Time To Get Off The Crashing Cryptowagon And Jump Onto The Goldwagon

It is difficult to fathom how anyone could believe that Bitcoin would ever be a good alternative to gold or even fiat money…  by Egon von Greyerz of Gold Switzerland Is the $32 billion collapse of the crypto exchange FTX the catalyst for the fall of the financial system? We will soon know but at least the GOLD – CRYPTO debate was settled last week for the ones who believed cryptos represent wealth preservation. I have always argued that cryptos are a binary investment. My view on Bitcoin has for years been that it can go to either $1 million or to Zero. So not a good risk and certainly not an investment for the fainthearted or for widows and orphans. Not that I ever thought Bitcoin is worth $1 million or anything at all for that matter. But manias always go to excesses before they collapse. Again we have learnt that cryptos are a lottery ticket. It can be worth a lot or nothing. What was worth $24 billion a week ago is today worth ZERO, ZILCH, NADA! Not long ago FTX, the ex second largest crypto exchange was worth $32 billion but declined to $24b and now zero. Ouch, that must hurt for all the investors who piled in to this Ponzi scheme. And it is not just any investor, names like Blackrock, Lightspeed Venture, Alan Howard (Founder of Brevan Howard), Tiger Global, SoftBank and many more major investors. Most of the bigger investors are Venture Capital or Hedge Funds so they understand the risk. It is amazing how greed and FOMO (Fear Of Missing Out) can attract almost everybody from Presidents to sport stars. See Blair and Clinton below. But sadly greed and FOMO also attract normal investors as well as greedy Pension funds managers. For example the Ontario Teachers’ Pension Plan are investors. It is clearly totally unacceptable that pension funds should risk pensioners’ nest egg by investing in a Ponzi scheme with no assets, no real financials and just some unverifiable and unaudited electronic entries on a number of computers. Apparently there was a backdoor to the FTX accounting software allowing the management  to take billions out without triggering any alerts or audits. Because so many recognised bigger investors jumped on the cryptowagon, pension funds clearly thought that this was a mainstream investment and therefore acceptable. For the average pension fund manager, it is always safe to do whatever other major investors do regardless if a particular investment goes to zero. Our company has an associate in the US who knows many of the major pension funds investment managers. Interestingly no pension fund is interested in physical gold. And that in spite of gold not only being the perfect wealth preservation investment but also an excellent hedge to balance a portfolio. More importantly in current times of high inflation and falling asset markets, gold acts as an excellent inflation hedge. But knowing pension funds, they will wait until gold goes up and is on the front pages. At that point many pension funds will jump on the goldwagon at much higher prices. There was also an A-list of celebrities and major sport stars involved with FTX. The founder of FTX, Sam Bankman Fried (SBF) was a superstar in the Crypto business and even managed to get Tony Blair (ex UK Prime Minister) and Bill Clinton to attend his Crypto conference in the Bahamas in 2022. I don’t know if these two world leaders received any shares in FTX but they were most certainly very well paid for attending the event. Coming back to cryptos, exactly 12 months ago the total crypto market was worth $3 trillion. Today, one year later the market is worth $885 billion, a fall of 70%. I obviously don’t mean that it is worth this amount but gullible investors clearly do. In my estimation it has no intrinsic value at all even though the market currently values cryptos at $0.9 trillion. NEXT BITCOIN TARGET $3-5K ON THE WAY TO ZERO? Bitcoin dominates the crypto market and represents 39% of the total. Obviously anyone who bought Bitcoin anywhere between $10 and say $1,000 has made a fortune. But as we know, the biggest number of investors jump on the bandwagon very late. Therefore, most investors are today most probably losing on their BTC investment. The problem is that investors have already lost 75% of the maximum gain when the price of BTC was $70,000 and now like most greedy investors, they are waiting and praying for the next move up. With such volatility, it is difficult to fathom how anyone could believe that BTC would ever be a good alternative to gold or even fiat money. As the BTC graph above shows, the next target could be $3-5,000 on the way to ZERO? The well known Bitcoin investor and ardent believer Michael Saylor bought, through his Microstrategy company, 130,000 BTC at an average of $30,600. With a current price of $16,600 he is sitting on a neat loss of $1.8 billion.  He might very well have bought these on margin in which ca

Time To Get Off The Crashing Cryptowagon And Jump Onto The Goldwagon

It is difficult to fathom how anyone could believe that Bitcoin would ever be a good alternative to gold or even fiat money…

 by Egon von Greyerz of Gold Switzerland

Is the $32 billion collapse of the crypto exchange FTX the catalyst for the fall of the financial system?

We will soon know but at least the GOLD – CRYPTO debate was settled last week for the ones who believed cryptos represent wealth preservation.

I have always argued that cryptos are a binary investment.

My view on Bitcoin has for years been that it can go to either $1 million or to Zero.

So not a good risk and certainly not an investment for the fainthearted or for widows and orphans.

Not that I ever thought Bitcoin is worth $1 million or anything at all for that matter. But manias always go to excesses before they collapse.

Again we have learnt that cryptos are a lottery ticket. It can be worth a lot or nothing.

What was worth $24 billion a week ago is today worth ZERO, ZILCH, NADA!

Not long ago FTX, the ex second largest crypto exchange was worth $32 billion but declined to $24b and now zero.

Ouch, that must hurt for all the investors who piled in to this Ponzi scheme.

And it is not just any investor, names like Blackrock, Lightspeed Venture, Alan Howard (Founder of Brevan Howard), Tiger Global, SoftBank and many more major investors.

