Is the Crypto Crash a Buying Opportunity?

There are four ASX-listed Bitcoin ETFs (VBTC, QBTC, IBIT, BTXX) and one related to crypto infrastructure – CRYP.

Everyone is wondering whether the October 10 crypto crash has damaged sentiment permanently or provided a temporary buying opportunity. Here's the Bitcoin chart. Down 26.6%.

Here's the Ethereum chart. Down 34%.

The crypto crash saw an index of secondary coins drop 70% whilst Bitcoin dropped 34% at worst. That caused billions of dollars worth of losses, many of which were suffered by leveraged retail enthusiasts. More painful was how quickly it happened, the cause (a single Trump tweet), the lack of warning and the seemingly cruel profit made by those ‘in the know’, which, if you believe the conspiracy theory, included the Trump family who were supposed to be ‘for the crypto people’, not exploiting the crypto people. Loyalty, it seems, counts for nothing if there’s a dollar to be made.

The question I'd like to know is whether this seismic event was a culture shock that will forever be remembered in crypto history, or a moment that will soon be forgotten.

 

What Do You Think?

This is what I think.

They say it is easier to blow up a balloon that has already been inflated, but not if it’s gone down because somebody ripped a hole in it. The October 10 crypto crash brought home to everyone in the crypto game, as well as the intrigued masses watching from the sidelines, that crypto, including Bitcoin, is not an asset class with any reliability, it’s a confidence game, and therefore, a marketing game, where the money is in razzing up the masses (the prices) and then exploiting the bunnies, gullible enough to have believed it.

The crypto crash revealed the true colours of this 'asset class'. It's dog-eat-dog, and the biggest dog is not to be believed, again, ever. Crypto has lost years of hard-earned (or is that hard-marketed) integrity and legitimacy, permanently.

So has the Trump family. Rather than being the crypto kings, the Trumps have become crypto toxic.

So, back to the beginning. Is this a temporary setback or a mortal wound?

Everything is forgotten in time. But for now, the crypto crash has killed a lot of players, killed a lot of faith, killed a lot of confidence, and, I believe, mortally wounded the space. You can fool all of the people some of the time, but you can't do it twice once the game has been revealed. The Trump family's marketing of the crypto space since Trump's re-election to Trump's tweet on October 10 will never be repeated.

Never again, will so many, allow so few, to fool them, for so long.

(Actually, they will – people are pretty stupid).

Our job is to make money out of any price over any timeframe, and we have the opportunity to make money out of a volatile Bitcoin price through four ASX-listed ETFs. We don’t rule out exploiting those in the future, but until the crypto crash has been forgotten, it was not a fleeting moment of weakness to be bought; it was the exposure of an asset class for its inherent weaknesses – it's a confidence game in which the biggest fool loses with no intrinsic value to fall back on.

Without intrinsic value, can crypto and Bitcoin ever qualify as an asset class alongside property, equities, bonds and cash? Can an asset class exist if it can't be valued, is priced by sentiment alone, has no intrinsic value, and is not... safe?

And for those of you in the industry, the professionals, who have been tempted to, or do, consider crypto and Bitcoin as a credible asset class to be included in financial plans and portfolio diversification, I ask you, what is your justification?

Because if you lose money for other people in this ‘asset class’ as a professional adviser or fund manager, don't be surprised if you get sued. Because unless you have been brainwashed by popular delusion, you are going to find it very hard, in law, to ASIC, under your licence, to argue that you had any reasonable basis for your recommendation.