If you're making this mistake, you will lose money investing in crypto
Of course, we also have our usual 404 logic, not found segment and more crypto news on the show today, so make sure you stick around for all the updates. We have in store all the way at the end of the episode. Now, if you like crypto, please subscribe to the youtube channel, hit the bell notification button, so you get a heads up whenever i post new content or you can follow the podcast on your platform of choice. Spotify is a popular one, where people like to listen to crypto over coffee and by the way last thing make sure you watch out for scammers all across social media that are impersonating me trying to take money from you, sell sponsorships and stuff. That is not me especially watch the youtube comments and be careful out there. Now there are many mistakes one can make in the crypto world and heck a lot of those mistakes have overlap with a lot of the other risk asset markets like equities as well. However, one in particular stands out for me that ive seen time and time again, people in crypto and crypto communities falling into and getting burned, whether they are experienced in the space or brand new in the space. And that mistake is chasing the hype and, following the pack, two peas in a pod right there, basically the same issue in two different ways. Let me give you an example: throughout the last year and a half before the crypto markets, imploded in epic fashion, people were all over launch pads for gaming projects, d5 projects, nft projects etc, and they were investing heavily in those things.
Pre launched before any product had ever been launched as those early allocation investors rolled in and the hype started to build up. You had a huge pack of people waiting for the public token launch event ready to buy in the expectation of profit. So then what happens? The early allocation buyers simply wait for the public retail masses to buy in and drive the price up before, promptly dumping those tokens on the open market and leaving the open market buyers holding the bag for the token price that is now receded now, every once in A while one of those coins would perform well, people would want it longer term, and the price would stay and maybe even continue to move up over time, but more often than not. This was a bad outcome for a large proportion of the people. Investing in these speculative pre launch projects based on what the masses were doing now were seeing the same sort of reckless investor mania playing out with the celsius short squeeze, which, in my opinion, is only going to end in tiers for the vast majority of people that Are participating in it effectively in the wake of celsiuss purported financial strife and positive deposits. Large short positions have been taken against its native cell token or celsius token, as that bad news continues to come about insolvency, bankruptcy, etc. In response to this celsius, community members hatched an idea to dunk on these shorters, which is to buy up as much sell on the market as possible to crush those shorts by pushing the price of cell up with buying pressure.
Removing supply from exchanges. Now, at face value, you think this sounds pretty nice. The community banding together against an ideological enemy. But beyond that, it is the dumbest possible move by community leaders to be advocating for especially encouraging people who likely already have funds locked and lost in celsiuss platform to risk yet more money on a short squeeze crusade. Heres the issue youre one whale dump away from getting absolutely punished by the short squeeze movement. Then youre left holding a token that you bought at inflated prices as part of a meme and movement thats, now worth half of what you paid for it and the shorts might even win. On top of all of that, you must not forget that in any investment market or asset market money is not created out of thin air, that would be central banking instead, money that you make is at the cost of someone or something else. Investments are a zero sum game, so you have to take profits. Protect your assets, make your own decisions without considering what the masses are doing and making risk management. Your priority is key in both of these scenarios that we talked about today. You have a common theme. You have many many people jumping on a bandwagon, expecting profits and resounding victory, but a very low percentage likelihood that this outcome materializes, especially for anyone except the elite few that started in the beginning now id be happy to be proven wrong on the celsius short squeeze.
But look at how this community short squeeze has worked out in the past in other areas, not all that great in a long term view for a lot of investors who didnt get in at that very ground floor and at good prices. The main message is this: particularly in times like this, where markets are already on slippery slopes, you have to be extra careful not to follow the pack but to make deliberate risk calculated decisions for yourself, so please be safe out there. Now, my friends, it is time for 404 logic not found, which is a firecracker of a segment on the show where i break down the logical conundrums of the crypto space that need to get some attention which speaking of attention, if you want to help the show, Get some more attention which really helps please hit like get subscribed, follow the podcast and share this episode with your friends, because it really does help the show helps me. So. Thank you very much for doing that in advance. Now todays segment is focused on something i genuinely did not have on my crypto bear market bingo card, and that was a solana, smartphone hardware project cant believe this is happening now. This past week, solana revealed a smartphone project called saga which encapsulates an android os based stack for developers to build web3 solana focus software on mobile devices, as well as an actual smartphone hardware device itself. That will presumably be the first to use these solano mobile stack tools conceptually.