Most of the bigger investors are Venture Capital or Hedge Funds so they understand the risk.

It is amazing how greed and FOMO (Fear Of Missing Out) can attract almost everybody from Presidents to sport stars. See Blair and Clinton below.

But sadly greed and FOMO also attract normal investors as well as greedy Pension funds managers. For example the Ontario Teachers’ Pension Plan are investors.

It is clearly totally unacceptable that pension funds should risk pensioners’ nest egg by investing in a Ponzi scheme with no assets, no real financials and just some unverifiable and unaudited electronic entries on a number of computers.

Apparently there was a backdoor to the FTX accounting software allowing the management  to take billions out without triggering any alerts or audits.

Because so many recognised bigger investors jumped on the cryptowagon, pension funds clearly thought that this was a mainstream investment and therefore acceptable.

For the average pension fund manager, it is always safe to do whatever other major investors do regardless if a particular investment goes to zero.

Our company has an associate in the US who knows many of the major pension funds investment managers. Interestingly no pension fund is interested in physical gold.

And that in spite of gold not only being the perfect wealth preservation investment but also an excellent hedge to balance a portfolio.

More importantly in current times of high inflation and falling asset markets, gold acts as an excellent inflation hedge.

But knowing pension funds, they will wait until gold goes up and is on the front pages. At that point many pension funds will jump on the goldwagon at much higher prices.

There was also an A-list of celebrities and major sport stars involved with FTX. The founder of FTX, Sam Bankman Fried (SBF) was a superstar in the Crypto business and even managed to get Tony Blair (ex UK Prime Minister) and Bill Clinton to attend his Crypto conference in the Bahamas in 2022. I don’t know if these two world leaders received any shares in FTX but they were most certainly very well paid for attending the event.

Coming back to cryptos, exactly 12 months ago the total crypto market was worth $3 trillion.

Today, one year later the market is worth $885 billion, a fall of 70%. I obviously don’t mean that it is worth this amount but gullible investors clearly do. In my estimation it has no intrinsic value at all even though the market currently values cryptos at $0.9 trillion.

NEXT BITCOIN TARGET $3-5K ON THE WAY TO ZERO?

Bitcoin dominates the crypto market and represents 39% of the total.

Obviously anyone who bought Bitcoin anywhere between $10 and say $1,000 has made a fortune. But as we know, the biggest number of investors jump on the bandwagon very late. Therefore, most investors are today most probably losing on their BTC investment.

The problem is that investors have already lost 75% of the maximum gain when the price of BTC was $70,000 and now like most greedy investors, they are waiting and praying for the next move up.

With such volatility, it is difficult to fathom how anyone could believe that BTC would ever be a good alternative to gold or even fiat money.

As the BTC graph above shows, the next target could be $3-5,000 on the way to ZERO?

The well known Bitcoin investor and ardent believer Michael Saylor bought, through his Microstrategy company, 130,000 BTC at an average of $30,600. With a current price of $16,600 he is sitting on a neat loss of $1.8 billion.  He might very well have bought these on margin in which case his position could be liquidated at any time.

Since Bitcoin is almost a religion for many investors, very few have got out but are instead hoping for the next rally to $100,000, $250,000 and much higher.

They might be lucky or they might lose it all as the total CRYPTO market crashes after major margin calls. 

Although FTX was only 3% of the total crypto market, the total loss of $24 billion in a couple of days will change the crypto market for ever. It might not ever be the same again except for the crypto fanatics.

Since FTX had a very high profile, the repercussions will be major. Not long ago FTX was seen as a buyer of Goldman Sachs.

Will we now see a continued rapid liquidation of all crypto assets as nervous investors realise that the whole crypto market could be a Ponzi scheme.

When the second biggest crypto exchange goes under overnight, there is nothing to guarantee that this will not happen to others.

Remember that there is no saviour and no central bank that will step in.

What is likely is that institutional investors will get out and stay out in the future. What is also probable is that cryptocurrencies will now be regulated in most major economies which defeats the object of this whole sector.

PENSION FUNDS BUY CRYPTOS BUT NOT GOLD

My and our company’s position regarding cryptos has always been clear. We don’t consider that cryptos have an intrinsic value.

At a time when most assets are in bubble territory, cryptos do not for us represent real value. They have become yet another bubble asset although the aficionados obviously swear by their virtues.

Still since we see a major risk of the financial and monetary system collapsing, we are totally convinced that wealth preservation is critical.

Cryptos have by many been seen as a wealth preservation asset. We have always seen it as a highly speculative investment. I doubt that after the overnight collapse of a major crypto business, that many investors still see it as wealth protection.

What we have just experienced with FTX confirms that digital entries on a number of computers with no physical asset backing can hardly be considered as genuine protection of assets.

Also, if you lose the key, your cryptos can never be recovered. This has happened to many.

CRYPTOS – JUST ANOTHER POPULAR DELUSION OR LIKE TRADING TURDS LIKE CHARLIE MUNGER SAID

Are we seeing the end of another Tulip Bulb speculative frenzy as described in “Popular delusions and the Madness of Crowds” by Charles Mackay?

The overnight $24 billion collapse of the crypto exchange FTX is in my view just the first domino of a massive series of failures in a financial system built on delusions and madness.

So is the crypto market just the first weak link in a global Ponzi scheme.

Let’s give the final word on cryptos to Warren Buffett and Charlie Munger in the presentation below:

Buffet: Cryptos are nothing of value and will come to a bad end”

Munger: “It is like someone else is trading turds and you think you can’t be left out”!