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Proprietary Data Insights Financial Pros Top Cryptocurrency Searches This Week
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Buying A House With Cryptocurrency Six months ago, Coinbase (COIN) CEO Brian Armstrong bought a $133 million home in Bel-Air. The Juice wonders how Coinbase employees feel about Armstrong doing like Bezos, who dropped $255 million on Beverly Hills real estate in 2020. When Armstrong bought the house, COIN stock traded for around $250 a share. Since he purchased the pad, COIN has crashed roughly 78%. Source: Google Finance Not a good look, especially as Coinbase fired 18% of its workforce – 1,100 employees – earlier this week. They learned of their job losses via their personal emails because Coinbase immediately cut off access to their work accounts. Armstrong’s explanation: I realize that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you. Given the number of employees who have access to sensitive customer information, it was unfortunately the only practical choice, to ensure not even a single person made a rash decision that harmed the business or themselves. If it’s any consolation, Coinbase will provide at least 3.5 months of severance, even with its stock in the gutter and crypto continuing to crash. Which leads us to ask – is cryptocurrency dead? |
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Is Cryptocurrency Dead?
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Key Takeaways:
Source: Google Finance Incredible. In bear market territory, the S&P 500 (SPY) still outperforms crypto pretty much across the board. And handsomely. Amid all of this talk about inflation eroding the purchasing power of a dollar and the stock market tanking, you would have been better spending the first half 2022 in cash or stocks instead of crypto. Which makes The Juice question some mainstream media accounts of what people are doing and plan to do with crypto. Consider this recent blurb from LA Mag: According to a recent Redfin survey, almost 12 percent of all first-time home buyers reported selling cryptocurrency to make a down payment on a house, a trend that Nurit Coombe says is poised to explode in Los Angeles. “We’re seeing a growing number of these people cashing out virtual assets for starter homes that go anywhere from $1 million to $4 million,” says the managing partner at the Agency, who specializes in cryptocurrency transactions. That quote – uttered just this month – suggests a disconnect from reality. Consider Dogecoin (DOGE), #3 this week in our proprietary Trackstar database of the crypto names financial pros are searching for. Quite a few people did well buying and selling the altcoin in 2021. In May 2021, DOGE traded as high as $0.73. Today, add a zero, but not on the good end. DOGE fetches just $0.05, down approximately 70% year to date. Take most any crypto – particularly the widely held and/or popular ones – and the story remains the same. Are you telling us all of these people apparently buying and preparing to buy multi-million dollar homes in Los Angeles with cryptocurrency proceeds got out while the getting was good? Which was mid-to-late 2021. A DOGE position of $1,000,000 at $0.73 is worth about $68,500 today. In this specific moment in time, this is as good as dead. A Word Of Caution In the first week of June, Bank of America Global Research conducted a survey of cryptocurrency investors.
It’s important to note that most of the people surveyed are new crypto investors with average transactions of $25 or less. Not the big money. Dabblers. They’re not playing with money that’ll drive markets or make or break futures. Beware of sexy crypto headlines. The ones that say people – in June 2021 amid one of the biggest crashes we’ve ever experienced – are still using crypto profits to make massive, million dollar purchases. It’s hard to believe they’re doing this with the most devalued asset, if you’re comparing crypto to cash or stocks. Whales might be making these moves. But not everyday investors who took a chance and got out before all hell broke loose or, worse, are left holding the bag as all hell breaks loose. The Bottom Line: It’s impossible to know if crypto is dead or not. Only time will tell. Over the next six months to a year, fortunes will be won or lost – again. It’s during times like these, when we appreciate the psychological component of these types of investing decisions. In the rearview mirror, a big investment in, say, Amazon.com, made perfect sense in 2020. But who among us had the balls to pull that off on a life-changing scale, given the uncertainty of that time? Your best move today – keep crypto in a relatively speculative segment of your portfolio. You might want to be in, just in case the market retraces its steps. Maybe you up your position if and when a rebound starts to materialize. Just like the crash didn’t happen overnight in one fell swoop, the comeback will likely come in noticeable, even if volatile steps. That said, you have history on your side with stocks. A history of bouncing back nicely. Comparatively there’s no history – at least none we can even kind of rely on – with cryptocurrency. Proceed accordingly – and with caution – even if crypto’s only playing dead in 2022. |
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