Someone Needs to Tell Mainstream Media Sources to Calm Down…
Yes, we all get it: the cryptocurrency markets have been slumping recently. There’s no denying that. In fact, if we take a look at Coinbase’s cryptocurrency market index, which functions as (just one) metric for evaluating the state of the cryptocurrency markets by using a weighted selection of some of the largest market cap cryptos, we see that things haven’t been fantastic over the past month as a whole. Granted, the decline looks sharper than one expects looking at pricing from last month because of the short-lived bull run that occured not too long ago. Regardless, the downturn is evident and real.
However, there are a variety of factors that can be attributed to the decline in price. We didn’t necessarily hear bad news with the proposed Bitcoin ETF from the Securities and Exchange Commission (SEC), but we also didn’t get great news either. Unfortunately, we were left in a sort of middle ground of long-term indecision and a regulatory ‘kick the can’ to be dealt with (again) at a later date. For the cryptocurrency world though, no news (or neutral news) can often lead to concern. With a market that was certainly over hyped in 2017, many in the cryptocurrency world are like drug addicts looking for their next high.
In this case, the “high” I’m referring to is “good” news. Now, there isn’t exactly a definitive measure for what constitutes “good” news in the cryptosphere, so that poses a problem. What somebody like myself may consider to be outstanding or optimistic news about the cryptocurrency world others may find troubling or concerning for the future of the still-emerging asset class. Regardless of what we all disagree on when it comes to what’s good for the future of the industry—whether you’re concerned with market performance like me, or someone who truly believes cryptocurrencies will completely replaces fiat currencies across the board in the future—there is one near constant that seems to always make its way into the world of crypto: mainstream media pessimism.
With the cryptocurrency markets underperforming (at least, underperforming what we’d like for them to be), many conventional media outlets are losing their minds and furthering the hysteria of an anticipated market crash. Sure, the major cryptocurrencies aren’t pushing beyond their 2017 highs (high cap crypto assets like BTC, ETH, XRP, etc.), but that was only 2017. If we take a more long-term view of the industry, clearly we’re still doing pretty well compared to years ago.
At the the end of the ‘Roaring Twenties’ and the great stock market crash, did everyone honestly believe that equities trading was “over”? Obviously not. It’s a downturn, there are going to be some losers, and then there are going to be some winners. Get over it.
What a downturn does not mean is that the entire industry is over, all of the investors (both retail and institutional) are SOL, and it’s time to close up shop. And yet, that seems to be the story peddled by some of the more well-known publications out there. In fact, even one of The Independent’s “voices” recently posted a piece not only accepting the oncoming downturn of the crypto markets, but excited about the death of the “crypto bro.”
While there are likely some reasonable points raised by Caitlin Morrison—writer of the piece titled ‘The era of the crypto bro is almost over — and I for one can’t wait’—they’re really only a criticism of cockiness (for lack of a better term). In her piece, Morrison chastises the Winklevoss brothers for (perhaps their more-than-necessary) confidence and criticism of the wise ‘Oracle of Omaha’ and his views on the world of cryptocurrencies. Warren Buffett’s statements about cryptocurrencies do, however, give readers and listeners a chance to see his thought process and identify that, in the most literal way possible (and not intended in a denigrating or insulting way), Buffett clearly does not know what he’s talking about.
Furthermore, Buffett himself has even made sure to inform others that he doesn’t know much about the new technology or asset class. If Buffett had any real conviction about the future of the cryptocurrency markets, he would have (as the Winklevoss brothers charged Microsoft founder Bill Gates) “put his money where his mouth is.” However, when asked about potentially shorting bitcoin (BTC) and getting involved with bitcoin futures contracts, I think we all remember what he had to say as a way of not having to claim mea culpa for not committing anything of worth to his ideological position:
We [Berkshire Hathaway] don’t own any, we’re not short any, we’ll never have a position in them…I get into trouble with things I think I know something about, why in the world should I take a long or short position in something I don’t know anything about?
And yet, we have outlets and commentators referring to the Winklevoss brothers as the “kettle” to the “pot” in regards to their previous statements. I understand the dislike for the over-confidence, and a mentality that is perhaps too “bro-ish,” but that doesn’t detract from the the cryptocurrency movement itself. Of course, there’s nothing wrong with having an issue about the “crypto bro” mentality, I get that, but all we’ve done then in return is create another market filled with hysteria, only it’s going the opposite direction.
Yes, cryptocurrencies go down in value sometimes, but they also go up. It’s easy to be pessimistic (and look wise, snarky, etc.) when things are in decline, but this isn’t the first time the crypto market has been hit, and it certainly won’t be the last. When the markets recover, everyone looks back and thinks about how great of an investing opportunity we were gifted, and yet, when that opportunity is right in front of us, many get scared. Let’s not forget the long term view of the crypto markets.
Anyone else remember the crash of 2013-14 when the charts looked like this?
Here’s how we’re looking in the long term: