A Candid Discussion About the True Risk of Cryptocurrencies

the true risk of cryptocurrencies

It’s time again for a difficult but candid discussion about the true risk of cryptocurrencies. Any discussion of the true risk of cryptocurrencies is generally received very negatively by the asset holders. In fact, quite anti-intellectually, some told me after I issued a warning this past January on my patreon platform to my patrons that silver was about to take a big hit in price from $30 an ounce and that gold at $1,960 an ounce would follow silver down in price, that they were quitting my patron because he didn’t want to listen to such “negative” outlooks from me, when so many others online were being so positive and stating that gold and silver prices were about to launch to much higher prices back then. One would think that anyone holding an asset would want non-emotional analysis of an asset for the greatest clarification of how to behave moving forward, but the difficulty of separating emotions from investment decisions is very high on the curve of proper investment analysis.  Many only want to hear what they want to hear. Ironically, the two types of people that will dismiss information they had not yet considered into their future decision making are the dumbest and the smartest people. I’ve already explained why the dumbest people dismiss conflicting information with their views, but the smartest people also engage in this self-sabotaging behavior because they believe they are the smartest people in the room so therefore, they firmly believe that no one else’s dissenting opinion can refine their own in a positive manner.

However, there are also commonalities for why the dumbest and smartest people dismiss helpful information. Both groups hold an incomplete view of the topic at hand but believe their information to be complete. With the dumbest people, they hold an incomplete view because the only people from whom they solicit an opinion are people that hold the exact same views as themselves. Therefore, their risk assessment of an asset is completely biased in one direction only and they will never understand the true risk of cryptocurrencies. With the smartest people, they hold an incomplete view simply because they are not aware of evolutions in the industry that have happened but yet believe their information is complete. For example, I’ve met plenty of MBAs and PhDs in economics from “top” programs during the time I worked at Wall Street firms and big global banks to understand that their understanding of price setting mechanisms, because their understanding was extracted from an academic career that cost them hundreds of thousands of dollars, was at least a decade out of date. This bias, too, prevents an understanding of the true risk of cryptocurrencies, Furthermore, even though they had no understanding of how technological advancements had completely changed price setting mechanisms beyond their knowledge base, they were committed to their outdated knowledge base simply because of the large sums of money spent on acquiring the knowledge they held.

However, I view my job to issue warnings of what I see as big potential risks to price, regardless of my personal stake or interest in an asset price’s behavior, and after that, it is up to others to decide whether or not to heed them as I can’t control that part of the equation. I know that many gold/silver stackers that heeded my multiple warnings that gold/silver prices were going to tank at the start of this year before I finally issued a green light to buy gold/silver asset a few weeks ago (all issued on my patreon platform) heeded them because they had been long-time investors that had undergone multiple iterations of the volatility game executed by bullion bankers, and had observed the markets zig at times when most thought it would zag. Having this level of experience is invaluable to the formation of processing algorithms of information inputs in an accurate manner.

In other words, experience granted them the understanding that the best way to analyze any asset is to consider all perspectives, even those that they may not want to hear and especially those that they may have an instinctive reaction to dismiss. My perspectives will not be right 100% of the time of course, but you can be assured that they will never be emotional. A great majority of the analysis I continue to observe online about financial assets remain emotionally driven and therefore of very little value, and worse yet, likely to be harmful.

As an example, when analyzing risk reward paradigms in regard to the true risk of cryptocurrencies, if one is critical of Elon Musk’s recent tweets about BTC, which have been deemed responsible for the most recent decline in BTC price, but yet has never worried about how much the declaration of dozens of prominent BTC millionaires and billionaires of year end $300,000 BTC prices have speculatively driven BTC prices higher earlier this year, such an evaluation perfectly elucidates confirmation bias – the condemnation of prominent opinions that drive BTC prices lower as manipulation but the blatant refusal to acknowledge equally prominent opinions that drive prices higher as manipulative. In fact, if you’ve never thought about how you may analyze information but realize that this description fits you, then the below podcast will definitely be beneficial to your ability to analyze risk and reward without the concealing cloud of emotions moving forward.

I obviously cannot control the behavior of asset prices, much  like a Mike Novogratz and Elon Musk can do with a publicly issued statement, which is precisely why I can, with a clear conscience, continuously call out anyone making $300,000 BTC predictions for the end of this year, much like I have done in the past with all the charlatans that perpetually issued end of the year $10,000 gold price predictions every year that never came true to further their business profits. Not one of these time-bounded price predictions of an outrageous nature in the history of financial price predictions has ever come true. Not one. That alone should be an intellectually driven basis to dismiss them all.

