Dacxi Crypto Wealth | Here Comes the Volatility



Apr 14, 2022


Weekly Market Overview

Last week we said that there was volatility coming to the market. What we were not so sure about was whether there'd be some volatility to the upside, perhaps due to some good news coming out of the Bitcoin Conference. Well we did get volatility, but it’s down. Bitcoin is trading at $39,745 and its good friend Ethereum is $3000. That’s -13% for Bitcoin and -12%. for Ethereum. But this dip isn’t unique to crypto, it is just a volatile time for the whole world, however you care to look at it.

The Crypto Fear and Greed Index, which was neutral last week after being mildly positive is back to extreme fear. We were looking good for a while, but taking a long-term view you could say we’ve been in a corrective market since April last year. The question is are we headed back for a visit to the buy zone? So while you know that will be if we do get back there, it'll be doom and gloom in the media. People will be scared and there'll be blood on the streets. Once again people will talk about the death of Bitcoin, and you won't feel like buying any. But that is of course the time that you should buy some. 

Have your long term wealth builder mindset happily in place, then plan ahead. You know right now is going to seem like excellent buying when you look back in 10 years time. It's good to be prepared because it can be harder to make insightful decisions in the heat of the moment. That’s just something to keep in mind as we go forward. In fact, looking ahead we're probably going to get fewer and fear good buying opportunities over time as the market matures. We won't get sudden crashes and it'll be increasingly liquid. So take advantage of those buying opportunities when they present themselves, or just buy a little bit every week, or every month. 


Inflation and Covid in charge.

So as I mentioned at the beginning, the world is a volatile place at the moment, which is not helping any of the financial markets. The CPI numbers (consumer price index) in the US came in today showing an 8.5% increase, year on year, which is the highest for decades. 

Ukraine and COVID are both contributing to global volatility and in all sorts of ways. 

COVID just drags on. Most of the world is kind of trying to live with COVID as best they can now apart from in China. Shanghai is pretty much completely locked down and other parts of China as well. This has incredible knock on effects for the global economy as well, in terms of disruption to the supply chain. Ships at Shanghai can’t load or unload. Shanghai also has drones that roam around telling them to comply with COVID restrictions - ‘control your soul's desire for freedom, do not open the window or sing.’ It’s really quite dystopian. 


Bitcoin fans are psychos. Lol.

Well according to a clickbait article in the New York Post we are. Evidently Bitcoin fans are calculating psychopaths with inflated egos. A team of ‘experts’ surveyed more than 500 people to uncover the personality traits most common among ‘crypto nuts’ and came up with that insight. I guess the use of that term alone gives you an idea of their credibility. I expected better of the New York Post.


Bitcoin 2022

This was a massive conference. One attendee who we know said it was the ‘hands down the best business event of any sort I’ve ever been to!’  There were some great announcements, and lots of interesting tidbits that came out of it. But nothing game changing or revolutionary. And certainly nothing to move the market at all. 

President McCauley of El Salvador, had hoped he was going to be one of the keynote speakers at the conference. But unfortunately, he could make it. But Samson Mao, who is leader of the team helping El Salvador to transition to becoming a Bitcoin Economy, was able to make it. He spoke of three jurisdictions that are at different stages on along their journey to adopting Bitcoin as legal tender. Kibera, which is part of Honduras. Madeira, an autonomous region of Portugal. And more surprising Mexico, which is an enormous and rapidly developing economy.


Grandpas don’t like Bitcoin.

Meanwhile back at the Bitcoin Conference venture capitalist Peter Thiel referred to Warren Buffett as a ‘sociopathic grandpa from Omaha.’ What Peter was talking about are the big guys in finance and the heads of the big banks, who are older people like Jamie Dimon and Warren Buffett. He claims they are purposefully trying to slow Bitcoin’s adoption. He compared them to a gerontocracy. A gerontocracy is an organization ruled by leaders who are significantly older than most of the adult population, and power and wealth accumulate with age, making the oldest the holders of the most wealth and power. Peter’s point is that Bitcoin is a young revolution - everyday $10.4 billion is passed from older Americans to their children. Some of that wealth will make its way into the crypto markets. 

Generation X, millennials and Gen Y, are statistically much more inclined to score some of their money in crypto. And why? Because of inflation. There's no point in just sticking your money in the bank with inflation at 8%. 

I mentioned last week a standout speaker of Bitcoin 2022. Jordan Peterson is a public intellectual and contrarian and he cautioned against unbridled enthusiasm for Bitcoin. He said he was very interested in the idea of a decentralized monetary system, but warned against unexpected effects of that system. 

Another data point that came out of the conference was from Robinhood, the Finance app. They said that Bitcoin is now their number one recurring buy, on dollar cost averaging, even ahead of Tesla and Apple. And I thought that's quite a significant milestone. It's probably Gen X, millennials, and Gen Y, who are buying a bit of Bitcoin every week. 


Bring on the Bitcoin spot EFT 

I think that is very clear by now. A new survey of financial advisors who control around $26 trillion in assets delivered some very interesting results. 72% of them would be more likely to invest in crypto if a spot ETF were available. 86% of them plan to increase their investments in crypto. Currently their ideal allocation is around 6% of the investable portfolio. 

Gary Gensler, head of the SEC, has for various reasons, always denied every Bitcoin spot EFT application, but there's immense pressure on him to approve one and I think it's probably going to be next year. That will open the floodgates to a massive new round of investable liquidity in Bitcoin and crypto. 

If you want to dig into everything that was said at the Bitcoin Conference, just go to Bitcoin magazine on YouTube. It’ll take you a couple of months to watch it all. 


Tesla solar powered Bitcoin mining.

Tesla Block and Block Stream are teaming up to build a Bitcoin mining facility in sunny Texas that will use solar and battery power. Obviously, Elon Musk is kind of supportive of Bitcoin, but wants Bitcoin mining to run on renewable energy sources. So it’s good to see him put some Tesla resources towards this. And interestingly, they're going to make the dashboards public, so you'll be able to see how much Bitcoin they're actually mining, whether they can make a profit, and how much energy they're using. 


Thank you very much for reading and or watching the Dacxi Crypto Wealth Cafe, and we'll see you again next week.