I put together this potent little graphic a few days ago.
People are describing what’s going on with MicroStrategy as a “Ponzi Scheme“. I don’t think that’s quite it. First, it isn’t a deliberately criminal enterprise, and second, they aren’t taking in cash from new investors and giving them to prior investors.
It is more of a cynical “virtuous cycle” happening, which will keep pushing the price of both BTC and MSTR up until the oxygen leaves the room and Earth decides not to hand Saylor over any more billions. Only God knows how long that’ll be. Weeks? Months? Years? Now?
This isn’t the first time around the crypto insanity merry-go-round, of course. The Dogecoin was created as a joke, just for the lulz. It has had a wild history, although most recently it has been said:
DOGE soars to a $68 Billion market cap making it more valuable than Royal Caribbean, Hilton, Aflac, General Motors, Bank of New York, Target, Allstate, Phillips 66, Occidental Petroleum, AIG, Nasdaq, Dr. Pepper, Ford Motor, Delta Airlines
A few years back, this lumberjack-looking chap took on some amount of fame as the “Dogecoin Millionaire”.
After DOGE peaked, it began a long, painful slide, which brought the above bro’s holdings down from millions of dollars in value down to about $200,000, which is about what he borrowed to buy the stuff in the first place.
He was at least man enough, two years ago, to express regret at not selling at good prices.
He held on, however, and only in the past month has he re-captured his former glory. His holdings of this joke currency are once more worth millions of actual dollars.
This time, however, he’s going to apply the lesson he learned.
Of course, BTC is a hundred-fold more important than crap like DOGE, and the latest goal amongst the fanboys has been to push into the Big Round Number zone of $100,000. It just can’t seem to cross the finish line, though, in spite of Saylor buying literally billions of dollars’ worth of BTC.
I’m not the first person to point out the similarities between this absolutely unhinged mania and the lunatic ascents of ancient history, such as the South Sea bubble (which, unlike a bunch of 0s and 1s, actually had a plausible business plan behind it).
Given the incredible rise in BTC, there are two parties about whom I feel genuinely sorry.
The first is the FTX crew. Yes, yes, they were dishonest and fraudulent hucksters, it’s true, but still, this cadre had incredible fortunes blown to smithereens due to a brief, sharp plunge in crypto prices thanks for reality being rude enough to enter the picture for a few weeks. Were it not for that short-lived slump, SBF would be among the richest men in the world today, instead of losing his mind in a prison cell.
The second group are the folks who, for whatever reason, have lost their Bitcoin. Some lost their wallets. Others lost hardware, such as physical storage devices. Others can’t remember their passphrases. Whatever the reason, there are folks out there, some of whom would have had tens of millions of dollars in BTC right now were it not for some screw-up on their part. Want to know the estimate of how much BTC has been lost forever? Here it is:
Can you imagine if somehow the entire nation had misplaced 30% of all of its cash that’s in checking and savings accounts? No, you can’t, because it’s an absurd notion. But when it comes to this incredibly inconvenient and, as far as I can tell, useless means of payment, that’s precisely what has happened!
Michael Saylor has done a brilliant job turning MicroStrategy around from a smoldering husk from the ruins of the Internet bubble into a world-famous Bitcoin holding company. He is a genius at self-promotion, and no one can argue with his success to date.
What he’s done is little different from what the entire U.S. economy (and China, and Japan, and on and on) are doing on a daily basis.
That is to say, using the ability to borrow an infinite amount of cash in order to prop up and sustain the illusion of prosperity. With Saylor, it is under the guise of being forward-thinking and innovative, although I’ve yet to meet the person who can articulate to me how Bitcoin is actually going to change our lives.
I’ve read countless books and articles about this beast, and I remain convinced it is nothing more than a new way to satisfying the ancient human urge to gamble. It is a sophisticated gambling token, and it has been welcomed by the cognoscenti, because while there’s no way to seem like an intellect by tethering yourself to a slot machine, you can certainly do so with something as opaque as cryptocurrency.
My main motivation for this post was to go on record with the continuation of my disdain for the entire enterprise. Do I feel like a sucker for missing out? No, honestly, I don’t. Will I if BTC goes up to $1 million? How about $3.8 million, like inexplicably famous investor Cathie Wood has declared?
I dunno. I guess so! But I’ve lived long enough to know that if you want to drive yourself absolutely mad with no good reason or benefit, just focus on all the might-have-beens in your short life, and you’ll get exactly that.
In the meanwhile, the possibility looms that something – – and I have no idea what – – but something – – will snip this cycle and cause it to stop. And if it does, I cannot imagine just how rapidly the entire industry will collapse and how much screeching would take place. Pandering Congress-critters will jump into the fray and put together some kind of “bailout”, I’m quit sure.
Anyway, I won’t be there to say I told ya so, because I’m not telling you anything. Yet I can’t ignore what’s going on and pretend that the possibility of this entire thing blowing to high heaven isn’t real.
