11/22 ANDY HOFFMAN (CryptoGoldCentral.com): My Updated View of Bitcoin and Cryptocurrency, In the Context of a Long Financial Markets Career
In 17 years of being a public figure in the blogosphere – via GATA, Torrey Hills Capital’s Bull Tweets, the Miles Franklin blog, and CryptoGoldCentral.com – I have been as transparent about my holdings as anyone in the financial community; at times, to a fault, given the response I open myself up to, from clients, friends, and trolls.
In 2019, it will be 30 years since my financial market career started – at Paine Webber in Albany, NY, selling Certificates of Deposit yielding 8% (thanks Federal Reserve, for since destroying the ability to save). During that time, I have witnessed incredible changes in the markets as we have known them; i.e., the ways people transact; new, transcendent market sectors - from the internet to cryptocurrency; epic bubbles and horrific crashes; and of course, unfathomably destructive manipulation – as in Precious Metals, I learned too well.
Those following me at Miles Franklin know I held one Bitcoin at Mt Gox...when I didn’t yet believe in its future, but was intrigued by its uniqueness, and spellbound by the parabolic 2013 rise. Also, that I was agnostic about Bitcoin until January 2016 – when I first wrote of how I started acquiring it, given my view the post Mt Gox bear market was ending, and its potential limitless.
Additionally, I made it very clear that I sold my silver in July and August of 2017 for Bitcoin – in a process that started when it became apparent the UASF would win the scaling debate, and ended as I left Miles Franklin…just as SegWit was activated. Vile trolls attempted to lie about my actions, or spin them in an unflattering manner – but the fact is, I was as transparent as I could have possibly been…which is why I was mercifully fired from Miles Franklin.
This is not the first time this has happened to me, by the way – as in my previous career in mining stock investor relations, I lost faith in the sector while still in the business of promoting it…which I made crystal clear in my blog postings, to the chagrin of my then employers.
Then came cryptocurrency – in which, like mining stocks and bullion before it, I generated extraordinary windfall profits early on, only to see them erode away. My levels of conviction in all three were strong – but I’m now 48 years old, with far more risk aversion, given my dwindling career opportunities and responsibility to my 6-year old daughter. Also, I’m tired from 20 years of fighting the investment wars; be they broad, mainstream battles like the 2000 and 2008 crashes -or the added risks, and frustrations, of siding with sound money against a status quo deadset on destroying it.
Crypto has been very good to me, in so many ways. It has restored wealth that was twice lost; enabled me to work for myself; and given me a financial – and philosophical – cause more powerful than Precious Metals, at a time when the world sorely needs it. To that end, my faith in Bitcoin’s long-term success has never been stronger – to the point that I believe it will one day be the “gold standard” of value storage. In fact, I expect numerous altcoins to have viable use cases, too – yielding huge gains to those wise enough to have found them early on. That said, most have not yet been invented, as the vast majority of today’s crop are just modern versions of worthless dotcoms.
All that said, timing is everything – as a good idea before (or after) its time, is as disastrous as dead on arrival investment themes…which is why I have given a great deal of thought to the sector in recent weeks, resulting in significant investment decisions.
The way I see it, Bitcoin’s use case has never been stronger – having dramatically improved despite a year in which cryptocurrency was amidst a hideous bear market, following an historic bull run that commenced when SegWit locked in last August, and exploded when Wall Street crypto hedge funds blew the altcoin market open in January. The fact that Bitcoin held above the “Hoffman Line” – i.e, a $100 billion market cap – throughout the altcoin carnage was extremely significant, in my view…and increasingly bullish, as more and more institutions engaged in cryptocurrency ventures – like Blackstone, Goldman Sachs, and the Intercontinental Exchange, to name a few.
To that end, it wouldn’t surprise me if Bakkt Physical Bitcoin futures and the SolidX/VanEck Bitcoin ETF are approved for trading by year-end…though unquestionably, the current crypto carnage will not be viewed favorably by the CFTC and SEC. However, the events of the past month have severely shaken my near-term investment outlook -not that I can’t be wrong, of course…which in turn, caused me to make significant portfolio decisions.