This smartphone is designed to be a direct bridge or interface between the user, the solana, blockchain and its web3 applications, and this concept of reducing the chasm between the user and the blockchain providing abstraction making things easier is something that i agree with. We need that, but in execution at least from what i can see, this is nothing more than smoke in my opinion, so heres my take on this and youre free to disagree with me if youd like but ive worked on, blockchain focused smartphone hardware projects before and I can tell you that this is not an apple moment: okay, because the average user is not going to drop their precious iphone and ios ecosystem or their android phone of choice to buy a clunky web 3 focused phone. It requires far too much sacrifice in terms of features and functionality that they use every day. But you know who will do this? The people who are already heavily invested in the ecosystem and solanas ecosystem, the vcs, the super users, the solana holders and influencers the d5 mainstays. But what does that really get you not a whole lot in order to truly bridge the next billion users into web3, which is a term that i now pretty much despise at this point. You must build high quality user experiences and abstractions compatible with what the next billion people actually use. This solana, mobile, stack, android toolkit, is actually a great move in that respect, because it could be a mechanism to build on existing android platforms and hardware that people use and love already.
But this is now overshadowed by the frivolous solana smartphone project itself. The saga smartphone hardware is so disconnected from what the actual average user wants, that its eerie in my opinion, like people, genuinely believe that this is a steve jobs, iphone announcement moment for crypto, forgetting that this has been done before and completely forgetting the actual needs and Desires of the target market, if you can find even one million people who want to buy a one thousand dollar minimum premium, smartphone with custom firmware thats tailor made for solana. I will be very surprised, and this lack of awareness, in my opinion, is a 404 logic. Not found enough, but for solana, fans and faithful id be just as wary about how much money and effort has been spent on this hardware project that could and should have been spent on protocol development to fix the issues plaguing solanas main net beta chief among them. The stability issues but ill leave it to you. My feelings are pretty clear, but i want to hear what you all think of this is this doomed to fail? Is this totally missing the point, or am i missing something? Let me know in the comments section i want to hear your opinion now lets top off the crypto over coffee session today, with some crypto news stories, lets switch over to the computer and check these out and by the way, my forgotten coffee, that is still hot By the way is from onyx coffee roasters, i think its an ethiopian single origin brewed in a pour over a really big fan of this stag x, dripper, really cool double wall, insulation anyways, if you like coffee check it out so lets switch over to the computer.
Here, alright, so the first story of the day is from cointelegraph. The headline reads: ftx may be planning to purchase steak in blockfy report. Reportedly ongoing talks followed blockfy signing a term sheet with ftx to secure a 250 million revolving credit facility on tuesday. So it would be tuesday of this past week now heres my initial reaction to this for people who are in crypto because they dont like the traditional methodologies. You know. Maybe they have concerns about economic stability, about money, printing about bailouts about um, specifically banking bailouts. This to me and whats, going on with ftx and alameda, and some of these others rings in my mind, almost bail out like its not exactly a bailout, but it reminds me of a bailout. This is a big organization with lots of capital effectively picking winners, saying i want you to survive, heres a lifeline, and i know its a free market, ftx alameda blockfi. All these organizations are able to do whatever it is they want, but it doesnt mean that everyone has to agree with it on principle, its perfectly fine. If blockfi wants to do this, i have some personal issues with how block five conduct themselves in recent past. Although i will say clearly, their risk management processes have done something by reducing rates of of yield to basically nothing because they havent really been having to pay out as much maybe theyre in a better position financially. Because of that now to me, though, the risk versus reward is: why would i use block fi if im not getting rewarded enough to warrant the risk of putting my assets in custody? Hello celsius right whats, going on? There is proof enough that the yields are not enough to warrant the risk thats the truth, but back to the ftx story.
I want to hear from you in the comments. What do you think? Do you think ftx making investments strategically in places? Basically, bailing out companies is this reasonable, or is this something youre concerned about or somewhere in between? Let me know what you think about this. The next story is from cointelegraph as well: bitcoin miners sold their entire may harvest according to a report. Bitcoin miners are finding it extremely hard to continue their operations as the cost of production has exceeded the profit. Now youre going to see and youre already starting to see it. I believe there was a 14 or 15 reduction in hash rate, thats people shutting down on mining, thats people backing off the um, the aggressiveness of their operation, cutting costs. We saw, as we were, entering in this period of really really bad bitcoin price action. We had hash rate at an all time high. We had bitcoin difficulty at an all time high. You also have electricity costs approaching all time highs or well past. All time highs around the world as a result of other macroeconomic and socio political events. Now what this is going to mean for the average bitcoin holder is that not a whole lot is going to change right in reality, bitcoin miners selling their bitcoin on the open market as they earn. It has an effect on the markets right, but its not a a crazy effect on the markets if they sell a months worth of worth of bitcoin thats, indicative of there being a sort of um dissociation or a decoupling, or this delta between the costs associated based On hash rate and difficulty and the price of bitcoin and may was a really really bad month june was a really really bad month.
