big bank purview.
So the first step toward regulation for the SEC, sensibly, is to legitimize crypto in the eyes of the State.
It’s an ironic little dance.
Crypto Probably Needs At Least A Little Regulation
We keep thinking back to that horrible pandemic story where a 20-year old committed suicide after seeing a six-figure debit in his Robinhood account. If you recall, there was no negative balance. Just a temporary placeholder you see before your options trade settles.
Access to options trading requires more oversight than the two or three questions you have to answer to qualify for an account with options privileges. You don’t have to know anything about options to pass this test. You just have to know the obvious, correct answers to the questions.
We’ve collected enough data to know the number of people who trade or invest in cryptocurrency is meaningfully larger than the number of people with a sophisticated understanding of it.
Given the sophistication of algorithms and survey methodology, we should be able to come up with a way to only open crypto – as well as options – trading to investors who demonstrate an intermediate or better level of knowledge.
Clearly Define Terms
The LUNA/TerraUSD debacle made it evident. Somebody, probably the government, needs to regulate the use of the term stablecoin.
At the moment, it’s used interchangeably to categorize coins meant to maintain a value of $1.00 whether they’re backed by the actual US Dollar or an underlying altcoin. This doesn’t fly and presumably cost a lot of people a lot of money in the last week.
We present just a start.
Do you think the government should step in and regulate crypto? If so, in what areas and how? What other terms create confusion and could use uniformity?
The Bottom Line: Cryptocurrency isn’t going anywhere. As we live through a tumultuous moment in time, we can’t forget about crypto’s past performance (it has made large swaths of the population wealthier) or its inevitable future as a mainstream trading and investment vehicle.
That said, as with any other investment, there’s risk. As we have seen, that risk can come and bite you out of nowhere.
Government has no role as big brother, however it does have a responsibility to ensure citizens know what they’re getting into and have the capacity to navigate their situation when there.
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