Mad Hedge Bitcoin Letter
April 5, 2022
Fiat Lux
Featured Trade:
(ETHEREUM’S WILD RIDE)
(ETH), (BTC)
The price of Ethereum has doubled from $1,800 last July to $3,500 today.
Throughout this newsletter, I have been preaching to readers that price appreciation will be higher in Ether than it is in Bitcoin.
Ethereum simply has better technology and is a better bet in the long run and sadly for Bitcoin, they are further along in their maturation cycle therefore the explosive up moves are confined by the law of large numbers.
It was simply almost a given that Ethereum would go from $1,000 to $3,500 and it’s really only a matter of time until they break $5,000 and then $10,000.
This is the second most popular cryptocurrency and although not a great store of value yet like Bitcoin, its fan base is growing by the day.
Here are a few answers for Ether fanatics from typical Ether questions.
Crypto investors always need more fine-tuning and know-how about cryptocurrency.
ETH is a great buy-the-dip opportunity for crypto diehards, and I believe there is clear sailing until $10,000.
Frequently Asked Ethereum Questions
Where's the best place to buy ETH?
There are many centralized exchanges that support Ethereum. If you live in the US, the most frequented exchanges are Coinbase, Gemini, and Kraken. Coinbase users can use Coinbase Pro for lower fees.
When is Eth2 launching?
Eth2 is a marketing term used to represent a number of updates to Ethereum. The Eth2 proof-of-stake chain was first launched in December 2020. "The Merge", which is the event that will fully switch Ethereum's consensus to proof-of-stake, is estimated to be ready in early 2022, although there is no exact timeline. Other updates, such as data shards, will follow that update.
Do I need to do anything to update to Eth2? Will Eth2 create a new token?
No, ETH holders never need to take any action to keep holding ETH. Ethereum users will be unaffected by the Eth2 upgrade. And the Eth2 updates will not create any new tokens.
How can I stake my ETH?
There are two ways that you can stake your ETH: by either running your own validator or providing your ETH to a staking pool.
Running your own validator requires a modern computer and 32 ETH.
Staking pools accept any amount of ETH. I recommend Lido or StakeWise.
Why are Ethereum transaction fees so high?
Like most blockchains, Ethereum fees are determined by supply and demand. The large demand to use Ethereum has pushed transaction fees quite high (however, fees were just a few cents only 2 years ago). Fees are especially high during market volatility, and during NFT drops.
What is being done to lower Ethereum transaction fees?
Ethereum fees are reduced by using layer-2 rollups. Rollups are scaling solutions that allow for significantly cheaper transactions, while still maintaining Ethereum's security.
Additionally, Eth2's data shards will make rollups even cheaper.
While rollups are cutting-edge technology being actively developed, a number of them are already live on the Ethereum mainnet.
What's the best wallet for Ethereum?
The most popular tool for using decentralized applications is Metamask. However, for security reasons, I recommend using a hardware wallet such as a Trezor or Ledger.
Mad Hedge Bitcoin Letter
March 31, 2022
Fiat Lux
Featured Trade:
(EVEN CHARLIE WARMS TO BITCOIN)
(DOGE), (SHIB), (BTC)
One of the biggest promoters of the U.S. economy for the past 50 years has been vice chairman of Berkshire Hathaway Charlie Munger.
Lately, he has taken his privileged position to opine about almost everything under the sun.
At some stage, people like us like to infuse the generation behind us with the right tools to navigate the global economy, and sharpening these instruments goes a long way in determining who became the ultimate winners and losers.
Charlie came out with sharpened elbows today describing a world in which “it’s never been harder for young people to make and keep their money.”
He then begins to dive into the topic of inflation and the financial destruction beset on a young population who are not only asset scarce, but whose salaries are lower in real terms than the young person 40 years ago.
Essentially, Charlie is encouraging young people to avoid the traditional financial system that benefited him so much in order to look for greener pastures.
Sometimes it really is greener on the other side of the fence and the first generation of crypto Billionaires can attest to that.
Becoming a crypto whale usually entails getting in early before the rest pile in.
Munger also lamented the hardship of young people purchasing property in a “desirable neighborhood in a city like Los Angeles.”
Mortgages backed by the US dollar and Fanny Mae have been instrumental in helping millions of hardworking Americans realize the American dream of owning their own home.
Obviously, the US property market in many parts of the country these days is out of control and even though it’s not directly linked to cryptocurrency, it’s directly linked to the US dollar which Bitcoin is an absolute competitor.
Munger couldn’t be righter that young people will not be able to copy and paste what worked before and that the ones who don’t adapt will not be able to achieve a life in a desirable city.
In a roundabout way, Charlie is espousing the virtues of Bitcoin even though he doesn’t know it.
Part of the bias he presides over is in the way young people get rich and age doesn’t make you want to get rich all over again in crypto after getting rich through the US dollar and stocks.
Investing in alternative strategies has never been more attractive, but there is a smart way to do it and an irresponsible way to do it.
In the last few years, Bitcoin has proved itself to be a great store of value and it appears that no matter what you throw at it lately, it won’t go down that much.
But then there is the scarier side of crypto that isn’t Bitcoin and things get suspicious quickly like somebody following you down a narrow, shady alley.
