Juneteenth, Father's Day and Graduations coincide and remind us to think about the essentials: our roots, why we are doing what we're doing, how we help each other prepare for what's next, while savoring and making the most of each day.
Happy Juneteenth and Father's Day!
Origin and significance of Juneteenth
I don't think enough people know enough about the significance of this historic remembrance so wanted to share a couple of resources:
- The National Constitution Center offers this post explaining the origins of Juneteenth.
- Congressional Research Service has compiled this very helpful guide (Updated June 14, 2022) which references key legislation and speeches related to Juneteenth since its origin.
A Father's Day Note
It took me far too long to realize that I meant the world to my father. Maybe its just something that is hard to comprehend until you're older. I want my kids to know that they mean the world to me. This Bitcoin Dad wrote a clever post about proof of work fathering. I got a kick out of it :). So Happy Father's Day whether you are a father, or perhaps you provide a father figure kind of role for someone who relies on you to help them prepare for and navigate the future. However you see it, however you do it, thank you for what you are doing.
State of Crypto
Overhyped expectations and crash landings
Bitcoin fell below 20K early this week for the first time since 2020. Prices recovered slightly Wednesday afternoon after FOMC announced its highly anticipated interest rate hikes, but since has fallen into the 17K range.
Where to from here?
- Bears: Some are predicting 10-14K price ranges or lower (here and here).
- Bulls: A PWC survey of 77 fund managers found that many fund managers expect BTC to hit 75-100k by end of 2022, which suggests to me that fund managers may feel like they are starting to understand the volatile rhythms of the crypto market.
Navigating through the noise
We are in a fascinating phase where the interaction between thoughts and money is particularly noisy with a lot of confusing messages. I can't help but suspect that many of the bearish voices - the ones projecting BTC to crash to lower and lower prices - are projecting where they wish they’d bought Bitcoin or where they'd like to buy it now. Understandable I guess.
These times bring to mind something a seasoned investor told me during a tough time - with a shrug and a laugh - in my younger years: "Its just money!"
That said, it is so important to work with a financial advisor (which I am not) who can give you objective advice. Its not so much that they'll tell you some magic secret or lead you to the perfect investment, but they can help you assess your specific situation, needs, your goals, your risk tolerance and work with you to find the investment approach that is the best fit for you. What is fine for goals and needs of one person might be disastrous for another. And what makes the difference might not be obvious at first. Its really good to have another set of experienced eyes helping you plan your journey.
Do high-risk high-volatility investments make sense?
Life is full of risks - and decisions about which risks are worth taking.
High risk assets will be volatile and at times experience extreme losses or gains, so the crucial questions for an individual and their trusted advisor are always:
- Does it make sense to have an allocation to those kinds of assets?
- If so, how much and what are some sensible ground rules for managing and containing the risks being taken?
I've approached high risk investing as a (frequently humbling) learning experience, and am learning that the exciting gains in "up years" usually come from steady investments made during the very non-exciting down years. Volatile assets seem to deliver best returns with patient investing and capital preservation when the market is down, and objective decisions when the market is up.
Maybe a little too Wild West?
I can't help but wonder if the back to back failures, crashes and rising tide of litigation has spooked some individual and institutional investors who would otherwise be more opportunistic.
Investors like to talk about keeping “dry powder": cash on hand or stable assets that can be converted into bitcoin or crypto at historically low prices, just as everyone else is running for the exits. So why aren't more investors piling in on the low low prices right now?
Guessing here that there are 3 reasons:
- Liquidations - either forced or by choice in order to preserve capital. Depending on BTC price when some loans were made I wonder if some are deliberately deciding to allow loans to be liquidated because it makes more sense to use cash in hand to buy BTC at these low prices (vs paying down the loan or buying/adding collateral). Haven't done the math on this but seems plausible.
- Capitulations: Investors decided to abandon their investments because they need the funds for something else. Terrible time to sell - especially for anyone who bought in the past year - but may be necessary for some - and possibly advantageous from tax loss harvesting angle.
