A Blog by Jonathan Low

 

Jun 1, 2018

Why Crypto's Most Devout Believers Are Suffering a Crisis Of Faith

In a financial system committed to finding certainty, it's hard to sell cryptos' extreme volatility as an appreciating asset. JL


Jemima Kelly reports in Alphaville:

A luxurious Beaux Arts townhouse at 10 East 76 th Street, Upper East Side, New York City has been listed for $29.95M USD, and 1.5 times that amount for digital currency. There’s been a pattern in which investors in cryptocurrencies have chosen to take some of that and put that into hard assets. This is becoming more and more of a trend. That's understandable, given that two-thirds of the value has been wiped off what HODLer-types like to call the crypto “market cap” since the heady days of early January.
Last week, we received a press release about a luxury townhouse currently for sale in Manhattan's swanky Upper East Side for just shy of $30m. As you might expect for that kind of price tag, it's a pretty fancy place, featuring 13-foot “majestic ceilings”, original mosaic tiled floors and a white marbled staircase:

But there's an added twist... you can buy this mansion with crypto! Time for all the naysayers who claim bitcoin, ether and XRP are useless payment methods that you can't spend anywhere to pipe down, because these three excellent
speculative instruments currencies can buy you a crib that even Chuck Bass would be proud of.
The seller is Claudio Guazzoni de Zanett, an investor in crypto and fintech, whose hedge fund Zanett Asset Management invests in “anything and everything Digital + BlockChain”, according to his LinkedIn.
From the release, with our emphasis:
A luxurious Beaux Arts townhouse at 10 East 76 th Street, Upper East Side, New York City has been listed for $29.95M USD, and 1.5 times that amount for digital currency
Wait, what?
Why is de Zanett asking for an extra $15m if you want to pay with your hard-earned crypto HODLings?
Valerie Lettan of Douglas Elliman Real Estate, the brokerage where the property is listed, explained it to us:

The reason for the higher sale price in cryptocurrency is due to the volatility in the market, the value of which has fluctuated substantially in recent months.

Still, he is a strong believer in cryptocurrency.
That's right. Someone who is being sold to us as a strong crypto believer has so much faith in crypto, he is asking for a 50-per-cent price premium, apparently just for the risk of having to hold onto the stuff until he can get rid of it.
Lettan continued:
There’s been a pattern in which a lot of investors in these cryptocurrencies have chosen to take some of that money out and put that into hard assets. This is becoming more and more of a trend.
Or, to put that another way: selling crypto is becoming more and more of a trend. And it seems like putting crypto into “hard assets” is less difficult than trying to find a buyer for the $44.925m worth of crypto coins you want to ditch -- hence de Zanett's 50-per-cent premium.
Lettan, again:
This would be a historic transaction should a buyer come through. We believe strongly it could be someone from outside the United States as that’s where a lot of the bitcoin holders come from.
But why would a hypothetical mystery foreign investor whose earnings have been totally legitimately won choose to pay a 50-per-cent premium? It's a mystery to us.
De Zanett isn't the only one who appears to be losing the faith. That's understandable, given that almost two-thirds of the value has been wiped off what HODLer-types like to call the crypto “market cap” since the heady days of early January.
The tone in online crypto forums has begun to shift conspicuously, from former exultations of “When Lambo?” and “Moon!” to incessant moans about “FUD” being spread, reassurances that prices are only plunging “ because it’s the volatility of the world entering the stability of Bitcoin in ebbs and flows”, and calls to “ keep the faith”.
And when believers start to lose the faith, they need a higher power to turn to.
Step in John McAfee, the software-entrepreneur-turned-crypto- fanatic who has literally owned up to being paid hundreds of thousands of dollars to pump crypto tokens -- “only products and services that Mr. McAfee truly believes in”, says his promo site -- but apparently still offers comfort:
We watched the “motivational videos” so you don't have to. And if you were in doubt over the extent of the fervour on display, here is an excerpt:
I'd like to talk about the war that we're all engaged in. Whether you see it as a war or not, it is in fact a war. Banks have declared war on us by denying us the ability to use credit to purchase crypto; the government has declared war on us; the SEC is trying to abscond with crypto as if it were securities, which it is not. We're in war. What can you do? What can we do? Take action! ...

We are not a security. We are coins; we are currency. They are frightened of us.
Onward, crypto soldiers! We are coins; we are currency! It seems that fake battles make for great marketing.
For the less militarily inclined among the wavering Bit-lievers, there's therapy:
And if all else fails, there's always technical analysis.

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