Many have thrown their life savings in these coins that are fashionably new and low cap and obscure thinking that they can get rich quickly when all that will actually happen is they'll lose their money in these coins that either fail or get the rug pulled.
Seeing coins like SHIB, DOGE, which were altcoins that actually did build a substantial market cap in the past, has only encouraged these people in their thinking that they can make a lot of money off of these coins when the reality is that these were only 2 among thousands of coins that got lucky.
Investing should be done with a purpose, otherwise, it becomes pure gambling and you'll likely fail.
That purpose could be Bitcoin as a means of decentralization, as a means of inflation hedge, or just as a currency that's easy to transfer. As long as you know what you support in your coin, you have a purpose that you believe in which is what investing is about, not closing your eyes and picking a coin.
Not only that you won't get rich, but you'll also lose your money in these coins. The only people getting rich will be those controlling the coin with their bags that are ready to sell.
But of course, there still are those projects with a purpose that can change the market, but you'll need a lot of time on your hands to find those new ones.
“Can we all please - I don't want anybody buying cryptocurrencies, okay? Stop it. Enough already. Or buy Bitcoin, don't buy Ethereum.” – Said Nvidia CEO Jensen Huang
Mad Hedge Bitcoin Letter
March 29, 2022
Fiat Lux
Featured Trade:
(ANOTHER WIN FOR BITCOIN)
(RUSSIA), (BTC)
“One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.” – Said American Writer Elbert Hubbard
Mad Hedge Bitcoin Letter
March 24, 2022
Fiat Lux
Featured Trade:
(KICK THE CRYPTO CAN DOWN THE ROAD)
(BTC), (FED)
Federal Reserve Chairman Jerome Powell on Wednesday said digital innovation in the financial sector is here to stay and with it, a raft of new regulations will need to be created.
It’s interesting that he delves into the matters of cryptocurrency so succinctly when one might really question if he has a grasp on the current fiat monetary policy in the United States.
Many have also gone on record saying that he has committed a vast policy error by allowing inflation to run too high for too long.
There are elements that are true to this and observing his overly cautious stance to raising interest rates makes me deduce that he most likely will bring the same type of attitude to Bitcoin and cryptocurrency.
I agree that new regulations need to be created and the lack of them is holding cryptocurrency back, but at least Powell didn’t take the hostile route which he easily could have with nobody batting an eye if he turned more conversative to the technology of money.
Powell described cryptocurrency as a “novel technology like distributed ledger and decentralized finance which has the potential to improve the efficiency of the payment system and encourage a more competitive financial landscape.”
When I hear Powell say the word “novel,” it basically means that nothing of substance will take place in the near-term future because he is too experienced to deal with an emerging asset class that could potentially ruin his legacy at the Federal Reserve.
He could have even said that cryptocurrency is “exotic” and still gotten away with it.
Every Central Bank governor wouldn’t mind a more “efficient” and “competitive” financial system and fortunately, the American financial system is still the gold standard of the world even if the gatekeepers of the Central Bank currently aren’t performing up to snuff.
Powell also divulged that the Fed will likely collaborate with other central banks on other areas of crypto and financial innovation, including stable coins.
A stable coin is a cryptocurrency pegged to a reserve asset like a fiat currency, commodity, or other cryptocurrencies. It is a tokenized version of the asset and can be introduced subtly into a blockchain ecosystem to facilitate seamless pass transactions, improved arbitrage, and value exchange.
It is sometimes referred to as a utility token because it allows you to quickly buy and sell on decentralized exchanges that do not accept fiat currencies.
Stable coins are also used in centralized exchanges. What makes them useful in an exchange of this kind is the fact that fiat currencies take a long time to process, but their tokenized counterparts are standard blockchain entities that move quickly.
Powell also dives into the need for crypto to close the “regulatory gaps” which for me means that he wants crypto to be centralized just like the US dollar wields an army of bureaucrats in the form of regulators safeguarding the American financial system.
That might rankle a few crypto diehards who are hellbent on crypto being a decentralized system and not to mention when crypto looks like a safer bet, all the Wall Street influence that will pile into the crypto ecosystem.
Ultimately, Powell’s speech was good and bad for crypto.
Acknowledging it effectively means he legitimizes it, yet he doesn’t want it to develop without parameters in which the government has zero influence.
It is yet to be seen if the federal government just kills assets like Ether and Bitcoin to create their own digital currency would be the digital version of the US dollar.
That’s a page right out of the Chinese communist party with their digital yuan.
If that happens, many investors will cry foul and would be left scrambling.
However, I don’t believe Powell has the intention to crush a whole trillion-dollar asset class that could trigger contagion throughout the whole market.
By keeping it at arms’ reach, Powell effectively gave a green light to develop parallel to the US financial system yet kicking the can down the road to whether this monster can be integrated seamlessly into the US financial system or not.
That’s the end game for the likes of Bitcoin and crypto, but that decision has been put off for the long-term giving more time to this emerging asset class to improve its foundations.
To live to breathe another day is not necessarily a bad thing in speculative markets.
THE MAN WITH GREAT POWER OVER THE FUTURE OF CRYPTO
