Crypto FUD Mucking
It’s time to break out your Great Stuff decoder rings!
No, it’s not time to drink more Ovaltine. It’s time for Reader Feedback! And where we’re going, we’re gonna need decoder rings, Great Ones. I’m talking stablecoins, FUD, FOMO, hodling and more!
What is that … Elvish? It’s like a whole other language! You didn’t just reread Lord of the Rings again, did you?
No, Great Ones, it’s not Elvish. It’s crypto-speak, and we’ll get into that momentarily. But first…
Reader Feedback is the day we reach deep into the Great Stuff mailbag and answer your burning questions.
Got questions on the market, stocks, options, cryptocurrencies and investing? Want to rant about the ridiculousness of the bourbon secondary market? (Don’t get me started…)
Well, today is your day! Obviously, if you didn’t write in to GreatStuffToday@BanyanHill.com, today isn’t your day. But you can fix that by dropping us a line right now!
All right, we have a lot of ground to cover, so let’s dive right into today’s featured presentation:
Hey, Mr. Great Stuff,
I love your newsletter. It’s one of only a few that I read every day, and I have come to trust your judgment.
One of the other newsletters (no need to name them here) is pushing hard on the idea that the cryptocurrency market is going to experience a cataclysmic crash in the near-to-mid-term future. Not because of regulations or cybercrime, but because Tether is on the brink of failure.
The thesis is that Tether’s USDT stablecoin is integral to the entire cryptocurrency ecosystem. The company is very shady (unable or unwilling to produce a financial audit for years), and is likely up to its eyeballs in near-worthless commercial paper from heavily indebted Chinese real estate developers, rather than the liquid assets it claims to have on hand. Among other things.
He compares Tether to Lehmann Brothers in 2008, on a smaller scale, but with no government bailout coming behind its imminent failure. When it goes down, he posits, so will the whole crypto ecosystem.
Here’s another article that makes similar points and adds in other concerns, such as Tether having no physical offices, the CEO and CFO appear to be ghosts, and shady answers to questions about Tether from their close business partners.
I’ve been on the fence about investing in crypto, but this analysis has me very skittish — to the point of considering shorting affiliated stocks. Since you’re on the bullish side of crypto, I would love to hear your take. Is it all FUD or fake news?
— Rich V.
Thank you so much for writing in, Rich! It’s Great Ones like you that make Great Stuff … well, great.
I’ve reached out to a special guest today to answer your question, because this one goes deep down the cryptocurrency rabbit hole. But before we get to that, let’s review some crypto-speak for our out-of-the-loop readers:
Stablecoin — A stablecoin is a cryptocurrency designed to have its price pegged to fiat money (such as the U.S. dollar), an exchange-traded commodity like gold or oil, or even another cryptocurrency. This price pegging (get your mind out of the gutter) makes stablecoins more … you guessed it … stable.
FUD — Fear, Uncertainty and Doubt. This is a term used by crypto traders to describe anyone spreading fear or misinformation to cause a coin to drop in price.
Tether (USDT) — USDT is a stablecoin cryptocurrency originally designed to be tied to the price of the U.S. dollar. It has since changed its backing to include loans to affiliated companies.
USD Coin (USDC) — USDC is a stablecoin cryptocurrency actually backed 1-to-1 by the U.S. dollar and runs on the Ethereum crypto platform.
Crypto’s Dyer Mak’er
Now that everyone’s mostly caught up, Rich, let’s welcome our guest crypto guru for today: Paul Mampilly’s right-hand man and editor of Crypto Flash Trader, Ian Dyer!
I believe there’s reason to doubt that…