To start, the increasingly worrisome declines in broad financial markets that had to eventually come. After two decades of Central bank support- particularly after the dotcom crash, 9/11, and the 2008 and 2011 financial crises; financial assets have never been more overvalued. Thus, it should be no surprise that fiat currencies are crashing - whilst stocks, bonds, and real estate are slowly, but inexorably deflating. Not to mention Precious Metals – which care of paper dilution, and Bitcoin’s emergence, are trading at all-time inflation adjusted lows. In other words, the Central bank-fostered “everything bubble” appears to be deflating; a trend which, if not reversed, will continue to negatively impact cryptocurrency – including, apparently, Bitcoin itself. In other words painful evidence that it is not yet – and I emphasize YET - viewed by the mainstream as anything more than a speculative vehicle.
Next, there’s the sad, and ominous, saga of BCash SV – where a madman more malicious and sociopathic than Roger Ver and Jihan Wu combined has made it his personal gold to tear the entire sector down – under the delusional, borderline psychopathic view he can recreate Bitcoin in his own, fraudulent image.
Clearly, SV has already failed; in the process, permanently destroying the original, equally fraudulent BCash…which SHOULD be a best-case scenario for Bitcoin, given how hard BCash has fought to usurp it. However, the power of CSW’s demagoguery – in his quest to destroy Bitcoin, at a time when crypto sentiment is so weak – is scaring investors in a manner even Ver and Wu couldn’t achieve. So much so, that they are fleeing Bitcoin wholesale - as whether they believe CSW has the ammunition to win, they anticipate he will be able to prolong the war indefinitely. Thus, last week’s violent break of the Hoffman Line – coincident with Wright commencing the SV attack on BCash ABC.
The way I see it, I’m too old to engage in another multi-year war with malevolent actors seeking to destroy my financial well-being. In that manner, Craig Wright is joining a long list of horrible people including Ver and Wu, Jamie Dimon, Bernanke/Yellen/Powell, and countless others. And I’m WAY too old to continue engaging with bad actors within my own community – like Rickards and Armstrong within the “gold community,” and Tone Vays and others in Bitcoin. Not only don’t I WISH to fight such wars anymore – which bring me no profits, but plenty of angst; but NEED to anymore, either…and at 48 years old with a family to support, I don’t see the upside to “fighting to the death” for gold, Bitcoin, or any sound money cause.
Thus, when the Hoffman Line broke last week, I sold the vast majority of my Bitcoin. I have no idea if this will turn out to be a brilliant maneuver or a horrible mistake – but given the risk to the financial security I had worked so hard for; for a cause that may or may not pay out - late in my investment career, when the stakes are highest; it was the obvious choice. I have no regrets at all – and for the first time in years, am not living in fear of what Bitcoin – and before it, Precious Metals – will do at any given moment. That said, I continue to believe it is only a matter of when, not if, Bitcoin returns to favor – yielding a price surge that will ultimately take out last year’s highs, taking it to much, MUCH higher levels.
If a worst case scenario somehow occurs (which I would put VERY low odds on of occurring) - of prices falling back towards three digits first, I would of course consider re-investing. That said, as noted above, I believe that in the next bull phase, numerous altcoins will thrive – and in my view, one such altcoin is BRhodium…whose MainNet launched last month, in preparation for exchange listings shortly after year-end. I have been equally transparent about my views of this unique altcoin – in which its holders either received it for free, or at bargain-basement prices in the OTC market…and am quite confident that when Bitcoin rebounds, BRhodium will be a primary beneficiary.
So, the way I see it, BRhodium is my “hedge” against being wrong about selling Bitcoin at $5,000. Not that I’m encouraging investors to follow my lead, of course – as everyone must determine the proper risk/reward profile of his or her investment portfolio. However, I’m just trying to walk you through my investment process, for better or worse.
Readers will have a variety of reactions to this disclosure – from clients, to friends and trolls. But the FACT is, that like mining stocks and bullion before it, I have been 100% transparent about my decisions to enter and exit, despite having no reason to be so. No one knows what the future will hold, but I was decidedly correct in my decision to exit mining stocks in summer 2011, silver in summer 2017, and gold in winter 2018...at least, to this point. I have no idea when Bitcoin’s bull market will resume - but given the Hoffman Line break last week; amidst news flow that SHOULD have been considered wildly Bitcoin-bullish; I determined it was better to be SAFE given my personal financial situation – with the caveat being my equally strong belief that BRhodium will be a prime benefactor of Bitcoin’s inevitable return to financial glory.