February was a month to take profits and prepare for a major shake down across all markets. As of this writing U.S. equity markets closed down today over 7% with major averages down 19% from recent all-time highs, Treasury yields are the lowest in recorded history and oil crashed the most since the onset of the 1991 Gulf War. The specter of total systemic collapse and currency reset is firmly in view.
Bitcoin was born for this.
Notwithstanding, it remains to be seen how bitcoin and cryptocurrencies will perform during the immediate short-term deflationary events, credit freeze, global supply chain halt, margin calls, liquidity shock and all the knock-on events, including perceptions around government and fiscal responses to the economic impact of containing and treating the coronavirus pandemic.
I am a fan of converting a healthy portion of liquid crypto asset trading portfolios to a decentralized stablecoin to lock in profits while avoiding exposure to the U.S. Dollar and centralized counterparty risk. Eyes on Multi-collateral Dai “DAI,” an ERC-20 token operating on the Ethereum blockchain, which generally maintains a value near $1.00 and is generated by the decentralized organization MakerDAO. Dai eliminates volatility through an autonomous system of smart contracts, designed to respond to market dynamics. Launched in 2017, Dai has successfully maintained a soft peg to the U.S. Dollar. The MakerDAO and Dai ecosystem are at the center of the growing decentralized finance movement, which is using crypto asset technologies to power new peer-to-peer capital market structures.
We are about to see something in the world that exceeds every expectation. All assumptions must be reset and refreshed as events unfold over the next few months. I am waiting until after the network supply of new bitcoin issued daily gets reduced by HALF in April or May before I look to call a bottom and recommend new long exposure to bitcoin and other alts.
The macro problems facing the world are likely to remake the landscape of large players in bitcoin mining and crypto venture capital world-wide – a brutal shake out is to be expected that could put pressure on prices unless demand for cryptocurrencies as a safe haven is recognized sooner rather than later.
When/if we get there, the crypto asset price capitulation is to be bought with every US Dollar that can be found hand over fist. Paper assets, including all fiat currencies, will not come back from what’s ahead. All the wealth of the world will flow into silver/gold, land/water and decentralized cryptocurrencies. Governments and Central Banks will introduce their own centrally controlled digital currencies in the process of re-booting the global financial system, but I expect confidence in such institutions to be obliterated in the aftermath providing a huge advantage to the open blockchain world of money and digital scarcity that operates in a new paradigm of accountability and transparency.
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