- Institutional politics: Fund managers who prodded their teams to make investments in crypto are no doubt dealing with "I told you so" from the in house skeptics. Which could make it a really hard sell to say, "Hey this is a time to double down and buy more!"
Behind reasons like these, I think there is a growing recognition that this is a very immature, risky space with entire categories of limited understanding in play.
Like Limited Understanding of:
- how laws and regulations will ultimately apply and arbitrate the large field of potential conflicts of interests between different players, DAO participants vs investors for example.
- how rapidly evolving blockchain ecosystems handle trading operations under load especially with exotic or experimental financial instruments like Terra, 3AC etc.
- how different kinds of financial instruments interact to aggregate or multiply risks when allowed to be implemented and integrated so freely, for example this dubious lending and staking scheme.
Perhaps its time for the industry to take a deep breath and regroup. To that end: If you have time for nothing else this week spend some time in the Crypto Canon - a recommended reading list for reminding yourself of the essentials during a bear market - great collection of the formative papers and thinking that underpins a financial evolution (perhaps revolution) that is necessary.
As noted here before, it's easy to let the misfires and mistakes of innovation make us forget about the perennial dysfunction, waste and suffering caused by the status quo. So its important to keep reminding ourselves that its precisely the problems within the status quo that compel us to innovate. When bad actors and poor judgement get tangled up in the legitimate trial and error of the innovation process, we have to right the wrongs, learn our lessons and get back on track. But we must keep working and building toward better health and wealth for all.
Recap of Consensus in Austin TX
Indicators of Adoption
Takes from Consensus Conference in Austin TX this past week were varied- some felt it was a lot of "breathing our own exhaust" but others say there were newcomers from other industries there to learn.
Coindesk has compiled a list of the Consensus key topics and materials from the conference sessions. Block's Web5 announcement got a lot of attention as noted below.
Web Five ???
Just as we were starting to figure out what Web3 means, Block (the company formerly known as Square) announced its Web5 initiative at the conference. Web5 is focused on ensuring a truly decentralized approach to privacy and ownership, acting on concerns that Web3 may be too heavily dominated by venture capital groups who do not value the ideals of decentralization.
I reviewed the docs at their TBD Web5 portal and noted a focus on identity solutions, which I agree is a fundamental building block that so far has been addressed in a way that supports the rights of corporations / platforms over the rights of individuals. I'm hopeful that this project will help steer us toward the kind of decentralized capabilities that enable better health and wealth for all individuals.
Identity is one of Dragonfly Capital Haseeb Qureshi's five unsolved problems of crypto that he believes entrepreneurs could make a fortune by solving.
Each edition of S3T devotes space to notes, photos and resources to increase our knowledge of and appreciation for the services and wonders provided by Nature.
I had the chance to see Limpkins, one of my favorite birds on a recent trip to Florida. Limpkins feed on Apple Snails and are unique because they are the sole member of their biological family Aramidae within the bird kingdom.
The Cornell link below will help familiarize with the identification and life habits of this bird. For a deeper dive, Ted Allen's Myology of Limpkins is a 345 page dissertation describing the musculature of this species.
I'm blessed to be part of a family that knows their way around the kitchen and has the good sense to be always ready to celebrate life. So I'm introducing this feature to experiment and learn how to share the "sensible ideas" (wink, wink) about good food and good times!
Peanut butter on toasted Chocolate Bobka Bread
Cut a slice, pop it in the toaster. Spread peanut butter on thick while the toast is still hot. Pour yourself a cold glass of milk. Bobka Bread made from scratch at the ever excellent Ninth Street Bakery in downtown Durham NC. If your town is blessed with a similar bakery, visit them early and often.
If you haven't already, take a moment to subscribe and get S3T delivered free to your inbox each Sunday morning. For me Sunday mornings are a time for reading and reflection, preferably with coffee and a chocolate croissant.
Opinions mine. Not financial advice. I may hold assets discussed.