In today’s Exponential Investor:

  • Megayields that no one cares about
  • Crashing sentiment
  • Keeping warm in a winter

Just over a week ago I had the honour of talking to a crowd of people about the crypto markets.

More specifically, the title of my presentation was “Crypto Megayields: Fortune Making or Fortune Destroying?”

I discussed the yields available from the crypto world that stretch from single-digit figures all the way up to triple-figure annual yields (yes, that’s right, 100%-plus annual yields).

In my mind, I can’t figure out why anyone wouldn’t want to know about these opportunities.

But of course, my mission is to explain the opportunities.

The only problem was this: at the presentation, it seemed as if no one was really bothered.

How to destroy sentiment in six months

I did the same event in April, earlier this year.

At that one I also spoke about the crypto markets. I was presenting on the basics of crypto investing, discussing things like self-custody, how to deal with exchanges, and the difference between networks such as bitcoin and Ethereum.

In April, my session was full.

There was just a small handful of seats free in a room of probably a couple of hundred. It was well attended, the people were engaged, and they asked a lot of questions. It was fantastic.

At the time, the crypto market had come off its highs of 2021 – and had done so by quite a lot too.

Having hit a high at $69,000 in November 2021, one bitcoin was still worth about $40,000 in April this year. That’s a big fall, but not utterly horrific. Attention in the market was still there, and investors were aware of the market heading south. However, I don’t think that they were prepared for what came next.

Fast forward six months (and a bit). Last week bitcoin’s price cratered to $16,000. The overall capitalisation of the entire crypto market has fallen from about $2 trillion to a bit over $800 billion since April.

Also, giant corporate failures in the crypto industry made global headline news. Terra Luna collapsed just weeks after my April presentation. Half a year later, November saw the fall of  FTX, one of the biggest exchanges in the world.

We’ve documented both of these events at length, here and here, so I won’t go into greater detail right now.

But these events helped to destroy the remnants of any positive sentiment that may have existed from the 2021 cycle.

Bad news can be good news

Paradoxically, the destruction of positive sentiment is a good thing.

Crypto is not dead. But it’s clear that a lot more people right now don’t care about it, have dismissed it completely and have no interest right now in any of it.

This was obvious to me as I took to the stage last week and the room was half empty. It wasn’t that the event was poorly attended. The session before me on trading foreign exchange and stocks was packed.

When it came to crypto though… the room cleared out.

What I found hilarious is in the session before, there were the typical underhanded comments about it too. One panellist rhetorically asked if crypto was good for anything else except criminal activity and money laundering.

Then a question from the audience came in asking the panel about trading metaverse opportunities – none of them, a panel of five, even knew what the metaverse was, let alone how to trade opportunities in it.

Weirdly the guy that asked the metaverse question didn’t even stick around.

The upside to all this however is that the room wasn’t half empty.

It was half full.

Sticking around is half the battle

And there were some people that did stick around to get a better understanding about staking, decentralised finance (DeFi) and what’s going on in the crypto world.

These are the people that will be successful in the next crypto cycle.

I don’t mind helping people learn about crypto when the market prices are in the doldrums (or the pits). It’s these “crypto winters” where the best opportunities of the next cycle rise to the surface. It’s the perfect time to get active while everyone else is somewhere else.

But as we see time and time again, people typically only care about the market when it booms. That’s the wrong approach to take. Care about the market when it’s in a winter. And when it’s irrationally booming, then you get worried.

So, I will say this once and clearly. Right now, in early December 2022, the fortunes of the crypto world are as low as they will be this cycle. The market is at a bottom.

I expect that from here the market will be boring for the next couple of months. However, slowly and surely, things will pick up again as we move into 2023.

I look forward to writing this same essay this same time next year.

I’ll do the same event again. It will be interesting to see: a) if I’m right or not about the market momentum; and b) how many people bother to show up to my talk next time.

I’m guessing that it’ll be a full house again.

Sam Volkering
Editor, Exponential Investor