So im sure were going to see the same thing happening for bitcoin miners here in june to an extent selling to cover their costs. Bitcoin difficulty and hash rate are going to adjust to this based on the economic effects, and so youll see this start to minimize, especially if the price of bitcoin stabilizes and starts to move back up. Youll see miners either coming back in the game or less miners selling on the open market as they earn that bitcoin for the block subsidy rewards. So this is obviously something that you dont want to see, but not the end of the world, at least at this point, the next story is from coindesk coindesk. The banner on your website is terrible, really kills me its always jumping in the way of the headline. Anyways the headline reads: goldman sachs leading investor group to buy celsius assets according to sources. The wall street firm is seeking 2 billion in commitments from investors to buy distressed assets at steep discounts if the crypto lender goes bankrupt. So this is continuing now on the story. Swirling around about insolvency and bankruptcy and all sorts of drama going on at celsius. This is very concerning for anyone who has assets there. I have some assets there. A lot of other people have assets there. The reality is, you should be considering those assets lost until further notice. It may end up being okay. It may not just be aware of that.
Goldman sachs and others are, at this point, probably positioning to try and get crypto assets at a steep discount. Now for those who are involved in the celsius mess, this is not something that you really want to be thinking about, and i understand that but im looking at this from a silver lining perspective, goldman sachs and other investor groups looking to buy these assets, these distressed Assets at a discounted rate implies their their thought at least that theres upside in crypto, either short, mid and or long term. So what that means is that you have these sophisticated investors that are seeking out these assets now thats a positive thing in many different ways, but its a positive thing in the sense that theres investor interest here well have to see how this plays out. If they can get 2 billion in commitments that would even double down on this sentiment, this idea that theres positive as positive sentiment about cryptos or at least certain crypto assets, not all of crypto, but certain crypto assets going forward into the future so well have to Watch as this story unfolds can celsius avoid bankruptcy. Can celsius recover from this its really hard to say. I really dont know the answer to that question. Many people will say its impossible. Other people will say its possible and theres. A lot of differing opinions in between were just gon na have to wait, see and find out, but it definitely wont be any time soon that we see a full recovery.
The markets are gon na have to turn around for that to really happen, and then the last story of the day here is one of the projects. That is a comeback story of the ages, one that i think many are hoping celsius can become and other projects can become thor chain now thor chain mainnet now went live just this past week on seven different networks. This is a cross chain protocol or a multi chain protocol and of course, the price of roon jumped right back and sort of bucking the the bear market trend and there have been a few all coins that have been doing that uh, both in the negative direction And positive direction kind of splitting off from the rest of the group in terms of big moves. But what really happens here is you have the culmination of years and years and years of work and and the results of some of the hardest fought recovery. Um sort of recovery, planning processes and recovery development processes that ive ever seen in crypto, if you remember way back when the the all of the thor chain projects were basically ground to a halt after several high profile exploits everyone thought thor chain was done done for Cant recover from this, but in reality they knuckled down, they went back to the drawing board, went back to first principles, fixed the issues engaged with auditors and did full scope audits top to bottom. They took their time, they came back, and here we are the culmination of all that effort, thor chain and all these sort of cross chain, d5 sort of swaps, projects coming into the mix landing on mainnet, and what this ultimately results in is a great model for Crypto projects that may have faced issues that may have failed to deliver a feature that may have suffered an exploit, etc.
Even if you find yourself in that position, you can come back from it. If you do things the right way and you earn back the trust of the community thor chain is a great community, but it also is attracting back newer investors. People who didnt originally invest in them before, or even people who way back in the day might have been a little bit soured and negative on on thor chain because of what happened with all the exploits. So really its just proof in the pudding that thor chain and other projects like it can recover from even some of the worst scenarios and even the worst occurrences, and see success in the middle of june in a bear market having the price of their token spiking And launching significant features – and you know, bear markets – are for building. So this is the time for a lot of projects to capitalize on this same type of story. So just keep that in mind. If youve got a project that youre interested in thats kind of not doing well right now, there is, there is hope, not a guarantee, but there is hope that it can come back. If the project team takes the right approach, now thats going to do it for crypto over coffee today, folks, thank you so much for watching. As always, if you have some time to stick around check out, another crypto video ive got linked up right here, really appreciate the support on the channel ive been traveling.
A lot ive been working on a lot of different projects right now, so videos are coming a little slower, but im going to be continuing to make content here in the bear market.