The Crypto Crash: Assessing The Damage

Proprietary Data Insights

Stocks With Surging Search Interest Last Week

Rank Name Searches
#1 Redbox Entertainment 332,583
#2 AMC Entertainment 236,803
#3 Tesla 181,639
#4 Invesco QQQ Trust Series 1 135,539
#5 Amazon 118,197
#35 Coinbase 29,780

The Crypto Carnage 

Source: Google Finance 

Remember Super Bowl Sunday? And all those expensive commercials featuring celebrities. Like the one making Seinfeld creator and Curb Your Enthusiam’s Larry David out to be an idiot for not believing in crypto.  

Coinbase (COIN) ran one of those ads, urging us to buy crypto. Had you opened a Coinbase account Monday morning after the superbowl and followed this strong suggestion, here’s roughly how you’d be sitting today. 

Editor’s Note: In the 30 seconds it took us to hit send, crypto prices could swing wildly. Again! So consider these rough, moment-in-time estimates. At one point over the weekend, the following losses in BTC and DOGE were even more pronounced. 

  • A $10,000 investment in Bitcoin (BTC) on February 14 is worth approximately $5,060 today. 
  • $10,000 in Dogecoin (DOGE) slashed nearly 53% to $4,730. 
  • $10,000 in Coinbase stock would have left you with about $2,590 today. A massive loss of around 75%. 

Makes the $8,000 or so you’d have left after a $10,000 investment in the S&P 500 (SPY) on February 14 look super attractive. Same goes for the ETF that tracks the top 100 Nasdaq stocks (QQQ). A $10,000 investment in mid-February is worth about $7,750 today.  

Startling numbers. And, yeah, amid the crypto crash and a bear stock market, you’d actually have been better off in old, stodgy stocks rather than shiny, new crypto. 

However, like The Juice said the other day, this doesn’t mean crypto’s dead and you should abandon it. It just means proceed with caution because a world exists where these things could be true. 

Exactly how you proceed depends on your specific situation and mindset. 

Scroll with us. We’ll do what we do best – illustrate and explain.

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Cryptocurrency

The Crypto Crash: Assessing The Damage

Key Takeaways:

  • The crash makes the headlines, however finer grain data can help tell the story. 
  • If you’re underwater on an investment, particularly crypto, try to figure out why. 
  • Once you do this, you’re ready to act accordingly and proceed with caution. 

 

The data you see there is on Dogecoin, courtesy of a cool platform called intotheblock. The site collects finegrain data on who’s sitting on on-paper profits or losses in their crypto holdings by scanning all of the addresses that own a particular coin. 

So, for DOGE, 43% of holders are out of the money. They’re sitting on losses. Eight percent are at breakeven. And 49% have on-paper profits. 

Makes the headlines about the crypto crash feel a little less scary. Not everyone’s hurting as badly as the media would like us to believe. 

That said, a significant number are underwater. We can all learn a thing or two about investing by figuring out why. 

Four Out of Ten Bitcoin Holders Are Underwater

That 10% number in the second box. It shows the percentage of people invested in Bitcoin who own a position equal to or 1% greater than the total supply. Makes sense that Bitcoin’s number comes in much lower than DOGE’s (66%) given the disparity in per coin price of each digital asset. 

Hang with us because all of this matters. We’re piecing things together. 

Shiba Inu Holders Are Underwater Big Time

Not only are 70% of Shiba Inu (SHIB) holders underwater (that number was as high as 81% over the weekend!), but, as the last data box reveals, 21% have held for a year or more. And 76% for 1 to 12 months. 

Not All Long-Term Investing Makes Sense

See a pattern here?  

The more speculative and lower priced the investment, the greater the number of people underwater. 

By far, Bitcoin’s a more mature coin. Relative newcomer, DOGE, started the pandemic-era altcoin craze. It spawned SHIB. 

The Juice thinks lots of people stuck in DOGE and SHIB got caught up in the hype. Particularly new investors. 

First, it’s easy to get lured by a low share price. You feel like a baller when you own thousands or even millions of “shares” of an asset. You feel less like a baller with 0.02639 “shares” of Bitcoin. 

Second, investing in these altcoins became personal and emotional during the pandemic. There was a ton of hype. Much of the narrative focused on novice, everyday investors “democratizing” investing by pumping meme stocks and getting rich quick in altcoins. 

This triggered an us against them attitude on the message boards, spawning that infamous cry of HODL!! Don’t give in. Don’t sell. If you believe in crypto. If you believe in what’s happening, you’ll remain long and even buy more. 

If this hysteria sucked you in, you’re not alone. Almost every investor since the beginning of time has let emotion dictate their buy and sell decisions, often delaying an exit before it’s too late. It has happened with stocks – penny stocks and even blue chips. It’s happening with crypto. 

You hold. HODL! 

You double down. You fight the good fight. You’re part of something bigger than yourself. Plus, you want to get rich the way “everyone” seemed to get rich in 2020 and early 2021. 

The dream doesn’t materialize. You find yourself underwater. 

The Bottom Line: There’s such a thing as being long-term a stock or even crypto on conviction. With history on your side, it would not be crazy to add, say, Apple (AAPL) shares during this bear market. 

At the same time, if emotion, not logic or even an educated guess based on well-established history, drives your desire to stay in a position, think twice. While it’s impossible to know for sure, The Juice thinks it’s safe to say quite a few of the people underwater in coins such as DOGE and SHIB bought the top (or close to it) and have since let emotion get the best of them.

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