Investing in a Crypto Winter

Investing in a Crypto Winter

It’s lights out for the kids and the very young at heart (because you must have a good healthy heart that can take a beating in stress) that gambled on cryptos, NFTs, Bored Ape this and that, the doggie coin and all of their other make-believe assets. Bitcoin is down nearly 58% this year and almost 70% from its peak, as I opine here in this piece.

Coinbase announced it’s laying off 1,100 employees, or 18% of its workforce. Yes, it appears that the “crypto winter” is in full effect, with the market for digital currencies deteriorating over the past month and exchange platforms that facilitate transactions on the blockchain facing the brunt of the damage. Ed Pennock, Managing Director, Equity Capital Markets at NCP Northland Capital Partners, put it this way just a couple of weeks ago:

“Bitcoin got smoked. It is down to ~$22K USD (down to $20K now). It’s going to have ripple effects. El Salvador had switched to Bitcoin. You can bet the Russian Oligarchs (AKA Friends of Putin) had shovelled loads into crypto. Celsius Froze accounts. Withdrawals and intra-account transfers were halted. That means that even if you had collateral in another account, you couldn’t access it for margin purposes. This has always been our concern. Crypto lives outside the established norms. You don’t know what will happen. Is this the beginning of the Crypto Winter? Maybe the Crypto Climate Change?”

Incidentally, speaking of Russia, it may win the war in Ukraine. Still, it will probably default on its bonds and enter a long and bleak recession, tottered by sanctions and the cost of a conflict which rendered it a global outsider. A dibrach conquest, to be sure.

Well, things are uncertain. In a nutshell, they suck. Enough said. People who went with real estate were last in and now are in a world of hurt, or they tickled the ole investment urge with juicy cryptos and thought that Bitcoin would be the next gold.

If you remain seated on the turbulent airplane with a balanced and diversified wealth strategy that includes gold and silver, then history proves that you will come out of this superbly. Families with mortgages to arrange or refinance with the bulk of their net worth in leveraged real estate may have more cause for concern.

I love gold and silver right now. I believe in them. I talk about them, and I own them. I see similarities to the 1970s but in a supersized format where the inflation erection we are experiencing is and remains of little match for the proper type of wealth strategy. Do not be fooled into real estate or cryptos right now. Although they are perhaps role players on your all-star squad, your wealth strategy is acceptable without them unless you have 50% or greater to put down on your real estate or a big deep pocket of cash you can spare to part with at no consequence to you or your family.

As for staying balanced and on top of your wealth strategy, you won’t be hurt by reading a little here and there. You can’t be hurt if you invest a bit of time in understanding what gold and silver have historically done to balance and diversify wealth for individuals, families, companies, and entire countries. Start here and give it some thought.

Finally, for cackles, l will leave you with this chart of the last real estate correction in the country’s largest market. This pattern was also repeated in the US – when 2005 house prices were not regained until over a decade later. We have only begun this trip. It is not a great time to start your real estate journey. There are other options available to you.

Yours to the penny,

Darren V. Long