There are people that claim they have made outrageous predictions about asset prices in the past that came true, but their lies are easily exposed by looking up the details of their public price predictions. For example, some people may claim that they issued $40,000 BTC price predictions that came true when BTC was at $3,000 in 2018, but conceal the timeline of that specific prediction. When one digs to discover the timeframe of that prediction, they will discover that that the timeline for such predictions was by the end of 2018, and that they issued it at the end of 2017 when BTC was at $18,000, then peaked at $20,000 and crashed to $3,000 by the end of 2018. And then even though they issued the same price prediction in 2019 and were insanely wrong, and in 2020, issued the same prediction and were madly wrong again, in 2021 when their prediction finally came true, they boast of their prediction as if they issued it at the lowest price of $3,000 in 2018. The similar analogy in precious metal markets would be for a gold analyst, if gold prices hit $10,000 in 2023, to publicly state that he made such a spot-on prediction, even though he had predicted $10,000 gold prices every year since 2015 and was madly wrong for eight consecutive years before his “prediction” finally came true.

Though in November of 2020, I predicted publicly (on my YouTube channel) a BTC doubling in price from its $20,000 price then to a $40,000 price in 2021, I stand by my claim above that no financial analyst has ever given an outrageous time bound prediction about asset prices that has ever come true. I don’t consider a doubling in asset price an outrageous prediction so even though my prediction came true, it wasn’t particularly accurate regarding the upside of its price in 2021, as the price has already far topped my price prediction at $60,000 earlier this year. In addition, I’m sure many analysts in the past have accurately predicted a doubling of asset prices within a 12-month time frame. Doing so successfully is not that that rare an event, even if one hardly ever makes price predictions within a given time frame. However, regarding price predictions that an asset will soar by more than 5X, 10X or 20X in a narrow time frame, I have yet to ever observe one that came true.

For example, as of the writing of this article on 15 May 2021, ETH is trading at $4,100. For someone to accurately then call either a massive price spike or crash by a certain date no further out than one year has never happened to my knowledge. If I were to predict a price crash of ETH from $4,100 to $100 by June 2022, that would be an outrageous price prediction and almost certainly will not come true within that timeframe. I have never witnessed a price prediction of this magnitude, provided within a tight timeframe with an exact expiration date, ever come true. Thus, I can only conclude that the any person that ever issues such predictions is completely disingenuous as they also must 100% understand that there is not a chance of their predictions coming true. Yet, they still voluntarily provide them in the mass media, knowing they will go viral based upon the prominence of their name (Novogratz, Tom Lee, etc.). Consequently, only one conclusion can be drawn (and the same would apply to the “gold and silver to the moon by a specific date” narratives as well).  They are either trying to pump up or crash the price of an asset they own or plan to short for personal financial reasons and NOT because they actually have any strong conviction in their outrageous predictions.

With that said, having lived in both the Western and Eastern hemispheres of the world, I have observed repeatedly the East serve as a testing ground multiple times for financial schemes before they are executed in the West. Living in Asia, I have my ear to the ground regarding the developments in the cryptocurrency world that often go unnoticed and unreported in the West, but if implemented, would almost certainly influence the price of cryptocurrencies on a magnitude far greater than an Elon Musk appearance on Saturday Night Live or an Elon Musk tweet about the great energy consumption of BTC mining operations. Again, I am not an expert in cryptocurrencies, and have never claimed to be, but I do understand risk at a complex level and thus I believe my assessment of risk in this asset category to be top tier.

If you would like to hear much more about the true risk of cryptocurrencies, I have created a podcast here titled, “A Candid Discussion of Real Risks in Cryptocurrency Speculation”, available to all skwealthacademy patrons at the Benefactor and higher level of patronage. To be transparent about the content of this patron only podcast, I do not provide any price predictions for BTC, doge coin or Ethereum in this podcast, but only discuss real risks that exist at the current time and the influence this risk could have on future cryptocurrency prices. So please do not sign up expecting more BTC price predictions, at least at the current time. In the future I may offer some, but for now, I am not. I released this podcast to my patrons, even though I knew it most likely would not be well-received by most of my patrons that were cryptocurrency holders, because of one belief and one belief only – my sincere believe that listening to alternative opinions that they had not yet considered can only benefit their strategies down the road, and perhaps may clue them in to the true reasons behind large price movements that happen in the future.

To keep up-to-date with all my content, please subscribe to my free newsletter here, my podcast here, and my patreon platform here. To learn more about the skwealthacademy curriculum for my soon to be launched academy, click here (delayed for a year now because of the economic lockdowns).

J. Kim

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