OK, bring on the hate. I’m ready. After a comment like that, I fully expect to be ‘cancelled.’ 🙂
Look out below! Coming down fast!”
Maybe. After all, the value of just about everything is falling fast these days. Except, of course, interest rates and inflation. Oh, and the price of industrial real estate. They all continue their rise to the heavens!
But not Bitcoin. Bitcoin is heading south. Sure, it could reverse direction — it’s done that before — but I don’t think it will. My opinion. Hate the message … but don’t hate the messenger! 🙂
BTC is down more than 50% from its high as I write this blog. On the other hand, so is COIN. COIN is the ticker for ‘Coinbase Global, Inc’ commonly known as Coinbase, a ‘cryptocurrency exchange platform.‘ In fact, COIN is doing far worse. On its first day of trading COIN closed at $328 per share. Today it is trading at about $52 — an 84% decline from that first day of trading. But so is Rivian, Robinhood, Carvana, Peloton, and DraftKings. And so is TOST — the symbol for Toast. Yes, I’m sorry to report that Toast is toast. After closing at $62.51 on its first trading day, you can now buy Toast at $12.88 per share — ironically, about the same price as a loaf of bread and one quart of milk. 🙂
If you are new to my blog, or you need a refresher on the SHI10, or its objective and methodology, I suggest you open and read the original BLOG: https://www.steakhouseindex.com/move-over-big-mac-index-here-comes-the-steak-house-index/
Expanding. Significantly. By the end of Q1, 2022, in ‘current-dollar’ terms US annual economic output clocked in at $24.38 trillion. Yes, during Q1, the current-dollar GDP increased at the annualized rate of 6.5%. The world’s annual GDP rose to about $95 trillion at the end of 2021. America’s GDP remains around 25% of all global GDP. Collectively, the US, the euro zone, and China still generate about 70% of the global economic output. These are the big, global players.
It attempts to predict the direction of our GDP ahead of official economic releases. Historically, ‘personal consumption expenditures,’ or PCE, has been the largest component of US GDP growth — typically about 2/3 of all GDP growth. In fact, the majority of all GDP increases (or declines) usually results from (increases or decreases in) consumer spending. Consumer spending is clearly a critical financial metric. In all likelihood, the most important financial metric. The Steak House Index focuses right here … on the “consumer spending” metric. I intend the SHI10 is to be predictive, anticipating where the economy is going – not where it’s been.
If the SHI10 index moves appreciably -– either showing massive improvement or significant declines –- indicating growing economic strength or a potential recession, we’ll discuss possible actions at that time.
New BTC cult members are needed. We need you to “buy the dip” in Bitcoin. Desperately. And it’s been quite a dip:
After peaking in November of 2021, the ‘dollar price’ of Bitcoin (BTC) has fallen almost 56% in value. But that fact is not what makes Bitcoin a cult. What makes Bitcoin a cult is the seemingly unshakable belief of BTC ‘investors.’ No matter what, ‘Bitcoiners‘ believe that BTC is the future for many reasons, including the oft-quoted commentary that it stands as “a decentralized alternative to government-controlled currency.” Sorry, folks, Bitcoin is not a currency. It’s not even a good ‘store of value,’ as many cult members suggest.
As the chart above clearly demonstrates, BTC lacks the stability needed for either. Whether or not it plunges to zero from here, or bounces back to new heights, remains to be seen. But make no doubt: The value of BTC is highly correlated with many other ‘high-risk‘ assets that do not generate income. But unlike Toast, which generated about $1.7 billion of revenue in 2021, BTC generated none. On the other hand, Toast lost almost half a billion dollars during 2021. Bitcoin did not. 🙂
But without a new source of BTC buyers, its value is likely to continue to fall. A lot. Bitcoin needs YOU!
Risk assets are getting crushed right now. Values are plummeting. NFT values are thru the floor. Are the ‘Bored Ape Yacht Club‘ NFTs holding up better? Nope. How about CryptoPunks or Moonbirds? Nope. From a May 9th article by Decrypt:
The article further commented, “Buying an entry-level Bored Ape costs 55% less than a mere 10 days ago.”
This is not an investment. This is rampant speculation, pure and simple. And it rises to the level of a cult. Like in any cult, true believers believe. Bitcoiners cannot be convinced otherwise. Sure this is just my opinion — and that’s all it is, an opinion. One I’ve held for quite a while.
But Bitcoiners don’t have mere opinions about BTC and other cryptocurrencies. Nor do they have “beliefs,” which are a just a notch higher — strongly-held, emotionally laden opinions. No, they are in … body and soul … they are cult members. They are Bitcoiners. Even as the crypto-market is crashing all around them.
And make no mistake, it is crashing. In just the past 24-hours, BTC was down 4.31%; Ethereum was down 7.3%, Binance Coin was down almost 13% and XRP was down almost 18%. In 24 hours. Cryptos are crashing. And NFTs are collapsing, too.
About a week ago, the Wall Street Journal posted an article entitled, “NFT Sales are Flatlining.” The article commented: “The sale of nonfungible tokens, or NFTs, fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to the data website NonFungible. The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November.”
Not convinced yet? Well consider this: Until recently, the cryptocurrency known as Terra’s ‘LUNA‘ — previously ranked as one of the top 10 most valuable cryptocurrencies — fell to below $1 — to about 65 cents. It had peaked last month at close to $120. The majority of its losses were overnight, falling 98% in just 24 hours. The crash pulled the market cap from $40 billion to $500 million. Overnight. And here’s the crazy part: LUNA was designed to be an algorithmic ‘stablecoin.’ Stable? Not so much. “I lost my life savings,” one user on the Terra ‘forum’ wrote. It’s a cult.
Hopefully, the contagion affect on our legitimate financial markets will be limited. Sure, sure, sure, there many other reasons for weaknesses in the markets today. But the crashing crypto-market — let’s call it CCM for short — is spilling over to legitimate investments. C’est la vie … this too shall pass. But in my opinion, not before most of these risky bets completely flat-line.
But even as this chapter closes — let’s call it Crypto 1 — the next chapter is gaining legitimacy. While not decentralized or without government control, Crypto 2 — also known as ‘central bank digital currency’ — is in development. And these currencies promise to be much more stable and reliable. Unlike LUNA.
Let’s head to the steak houses, where today the SHI10 is releasing our first one million CRYPTO-STEAK stable-coins. Each coin entitles the holder to a digital steak of their choice at any of the 40-SHI restaurants on our grid! Yum! Join us! 🙂
Once again, here in the OC, the grills are red-hot, with only 5-slots available for late Saturday evening. While the OC leads the nation, other markets continue to show reservation strength as well. Here’s the longer term trend chart:
All SHI markets are in-the-black this week … even as turbulence reigns supreme in many financial markets here in the US and around the world, our expensive steak house reservations suggest the consumer is unfazed and looking for a great steak and fine wine.
But bring your AMEX to the steak house. Bitcoin is not accepted.
<:> Terry Liebman