November 2021 Topsy Turvy Market

It has been an exciting week in crypto for Travel Write Money. It appears that our investments have flipped around. Typically, our HIVE and CRO holdings are undervalued. However, this week we have seen our fortunes reversed.

CRO

The Crypto.org coin, CRO, experienced a massive rise this week that took it to nearly $1 each. Many CRO hodlers had the opportunity to upgrade their Crypto.com Visa debit cards to the Icy White or Rose Gold level, which requires staking $40,000 in CRO. While this may seem abhorrent to some, keep in mind that a majority of that $40K is house money, not out of pocket money. In exchange for staking, they also get roughly $90/week in interest income paid in CRO coin. Obviosly, with the pullback, the weekly income is slightly diminished. However, when CRO tests the $1 mark again, things go the other way. That $90 weekly income also increases. For many people, an extra $360 per month can be useful.

On the flip side, large increases also mean that dollar cost averaging buys you less. As the size of your bags grow, additional contributions make up smaller percentages of growth. However, this would have happened whether it was through capital growth or simply the result of saving over time. Pumps like this only make it more noticeable.

HIVE

The HIVE community has also experienced good fortune. HIVE briefly touched the $3.41 all time high yesterday. This was shortly after reaching a previous ATH over $2. It was a bit exhilirating to watch the price pump up the value of accounts to almost 3X. Many of us are unable, however, to trade in and out of HIVE on a whim thanks to the safety features of the blockchain, which require a 3 month withdrawal period. Undoubtedly, the price pump is the result of exchange trading. This means that the pump will likely not endure very long.

On the other hand, HIVE has had the tendency to lose elasticity in its price fluctuations. With every pump, it has tended to revert to a higher low. Most likely what is happening is that traders pump the price, then the HIVE community takes advantage by locking in a few quick gains. Then, as the price reverts to previous level, the community buys back their liquid HIVE at lower cost. Having a built-in stablecoin, HBD, makes this possible. With this in mind, it is unlikely we will see HIVE sink back below $1.

The only other significant piece of information is that this pump has put HIVE over the $1 Billion market cap level. The number itself is insignificant other than the psychological impact of making HIVE a "serious" blockchain. Market cap ranks are something of a horse race way of comparing blockchains. Being in the top 100 blockchains by market cap could potentially attract more investment to HIVE.

BTC and Friends

The rest of the crypto world is seeing a bit of a dump. News headlines point to expiring BTC options as the culprit for depressing the crypto market. As any seasoned crypto investor knows, most other cryptos are correlated to the performance of Bitcoin. Therefore, if Bitcoin dumps, the market tends to dump too. On the other hand, this is likely a needed price adjustment to help build the foundation for the expected runs coming in the next few months. Bitcoin is expected to hit new all-time highs, dragging altcoins with it. And, some of that correlation will spill over to HIVE and CRO. They call these slumps "accumulation phases" because you're meant to take advantage of the low price to accumulate more holdings.

The Rest of the World

To add to some of the market dissonance, the rest of the economy outside of crypto is not doing so well. We continue to have the systemic problems inherent to central bank money printing and centralized financial services. According to Cathie Wood, CIO of Ark Invest, this holiday season may not yield the expected economic impact of years past as a result of inventory problems. On the one hand, some inventories that were in high demand earlier in the year are now sitting there taking up space. And, the products that people will want are having supply chain problems. In other words, some products are oversupplied while others are undersupplied, resulting in a low sales for both.

Compare the overall economic pessimism to the hubris of the crypto markets. Obviously, things are working as designed. But, at the same time, things are topsy turvy. Many of us should be concerned about the overall economic outlook. Yet, we are excited about the growing prosperity of the crypto economy. It is difficult, at times, to decide whether to be optimistic or pessimistic about the future.