Brace Yourselves, The ‘Crypto Winter’ is Coming...

I was so inspired to write about Thor, Love, and Thunder, but then the Winklevoss twins changed my mind and writing plans. What happened?

Billionaire bitcoiners Cameron and Tyler Winklevoss are laying off 10% of the workforce at Gemini, a first for the U.S.-based cryptocurrency exchange and custodian.

I mean, what are you supposed to make out of this?

First of all, these brothers ring a bell. Do you remember? I know someone who certainly can’t forget about them easily.

The twins reach a settlement with Zuckerberg for $65 million in a mix of Facebook shares and cash. Justin Timberlake is to blame in “The Social Network.” Let bygones be bygones. Water under the Meta bridge. Moving on.

The famous “crypto twins” wrote a Dear John letter to their (former) employees, and warned us all about the “crypto winter” that’s coming. “Crypto winter?!” What’s that even supposed to mean? Should we be worried?

The last so-called crypto winter ran from 2018 into the fall of 2020 as the value of cryptocurrencies plunged and layoffs were rife.

If it’s any comfort to the employees at Gemini, who’re probably updating their resumes as we speak, Cameron and Tyler Winklevoss wrote that “we are not alone.”

“Fellow crypto exchange Coinbase recently reported that revenue had fallen 27% from a year ago, as had overall usage. Other fintech start-ups such as Robinhood and BitMEX have recently cut staff.”

So, if you’re a Gemini worker who just got axed, at least you know where not to submit that updated resume to.

Bitcoin - One Step Forward Two Steps Back

I didn’t say that, so don’t blame me if you plan to use Bitcoin to warm up during the “crypto winter.”

BTC has mostly been trading with ‘one step forward and two steps back’ and is unable to go beyond $32,000. A financial analyst has predicted that Bitcoin will shed another 50% from its current price and hit $14,000 in 2022.

Who’s that analyst, who’s very likely to become the most hated person in the crypto universe?

It seems that he knows what he’s talking (predicting) about. Charts can be pretty much persuasive, even on Twitter.

And there’s more…

If You Think “Crypto Winter” Is Bad, Wait Till “Crypto Hurricane” Strikes

At a financial conference Wednesday, JPMorgan CEO Jamie Dimon told investors he’s worried about the Fed’s tightening and the fallout from the Ukraine-Russia war. He thinks we are headed for an “economic hurricane.”

“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this… That hurricane is right out there, down the road, coming our way,” Dimon warned.

We’ve been warned, twice. If the Wall Street boys are worried, then we should be packing our bags and leaving for greener pastures that are less volatile. The good old stock markets.

“Dimon echoes the prevailing sentiment that’s been weighing down stocks, and by extension, cryptos this year. As I wrote a few weeks ago, “major cryptos are highly correlated to the stock market. They also have a high beta to stocks. That means crypto, in effect, amplifies stock moves. If stocks soar, cryptos soar higher. And vice versa. If stocks tumble, crypto goes into free fall.”

Wait! I’m confused. Haven’t we introduced crypto to distance ourselves from the stock markets? Now, they’re saying, it’s “basically” the same thing. What?

Celebrities and Cryptocurrencies - What Could Possibly Go Wrong?

Charles Randell recently visited a school near the FCA’s east London headquarters, and chatted to a group of 13- and 14-year-old students about the risks of crypto.

Who’s this gentleman with enough time to “chat” with teenagers about the crypto risks?

Charles David Randell CBE became chairman of Britain's Financial Conduct Authority and Chair of the Payments Systems Regulator in April 2018. (Wikipedia)

“They were very able students, but the hope of getting rich was stronger than any facts or rational arguments I could give them,” he said. “With celebrities as varied as Kim Kardashian and Larry David willing to take money to promote speculative crypto, how do we curb people’s enthusiasm to do something that may seriously harm their financial lives?”

Are things that serious? Aren’t we overreacting a bit?

Trust me, it’s a looong list…

So, How Are We Supposed To Get Trough The “Crypto Winter?”

The first rule of gambling is never to bet more than you can afford to lose, but crypto investors should also heed traditional investment “rules” such as diversification.

That’s eye-opening, but is it going to be enough?

A 2021 Morning Consult survey found that 20 percent of investors and 45 percent of crypto owners would invest in cryptocurrency if famous people endorsed it (though still behind financial advisers, family members or friends, and business reporters). Younger consumers may also be more swayed by fame — CreditCards.com found that 28 percent of Gen Zers and 24 percent of millennials said they were looking for financial advice from social media and influencers.

We certainly know who’s not going to help when the winter comes, snowing crypto or “regular” blizzard, don’t we?

"Over the winter glaciers, I see the summer glow. And through the wind-piled snowdrift, the warm rosebuds below."

~ Ralph Waldo Emerson

For what is worth, you should know that this leader of the transcendentalist movement was very practical when it came to the financial matters:

“The right merchant is one who has the just average of faculties we call common sense; a man of a strong affinity for facts, who makes up his decision on what he has seen. He is thoroughly persuaded of the truths of arithmetic. There is always a reason, in the man, for his good or bad fortune in making money. Men talk as if there were some magic about this. He knows that all goes on the old road, pound for pound, cent for cent - for every effect a perfect cause - and that good luck is another name for tenacity of purpose.”

So, think about these lines during long and cold “crypto winter” nights.