A big THANK YOU to Josh Sigurdson of the World Alternative Media for hosting Trace Mayer in one of the best interviews I’ve seen on the state of cryptocurrency and the financial markets in 2018. (Link to video at end of article)
During a prolonged bear market, many lose perspective on what the cycle means for retail investors. Yes, I have friends who entered the market late 2017 and ask the current price of bitcoin or Ethereum sarcastically whenever they see me. I hear the prognosticators predicting certain news announcements, events, or government decisions will break us out of the malaise. Yet, I’m not pessimistic or anxious for a quick turn of the market.
Many public figures do not fully express, what seems obvious to me, when it comes to the current state of bitcoin and cryptocurrencies. This is the absolute BEST time to be involved in this nascent market.
Speaking publicly about finances or markets, does require a higher level of courage. However, I’m always amazed by the reservation leaders in the space exercise while in front of a mic. Thus, the interview with Trace Mayer was a reprieve from timid drivel heard daily.
(I will analyze this video in order of questions asked, place Trace’s words in quotes, and provide a time reference for each topic. Feel free to substitute the word “bitcoin” with “EOS” or any of your favorite cryptocurrencies)
What do you think about bitcoin price predictions?
1) Market Downturn & Consolidation, @1:00
My feelings are exactly the same when Trace says, “It’s been great”.
While still working for fiat, I want as much time as possible to acquire jewels that I believe possess staying power and will out-perform in the next bull market. I personally don’t believe we have 6-18 more months of bear market, but hearing it was a pleasure to my ears.
Anger may prevail when some hear, “It’s good to have a real shake-out of weak hands”. No one wants to believe they are weak or that it’s good they left the market at a loss. However, this concept is based on historical repetitive behaviors. It’s what happens naturally in every market, and savvy investors look for such opportunities. The saving grace for those who did exit prematurely is, they can always come back. If realities are faced and lessons are learned, their hands will be much stronger. For those who continue to pay attention to developments in the space, it is undeniable that, “Now is the time to build, hodl, and acquire”.
2) Introduction of the Mayer Multiple, @ 1:43
I enjoy discovering new research tools and investor insight sources within the crypto space. Trace introduced a source I was unfamiliar, Preston Pysh from The Investors Podcast, (Updates can be followed on Twitter https://twitter.com/tipmayermultple)
The Mayer Multiple can be summoned up as a measurement based on bitcoin’s 200 day moving average of the probabilities of various price multiples from bitcoin’s brief historical context. It’s not a predictor of future prices but a tool used to understand the probabilities of price multiples and what is normal and abnormal levels. Some declare, anytime the Mayer Multiple is below < 1.0 ratio, indicates a great entry point.
Bottom line, this helps us suppress our emotional mania about when to enter and exit positions to avoid Buy High/Sell Low syndrome.
Have we seen the bottom yet?
3) Answer to the “bottom” question. @3:00
The best answer I’ve heard all year to this monotonous favorite media question, “I don’t really care.”
Such an answer invites misunderstanding and attacks from numerous directions. However, if the trolls stick around long enough to hear the reasoning behind the sentiment, they too could enter the place of Zen.
The answer is based in having vision. Trace is able to see the infrastructure developments in crypto from projects like Bakkt, LedgerX, and Eris exchange. What are 2 primary effects of institutional players who offer swaps, derivatives, and investment funds?
i. They must buy a lot of crypto to hold and securitize the traded paper derivatives.
ii. They will open the doors to crypto-friendly government regulations because Wall Street et al, will eventually trade whatever they want to trade.
The American market is still the ultimate honeypot, and there is much movement left in the market for a massive surge in asset prices. Trace stated, “Currently people are buying Calls at very high strike prices, $50k/ bitcoin, with December expiration, at $78/per contract, 175 contracts”. The level of detail he provided in this example, proves he’s looking at the evidence so often, the figures are memorized. This is not someone making things up to look good, he truly knows what he’s speaking about.
With bitcoin being a limited resource, “…everyone wants to ‘chase the rabbit’ and when it runs, it runs like crazy!”
4) In the meantime, Develop your human capital. @4:20
Before cryptocurrency, I was deeply involved in the real estate investment world. Many gurus pushed the idea of becoming your own bank. It’s a very empowering and freeing concept that attracts most independent minded people. Cryptocurrency offers the optimal path for self-banking. However, as I began to plan how to communicate this concept to the masses, I realized only people who are what Trace described as “Hodlers of last resort” will do all that’s needed to be their own bank.
Even for true crypto-enthusiasts, we can take our focus away from prime directives. So Trace reminds listeners to go back to basics during this period and develop your human capital. Examples are, “proper security…setting up your banking infrastructure…finding crypto friendly banks”, generally, preparing to protect yourself and thrive under all scenarios.
What do you think about a potential ETF on bitcoin?
5) Bitcoin ETF @5:52
I appreciated a more thoughtful and nuanced argument about the good & the bad of the SEC and other regulatory bodies.
