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Market Lab Report - This time is different

Market Lab Report / Dr. K's Crypto-Corner

by Dr. Chris Kacher

The (R)Evolution Will Not Be Centralized™


Blockchain as a metaversal catalyst

Some say the metaverse is a meaningless buzzword, but in reality, as with all words meanings, it has its roots in the PC revolution of the 1980s which pushed embryonic versions of the metaverse into mass adoption. Blockchain exponentially accelerates metaversal use cases from gaming to art to music to jobs to law to governance to publishing to most all creative endeavors.  Blockchain as the beating heart of the metaverse blurs the line between the physical and digital worlds. Blockchain creates an efficient and transparent system for conveying rights and ownership such that groups can quickly coordinate to fund and pursue goals, catalyzed by DAOs. 

Decentralized platforms on which to build and create provide a dev architecture that is limitless, private, secure, and uncensorable while minimizing switching costs. Contrast this with centralized systems that own your data and control your money. Such may not seem like such an issue until it is an issue. Those who tried to help the protesting truck drivers in Canada had their bank accounts frozen.

Freedom and transparency through blockchain which makes truth economic

AI together with blockchain can make telling and reporting the truth economic. "I may not like what you're saying, but I defend your right to say it." Meanwhile, the centralized cancel culture spurs censorship. We are supposed to convince people of things through rational debate, not starve them of information.

Fundamentally, blockchain has to do with freedom. Bitcoin is the magna carta of code. Blockchain drives transparency. Freedom is the use case. The 3AC disaster couldn’t have happened with an on-chain protocol that was transparent.

This time is different

Just because Bitcoin is at or below major points of support does not mean it has to get support or have a quick recovery. The macro economic situation today is far worse than in prior situations given record levels of debt, interest rates near the floor, and soaring inflation. This is what most do not understand. Instead, many cling to the hope that they might recover part of their huge losses by HODLing. Plan B on Twitter has a wide following. He uses the stock-to-flow model to chart the price of Bitcoin. It has worked very well over the years, but all models can be strained to breaking when conditions change.  


Crypto has never been through a prolonged recession. The last one was in 2008 before Bitcoin came into being. The one in Mar-2020 was extremely short-lived because the Fed chair pumped massive sums into the system via QE.


The upshot is Bitcoin and stocks can fall a lot lower than current levels. Using the rationale that Bitcoin has already fallen 75% so, "How much further can it fall?" can lead to huge sums lost. In 2014 and 2018, it fell -87.5% and -84%, respectively. If Bitcoin were to fall again to such levels, it would represent another -50% drop from -75% if it fell to -87.5% off peak, not -12.5%. #avoidbadmath

In the meantime, we are dead cat bouncing. Biden is attempting to reduce the price of oil via favorable taxes so companies will produce more oil. This could help CPI moderate. M2 is decreasing slightly but never materially if history is any guide. Supply chains remain crippled, so this dead cat rolls over on the next piece of bad news. This could come in the form of the next CPI/PPI reports or when unemployment or weekly jobless claims start to accelerate. In prior recessions, unemployment typically spikes going from very low to very high levels over a short period of months at which point, welcome to stagflation that make the 1970s look tame. 

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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2022 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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