Crypto Humiliation

1Reports of Crypto’s Death Were Greatly Exaggerated

You might’ve noticed (or maybe you didn’t) that we had nothing to say last week about FTX fraudster Sam Bankman-Fried getting sentenced to 25 years at Club Fed.

The reason is simple: We had nothing interesting or different or unique to say.

Under those circumstances, we prefer to hold our fire — to conserve our Bullets, as it were. After all, our mission is to seek out “the story no one else is telling.” We pursue what the mainstream can’t — or won’t.

In retrospect, however, it’s worth recalling all the obituaries the mainstream wrote for crypto at the time of FTX’s collapse in November 2022.

As we check our screens this morning, Bitcoin is five bucks below the $70,000 level. Last month, the flagship crypto surpassed its November 2021 peak — something the mainstream thought would never happen because of the pall that FTX cast on the sector.

For instance, there was The Economist — which adorned its crypto coverage with imagery of a giant meteor…

the economist

Of course, there was also The New York Times’ resident Nobel Prize-winning economist — aka the guy who said in 1998 that the internet would have no more economic impact than the fax machine…

the new york times

[Which brings to mind “Betteridge’s law of headlines,” popularized in 2009 by the British technology journalist Ian Betteridge. As summed up by Wikipedia: “Any headline that ends in a question mark can be answered by the word no.”]

A few weeks later at year-end 2022, the NPR tote-bag crowd reveled in the comeuppance of the crypto bros…

NPR

Never mind that at year-end 2022, stocks had put in their worst annual performance since the 2008 financial crisis — and it was a legendarily awful year for bonds.

But the mainstream beclowned itself even more than those headlines suggest. As it turns out, FTX’s collapse marked the bottom for crypto — almost to the day.

It was a true “darkest before the dawn” moment — as if flushing FTX and SBF out of the system was a cleansing moment for all of crypto.

crypto's death

Paradigm’s resident crypto evangelist James Altucher figured as much. On Nov. 14, 2022 — three days after FTX filed for bankruptcy — James made two recommendations for the bold-minded in our predecessor e-letter. Both were easily accessible to anyone with a brokerage account.

He recommended Coinbase Global Inc. (COIN) — trading at the time at $45.26. Checking our screens this morning it’s $267.73 — a 492% gain in less than a year and a half.

He also recommended the Grayscale Bitcoin Trust (GBTC) — a closed-end fund that owned Bitcoin. At $8.35 a share, it traded at a staggering 40% discount to the amount of Bitcoin it held. GBTC was able to close that gap as it won federal approval to convert to an ETF. This morning it trades at $62.22 — a gain of 645%, outpacing the gains in Bitcoin itself.

Not bad for something we publish as a freebie on top of your paid subscription, huh?

But please don’t get the wrong idea: Even with Bitcoin trading near all-time highs, there’s still ample opportunity in the crypto space. In fact, James has $100,000 of his personal wealth invested in a single trade idea.

“I have rarely put this much money into a single name,” he says. “But I can also say with confidence that I have never seen this much profit potential.

“If my prediction is correct, I will walk away with a $10 million fortune in 2030.”

This, too, is information we furnish for free: Just follow this link.

2Delayed Reaction

With the markets closed for Good Friday, today is the first day that most markets — aside from crypto — can react to Friday’s news.

Begin with the release of the Federal Reserve’s preferred measure of inflation, called “core PCE.” When Fed officials refer to their 2% inflation target, this is the figure they have in mind.

The good news is that core PCE is the lowest in nearly three years. The bad news is that it’s still 2.8% — nowhere near 2%.

Thus, a few hours later, Fed chair Jerome Powell spoke during a panel discussion in San Francisco — saying the Fed could easily hold short-term interest rates steady if inflation persists. He went on to say he doesn’t see the economy suffering with rates at their current levels.

With that, the major U.S. stock indexes are opening a new quarter in the red — but not by much.

As we write, the Nasdaq’s loss on the day is microscopic. The Dow is down a little over half a percent. The S&P 500 splits the difference — down a quarter-percent from Thursday’s record close at 5,254.

In his monthly roundup of nearly every asset class under the sun, Rude Awakening editor Sean Ring says there’s nothing stopping the S&P reaching toward 6,000. Forget Powell’s tough talk, Sean says: “To support Biden’s utterly failing campaign or Treasury Secretary Yellen’s incredible spending, Powell will cut rates in either June or July.

“Once that happens, we’ll have the final goosing of the market for this cycle. Then, my bullish attitude will almost certainly change.”

In the commodity complex, the headliner is crude — up nearly a buck to $84.16, the highest since late October.

➢ One economic number of note: The ISM Manufacturing Index delivered its first positive reading in 17 months. At 50.3, the number is barely above the dividing line between a growing factory sector and a shrinking one… but over-50 is over-50. "Demand remains at the early stages of recovery,” says Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee — “with clear signs of improving conditions."

3Stealing Loaded 18-Wheelers for Fun and Profit

As if the closing of the Port of Baltimore isn’t doing enough to ball up supply chains, there’s this…

eric tweet

“The trends tell us that cargo theft is currently at a 10-year high,” says Scott Cornell — who specializes in this sort of thing for the Travelers insurance company. “So far,” he tells the FreightWaves site, “the numbers for the beginning of 2024 are projecting that 2024 will have higher theft numbers than 2023, which had higher numbers than 2022.”

