Doc's Daily Commentary

Mind Of Mav

Why Everything Is Red Today

 

If looked at your crypto today, you see all red across the board. If you are unsure why this is happening, this is the place to be. I’ll explain why the crypto markets have seen a 9% drop and shed some light as to why. This newsletter isn’t meant to spread FUD (fear, uncertainty, doubt). I hope to point out a handful of things that are creating FUD and what I’m doing to combat the FUD.  

It is never fun to open your accounts and see all red on a Monday morning, and it is never a fun way to start the week. FUD is running rampant in the crypto community, with the SEC tightening down on crypto exchanges as well. We seem to have a perfect storm brewing for us to buy in low, right?

Let’s dig into each:

Regulatory Crypto FUD

To top it off, we have congress back from recess; welcome back to work! I think there is going to be some more regulatory FUD coming from that direction as well. Likely, it will be due to them threatening stable coin regulations.

We already saw Celcius get in more hot water with various state regulators. I’m kind of getting a feeling of a bad sentiment with regulators against cryptocurrency. This is why I think we are seeing crypto markets in red right now. All these things combined are making FUD run rampant this week in the crypto markets.

Last week heard the news from the SEC regarding Coinbase saying that their stable coin is a security. In response, Coinbase has just pulled their Lend product from the market, but the damage has been done. The real question is whether or not stablecoins are a security, or if security regulations need updated to better match the nature of digital assets. 

Stable Coin Regulation

I would highly prefer to get a larger chunk of interest from them holding on to my currency. The bank doesn’t seem to like the fact they can pay us .01% in our saving accounts, and we can get 5-8% back using stable coins. I’m sure there is enormous pressure from the banks to drop the hammer on stable coins.

With Congress coming back from recess, I fear cryptocurrency will be a big topic they will tackle. Change is always hard to see, especially when we have a good thing going for us. The good news from this is that stable coins will have a few effects on the banking system.

My prediction is that we will likely see an increase of interest paid by the banks in our savings. In exchange, we will also likely see lower returns from our stable coins. These changes will probably be years out, but it is something I can see happening. It’s no secret that banks take the money we leave with them, and they invest with it. I think that a little healthy competition between stable coins and banks’ interest rates will be good for us in the end somehow.

Until then, we will go through some growing pains. Uncle Sam needs to dip his fingers into the crypto coffers and get his cut. Let’s hope that in the end, we all end up in a better place than we were before.

If you’re feeling stressed right now, strap in and read until the end, as I have some excellent crypto news as well. I’m not particularly eager to present a problem we all have without also offering a solution.

As always, this is not financial advice, and I’m not a licensed advisor.

Evergrande News

Evergrande. Wow, where to start? Evergrande is the largest developer in China. They are have over-leveraged their position in the housing market. It isn’t uncommon for developers or real estate investors to leverage their positions, but Evergrande took it to the next level. They took on higher levels of debts to build out their developments;  our current economic situation led to them defaulting on their debt payments. Some are comparing this to when Lehman Brothers went under signaling the 2008 crash. I would argue that, while similar, it is a different circumstance altogether. 

A company that large defaulting on payments will have a ripple effect across crypto and the stock market in general. One thing to note is that cryptocurrency sees a more dramatic impact from situations like this as they aren’t backed by a business like a stock of a company.

What does that mean, Bitcoin isn’t backed by a company? Let’s take a look at the company Apple. They have sales, they have real estate, inventory and other physical assets that back the price of their stock. Bitcoin’s nature is to be a store of wealth. I’m not bashing on crypto right now; I’m just explaining the nature of Bitcoin.

Because cryptocurrency, in general, isn’t backed by a company the same way a stock is, you’ll see more volatility when bad economic news comes out. File that away in your brain so you can reference it as part of the reason cryptocurrency sees wild up and downs.

Solution for crypto FUD

If you understand better how an investment works, you will always make better decisions with your investments. Knowledge is a fundamental necessity to investing and will allow you to take out the emotion of your actions surrounding your assets. Emotional trading will put you in poor situations that will likely lead to you making mistakes.

Many crypto holders are feeling pretty upset with the news about Evergrande as they seem to spread more FUD than we all want. It’s like a never-ending flow of that stuff when it comes to cryptocurrency. I have held through all the FUD over the last few years with my cryptocurrency, which has massively paid off.

A widespread sentiment among crypto holders is that we wish we never sold when we did. I learned my lesson early with that back in 2017. I was trading my positions regularly, and it didn’t pay off as often as I would have liked. I made a decision that I’d become a long-term holder, and I’d buy the dips.

The good crypto news

We are currently seeing very low liquidity. If you aren’t sure what liquidity is:

Liquidity: The ease that an investment can be bought or sold. If there were 1,000,000 trades a day, it’s easier to trade than if there were 500,000 trades a day.

Low liquidity can have many implications, the main one being that the price is more easily influenced to go up or down with smaller amounts of money.

The good, institutional money is not going to listen to this FUD right now. Neither should you! Keep your eyes set on the moon and buy the dip as in 5 years; this will be a blip on the radar.

We need to apply that same thinking to what is going on today. Strap in expect the market to keep dipping and look at it as a discount as you buy in and go long with your investments.

This state of investing state of mind needs to be strong, especially for younger investors. If you have 30 years before retirement, you have a long way to go, and you likely won’t even remember this 10% dip that we are currently seeing.

To wrap it all up there is a lot of FUD going on in the cryptocurrency news. We will go through some growing pains and will have to adjust our expectations with stable coins. Regulators are targeting De-Fi and stable coins right now. Evergrande is going to have a ripple effect on our investments both in crypto and stocks.

Keep your chin up and take the emotion out of the dip, and you can profit from it as you buy into the dip. I wish you all the greatest of luck and hope you take my words and learn something that you didn’t know so that you can take your personal investments to the stars.

 

 
 
 

The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)

 

Add your vote to the V3 Portfolio (Phase 3) by clicking here.

View V3 Portfolio (Phase 2) by clicking here.

View V3 Portfolio (Phase 1) by clicking here.

Read the V3 Portfolio guide by clicking here.

What is the goal of this portfolio?

The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
Pillars of ReadySetCrypto. We aim to Capitalise on the collective knowledge and experience of the RSC
community & build model portfolios containing the premier companies and projects
in the industry and manage risk allocation suitable for as many people as
possible.

The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

Our Current Allocation As Of Phase Three:

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The ReadySetCrypto "Top Ten Crypto" Community Portfolio (V4)

 

Add your vote to the V4 Portfolio by clicking here.

Read about building Crypto Portfolio Diversity by clicking here.

What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
 
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
 
To give an update on the position, each one listed in low to high relative risk:
 
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
 
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:

 

 

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