Crypto-Caterpillars Will Become Goldbugs

Gerardo: You and I joked last week, I wrote about it, you've written about it, that look, eventually the music stops playing the clowns wipe the mask off their face. And we were due for a pullback. Bitcoin was up some 300% over the last six months. We know the run it's had over the past several years. And so it was really interesting to me to see all of the disbelief in the crypto space that something could pull back 30 or 40% from its highs.

I know you like the chaos. I have to get your thoughts on how you process the drop, what you think follows? Is there more room to the downside is? Is this the time where you have to start being selective with your crypto coins in picking winners and losers?

And is this a come-to-Jesus moment for the crypto crowd? Is this when they get serious about actually looking into if there is value, if there is scarcity, if there is utility...

Because that hasn't been the case up until now.

I met a young lady last week that didn't know what I did for a living and I just asked her what she did. And she gave me the whole spill, she's like, "I am a Crypto Babe. And it's to the moon and we're going to buy Lams. And we're going to be fab."

A smart young lady. Intelligent. Knew her stuff. But she had all the bullet points down. And I should have known then that was a contrarian signal. And that in part inspired the writing that I did last week, and a few days later it started crashing. So first off, did you enjoy the chaos?

 

Nick:  Have fun being poor, Crypto Babe!

Whole lot of questions there. And a whole lot of chaos.

And it still is very volatile. As I look at the Bitcoin price, it swung by $3,000 or $4,000 just today. It’s inherently a volatile asset — a new currency, commodity, however you want to classify that in your lexicon.

There's been so many “shoeshine boy” moments in this crypto run-up. Everybody’s mom, grandfather, and pizza delivery boy has been talking about crypto for months.

You just had your crypto girl moment.

There's been so many of those moments, we didn't know when the top was going to be.

We've talked about the metaverse and cryptoland... and about digital assets and NFTs, and cummies and uniswap and all sorts of stuff.

Which one of those caused this crypto correction?

The media wants to run with the Elon Musk narrative.

But really there were some new Chinese financial rules (we covered it here), and I'm sure there's some math involved in there.

It's funny that it pulled back right to $30,000, which is where there is some resistance 

 

As far as euphoria goes, it was a very euphoric week because you had Dave Portnoy making videos about which shitcoin he was going to back, because he was tired of missing out on the ability to manipulate them. He was saying that they were so easily manipulated that he was just going to pick one and get behind it and see if he could drive the price higher. And he made a whole video about which one it was going to be. It was like a mock sports draft, and he was putting on the hats for the different cryptocurrencies. A total dog and pony show.

And then there was this other guy, Anthony Pompliano, with almost a million followers on Twitter. He’s made a lot of money in crypto. And he put together this program called Bitcoin Pizzas, where in select cities around the country he partnered with a pizza shops and you can call an order a Bitcoin Pizza and get it delivered in a special Bitcoin box. And some of the proceeds go to fund development of apps and things on the blockchain that use crypto. But you can’t pay for the pizza with crypto, by the way.

I thought it was poetic that these guys put out these videos last week and then boom, you get a steep selloff.

I’ve been watching Bitcoin for the better part of a decade now. And I would say this selloff is par for the course. It's known for losing significant portions of its value, and then retaking its previous high and moving higher. I was a buyer down around $30,000 last week.

 

Gerardo: Ah, so you and Crypto Babe, you and crypto girl would actually get along.

 

Nick: Well, that's the thing between me and Crypto Babe, which is where the conversation goes next. These people who are only invested in crypto... live and die by the crypto. I don't think crypto girl had a diversified portfolio of stocks and other assets.

 

Gerardo: Don't be judgy, Nick. Don't be judgy.

 

Nick: Well, it's not being judgy. It leads to a lot of wider discussions, and I've been saying this for years, like, "What are these people going to do as they mature, as they see these haircuts and see the volatility in the cryptos.?"

I think they're going to invest in other things. I don't know if that's going to be gold, but I think it is.

You can see that as gold approaches $1,900 — it didn't really blink in the face of stock market selloffs or crypto selloffs. In fact, you can definitely make an argument that money coming out of crypto is good for gold.

Not because I think that crypto detracted from gold as far as money not going into gold. But I think crypto has just been an attention hog, and has diverted attention away from other asset classes that I think these crypto investors are going to now start looking at.

There’s a reason gold is holding up so well.