Theft in the fourth quarter of 2023 leaped 68% year-over-year, according to CargoNet.

That includes instances of what’s called strategic cargo theft — in which entire 18-wheelers of cargo just vanish after warehouse pickups.

“Strategic theft,” says Cornell, “is when they use various means to trick you into giving them the freight and that’s through methods like identity theft, fictitious pickups, double brokering scams. Those methods are where we’re seeing the biggest increase in cargo thefts over the last 18 months.”

The most sought-after goods — food and beverages, electronics and household items. The states that are most targeted — California, Texas, Florida, Georgia and Kentucky.

The theft rings are well-organized and frequently stay a step ahead of law enforcement. So it’s up for trade operators to look out for themselves: “Red flags may include recent changes to a motor carrier’s information listings,” says FreightWaves, “or whether the carrier’s operating authority was dormant for a long period of time.”

4Billionaires Hold Taxpayers Hostage

Jackson County, Missouri, voters go to the polls tomorrow to decide… whether the Super Bowl champion Kansas City Chiefs will stay in Kansas City?!

The following is one of our periodic rants against taxpayer subsidies for stadiums that house professional sports teams owned by wealthy individuals.

The Chiefs are owned by the Hunt family, heirs to the fortune of oil tycoon H.L. Hunt — estimated net worth $25 billion. But the Hunts are willing to pony up only $300 million in renovations to Arrowhead Stadium out of a total $800 million cost.

If the referendum is rejected, “We’d have to look at all our options,” says Chiefs president Mark Donovan. “I think they’d have to include leaving Kansas City.”

Also on the ballot is an all-new stadium for baseball’s Kansas City Royals — a $2 billion project of which private funds will likely cover only half.

But the costs could be much higher than advertised: Documents leaked to Kansas City’s public radio station suggest taxpayers could be out $5.1 billion over four decades. (Here we have to once again remind you that the bonds on the Kingdome in Seattle, demolished in 2000, weren’t paid off until 2015!)

And the team owners aren’t even willing to stump up the cost of holding the election: Jackson County Executive Frank White Jr. is asking them, pretty please, for $1 million, lest county government have to dip into its emergency reserve.

5Mailbag: Politics… and Securing Your Crypto

“Ditto to the comment on how it is OK to infuse political musings into your analyses,” begins today’s mailbag. [As a reminder, this kerfuffle began when a reader jumped down my throat in response to last Tuesday’s edition.]

“I look at it as just another viewpoint to consider in making my decisions. You know you must be getting close to the truth when you ruffle feathers. Keep up the good work!”

Adds one of our longtimers: “So Dave took heat from some windbag over what she construed to be pro-MAGA comments. Lots of cussing and name calling and threats to cancel subscriptions and for Dave to keep his opinion to himself and many exclamation marks to make histrionic pearl-clutching threats.

“My observation is that these tactics are almost always used by the ‘Gestapo of Truth’ gang who use these same tactics to silence dissent from their self-appointed role as monitors of speech - ‘We’ll only allow it if it agrees with our views!!!!!!!!!!!!!!!!’

“And that Gestapo of Truth gang is almost always from the Democratic, progressive, woke left.

“I’m sick of the attacks on what is left of free speech when they find it offensive. That’s the only time free speech has any value.

“Love the 5!!!!!!! Keep speaking the inconvenient truth!”

One more: “Dave, thanks for presenting facts about issues that face our nation (questionable reporting re: Jan. 6.).

“Also, there is a whole lot of 'cradling' people about the state of our nation in the news. I do not need cradling. To the degree I can watch news, I understand these are very difficult times and we will continue to see crises for people who are not informed or prepared. My question is: Are digital assets going to survive wars, EMPs and rolling blackouts? What do you advise for securing electronic assets?”

Dave adds: The thing is I wasn’t trying to be provocative or political. I was just illustrating how one shouldn’t jump to conclusions in the first 24–48 hours of a major breaking story, economic or otherwise.

But clearly one of the examples I drew on was “triggering” for our doctor reader — and she wasn’t the only one.

➢ One final thought: If this were really a “MAGA megaphone,” wouldn’t we have been talking up the IPO of Trump’s social-media company last week? Instead, we had nothing to say about it for the same reasons we had nothing to say about SBF’s sentencing. (See above.)

As for the safety of digital assets amid societal turmoil… you might want to consider a cold-storage wallet.

If, God forbid, the power grid goes down for an extended period, you can conceivably transact with others using crypto as long as you and those others have laptops or other devices (with sufficient battery backup, of course).

And if you store the wallet in a home safe or something else that works as a Faraday cage, you’re covered in case of an EMP — although personally, I’d be much more concerned about a bad solar flare.

A cold-storage wallet isn’t as difficult as you might think. Even I managed to figure it out with the help of a special report that goes out free to every new subscriber of Altucher’s Early-Stage Crypto Investor. (And — shameless plug — there’s no better time to join up than now, for reasons James explains here.)

Best regards,

Dave Gonigam

 

 

 

 

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets

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