When it comes to governing bodies, the crypto community must become more sophisticated in how we view individuals within government agencies. We must learn to NOT paint everyone with a broad description of corrupt or bad. We must point out and support those who are on the right side of thinking within these agencies. So, when Trace gave an honorable mention to Commissioner Hester M. Pierce of the SEC, it set the right tone we all should adapt. Commissioner Pierce decisions support opening the ETF market to crypto investors without prejudice and the burdens of stifling regulations. There are agents who realize governments must encourage start-up crypto projects to take risks. Many want policy that is clear and protects honest entrepreneurs and investors to interact freely.
We have champions in government, and we must bolster these people and continuously equipment them with ideas, examples of success, and if necessary, lobbying for removal of their opposition.
6) Understands cautious stand from some officials. @6:12
When I first entered the crypto world, I had hopes of self-policing within the community without the need for Big Brother protections. However, the reality of the fallen state of mankind shows itself in every conceivable fashion in this money focused industry. White hat hackers were not able to stop the thieves, saboteurs, and human Decepticons. Good actors within scam projects were not willing to reveal founders’ names and locations. Honest projects were not getting the larger support needed because so many dishonest ICOs proceeded them and caused extreme levels of caution from larger investors.
Trace points out the very exchanges the hopeful retail investors are willing to chance their monies within, are chalked full of shady practices:
i. “No account audits”
ii. “Front-running trading against clients”
iii. “Running the Stops”
iv. “Right now, this is where the price discovery is happening (in places where we do not fully know what is going on)”
v. “Guess what’s going to happen when price discovery moves to a more controlled environment?”
So, we must grant understanding to the enormous burden of responsibility that causes some government agents to proceed with caution. Whether it’s Smart Money or retail investors, we can’t possibly audit and ensure all exchanges are operating decent and honestly. We need disinterested 3rd party auditing with the power of subpoena and tools to help set rules of operation across the industry. With accountable and regulated businesses, confidence for entering this market will increase for those responsible for protecting and growing enormous portfolios.
However, this market is well beyond the jurisdiction of any one governing body, so how will they establish and enforce even the good rules?
7) Window is closing for the retail investor. @7:31
Once institutional investors are assured and ready to buy, those who want to establish a Futures market, a custodial fund, or ETF will need large sums of bitcoin or other cryptocurrencies. Futures must have Cash (bitcoin) settlement, and Options must be fully collateralize. Even if custodial responsibilities are fractionally reserved, estimates require billions of dollars worth of crypto that must be purchased for the trillions in paper notes that will be purchased.
As Trace points out, there will always be bitcoin available to purchase or earn, but the average person will only be able to earn or pay for a fraction of what our purchasing power can acquire today.
How well could bitcoin prosper in a crash?
8) Bitcoin, the strictest hardest money the world has ever seen. @9:40
When we are students of economic history, train ourselves to seek opportunities in every market cycle, and establish positions for what’s next, we can answer with confidence when asked about bitcoin in a market crash, “It’s gonna do beautifully!”
This Trace Mayer answer may seem shocking to those who desire the status quo and fear major disruptions. However, this answer is perfect and should be the answer for all who are serious about the cryptocurrency space.
The reason? For the first time in history, every individual can gain access to the truest form money. Opposite from over-inflated fiat currency, cryptocurrency is, “Totally equity based and the hardest strictest measure of money”.
9) It’s a totally fake world out there, @11:55
To know how the economy works and what our monetary system is built upon is a sobering and tragic revelation. Trust, belief and hope from the masses has enabled financial elites to engage in, “hypothecation and rehypothecation…pumping more debt to keep economy afloat…artificially low interest rates”.
Trace even dares to talk about what few others are willing to share. Such as the Gold/Silver Comex markets. Are the notes truly backed by commodity reserves? How many people really attempt to Take Delivery of the metal they bought? Could this market just be another form of fractional reserves?
Also equity shares, could they be phantom stocks? Of course they could. One paper stock a company has issued could be digitally resold by a broker multiple times over. Are retail investors checking the authenticity of the CUSIP number? Not to mention the explosion of the derivatives market.
After the money bubble, equities bubble, bonds bubble, and derivatives bubbles implode, we will forever ensure our monetary value going towards any financial instrument is secure and verifiable. Some are seeing what’s about to occur and are adopting Trace Mayer’s mindset, “…we are moving to a ‘Don’t Trust, Verify’ world, incredibly exciting!”
There’s all these problems, but there are solutions!
10) There is no way to avoid the final crack-up. @13:30
The next phrases are unique ways to describe underlying motivations from people hoping for gains from the traditional financial systems in the face of evidence. Trace’s description of “Being Greedy” if a person holds on to hopes for a pension, traditional brokerage account, or even a bank account that’s backed by FDIC is a brave characterization of 80% of the American population.
So, why does he say this? Because there is no excuse with all the information we can access. People must know they are actively participating in, “Privatize the gains, socialize the losses”. Everyone playing the old game are premeditating their cry to the government and demanding others to pay for losses (the money bailout). But, where will the value come from?
This is why, “Bitcoin will be absolutely brutal…”. Those who possess a secure form of money will possess the true wealth. Those who know how to secure and self-manage their funds in a cryptocurrency world will be the financially secure.
We must continue with confidence because, “…in the future, there will be people who own bitcoin and people who don’t…The wealth transfer will be absolutely massive”!
Watch the entire interview HERE.