The Apology Phase
Financial market cycles have many phases. Hope, euphoria, denial, depression, and a bunch of others in between. Where are we now? The apology phase.
There are two things that I’ve tried to really hammer home since I started writing about financial markets and my general takes on society. The first is I am not a financial advisor. It speaks for itself. I absolutely want to help people learn from my experience but I’m not telling you to do anything. It’s entirely up to you if you want to buy Gold, Silver, Bitcoin, Zcash, or STONKS.
The second point I’ve tried to hammer home for readers is own your platform. Own your platform has evolved a bit but the spirit of the idea is still there. When you own your platform, there’s a good chance your customers pay you directly. When you don’t own your platform, there’s a good chance your customers pay you for your audience.
There’s a subtle difference there and if you didn’t pick up on it I’m talking about the difference between running a subscription service where your audience pays for the product and an ad-based service where your audience is the product. If you’re an investment guru with a daily YouTube video channel, you’re almost certainly going the ad-based route; or possibly some sort of hybrid model where you get a pitiful share of ad-revenue from your streams while also running a Patreon where your most loyal viewers are paying you for special perks.
The problem I’ve always had with the ad-model is that creators can easily go down a path where editorial control over the content can be influenced. Anyone who has been even slightly controversial probably knows what I mean. Peter Schiff occasionally gets hell from his advertisers for his political views. And it isn’t even just limited to content creators. Professional golfers are now losing sponsorships for leaving the PGA tour and instead going to the LIV tour. Reason? LIV is Saudi-backed and we’re all (myself included) incredibly selective about when we care about human rights and when we don’t. Saudi golf = bad. Saudi oil = good. But I digress...
Generally speaking, when you’re only accountable to your audience or your fans for cash flow, some of these other problems aren’t actually problems. While I might not own Substack, I own what Heretic Speculator is and I own my reader list. I’m accountable to you guys. BlockChain Reaction? I’m accountable to my subscribers. Plug alert: you should join by the way! The point is, I like this arrangement. It works for me. Hopefully it works for you too.
Crypto Cannibalization
There are some crypto commentators though who do accept advertising and many of them are now coming under fire for giving a platform to crypto companies that have been blowing up over the last few weeks. BlockFi and Compass Mining are now the two most obvious examples. Strangely, a lot of that fire online seems to be coming from the Bitcoin maximalist crowd; as if Bitcoiners weren’t just telling everyone to buy their messiah token $50,000 ago. Baffling lack of self-awareness, but again… I digress…
Bitcoin, like anything that the human species cares very deeply about, has varying levels of allegiance. There are many who believe Bitcoin is a decentralized digital currency that belongs in a very diversified investment portfolio along with a selection of other blockchain-based projects and assets. You can obviously put me in that camp. There are others though who believe Bitcoin is the only crypto asset that should get any attention and that everything else in crypto is scam or a Ponzi scheme - but Bitcoin isn’t. I’m not making this up. That’s the crowd that has been blasting people like Nic Carter for having the audacity to put venture capital in non-Bitcoin crypto businesses.
Even the Bitcoin-only crowd isn’t safe from cannibalization. I largely associate Preston Pysh with the “only-coiners” and even he’s now getting blasted by his own team.
Burn the witch!
There have been varying individual approaches from those who have been accused of being witches by the orange-coin Puritans. Nic Carter seems to be taking more of a (paraphrasing here) “eff off, I don’t owe you anything” approach. Preston Pysh seems to be taking the (paraphrasing again) “I’m sorry, please forgive me for allowing a commercial from a now struggling company to run in my program” approach. To be clear, I’m not dogging either of these guys. Through all of this, I hope they’re staying true to themselves. If Preston feels he owes an apology and actually wants to give one, fine. If Nic feels he doesn’t, that’s fine too.
At the end of the day, we are all responsible for our own actions. I talked quite a bit about this in The Line Between Sharing and Shilling a month ago. The Puritans are on Carter and Pysh now. But they came for Raoul Pal first. They’re okay with the wildly irresponsible things Michael Saylor says though because Saylor thinks everything in crypto is a security… except for Bitcoin.
In Preston’s situation, he was apparently apologizing more for mischaracterizing the ad presence of BlockFi in his program than apologizing for it’s presence generally speaking. He insinuated BlockFi ads were never in the program when it probably would have been more accurate to say BlockFi was never officially endorsed by the program.
Where are we?
Regardless, crypto podcast hosts are now defending themselves on social media against allegations of shilling bad companies or bad business models. Is that right or wrong? I have some strong thoughts about it but, frankly, who cares? What matters is what it tells you about where we are in this market.
“Apology” isn’t one of the stages of the market cycle. If I had to guess, I’d say it’s maybe the cousin of “panic.” If that’s the case, capitulation is probably somewhat close. Though, it also seems like there is quite a bit of “anger” online and that phase would be after capitulation according to this infographic. We know some miners have been selling their coins to cover operating expenses and to service debt despite their initially planned “Bitcoin on the balance sheet” approach in anticipation of higher prices. Now that those higher prices haven’t come, the coins are getting sold. That’s probably capitulation.
However, I don’t think the bottom is in. I do think we’re entering a consolidation phase that will probably take us through the end of the year before the crypto market finds its footing. Since I personally have a very long term outlook, I’ll continue to dollar cost average into the coins I like. Bitcoin is a decentralized currency with a coded supply cap. There’s a lot to like about it. It’s terrible for privacy though, which is why Zcash is another big one for me. I haven’t wavered on either of these ideas.
Disclosure: I’m not an investment advisor. I merely share what I do and why I do it. You shouldn’t take anything I say as investment advice and always do your own research when making investment decisions. Cryptocurrencies, tokens, STONKs, and digital trinkets could all go to zero. I’m personally long BTC and ZEC among various other “shitcoins.” I have no plans to be burned in any witch trials. And I am very much in support of Nic Carter’s double birds to the haters.
