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Bitcoin bust and trust UPDATE July 2 2022

Vapor....

The latest news in the market resembles the 1950’s radio disc jockey that shouted between songs “and the hits just keep on coming”.

Previous Wall Street darling stocks manage to get off the mat after being hammered down 70, 80, 90 percent or more, only to be carpet slammed again by another brutal sell off on any given day. Relentless is the word that comes to mind.

Crypto fans who dabble in the Bitcoin universe and thought they were safe are finding out they too are not immune from the markets financial beat downs.

More than a handful of cyber coin dealers and marketers have had liquidity problems in the past few weeks with some halting or limiting redemptions. The so called “stable” coin, Terra USD, which was supposed to remain in lockstep with the US dollar, lost its mojo as it not only failed to maintain its peg to the dollar, but almost completely collapsed. Now the news wires contain almost daily headlines that major players in the crypto universe are having some very serious financial issues.

Warning multiple times Cyber coins were “vapor”, I reiterate a direr warning again today that the whole cyber universe reeks of an out of control mania that will end badly. In fact, the cyber coin phenomenon is the worst mania ever when compared to previous price explosions in any other asset mania recorded in human history.

Unfortunately, these types of liquidity headlines have a tendency to become only more frequent, until the “one” headline that announces a total collapse of the asset in question or that of a major player hits the wires and causes an all-out panic wipe out.

Not saying it will happen of course, as no one can forecast the workings of financial markets, but the whole thing has a very familiar ring to it.

Since Bitcoin came to my attention about 7 years ago, I didn’t trust it and written such in more than a handful of news articles and covered it on my radio show multiple times over the years.

The coins themselves, called tokens, are not guaranteed by any government, and the market has grown into the trillions. It is estimated over 100 billion worth of bitcoin accounts have been lost in cyber space due to password loss or theft. The actual numbers may never be known. Never knew anyone who lost a bank or stock account.

This brings another issue to light that bothers the heck out of me. Truthfully I don’t fully understand the whole cyber coin thing, how it works, who runs it, and all the ins and outs of this relatively new version of electronic currency, and frankly I believe few do.

With trillions in cyberspace, not doubt there are many, many hands in the mix, of which we have no idea of their moral makeup and honesty versus their self-interests. We also know that there are tens of thousands of very computer savvy thieves running amongst them.

With no one you can call or ask for assistance from, an investor is at the mercy of this vast and complicated electronic universe. Making matters worse, it has no checks or balances that apparently work right and there is little to no regulatory oversight at this time, although some is pending by concerned governments.

The whole things is downright frightening to this analyst.

And finally, I am surprised one of the reasons proponents of Bitcoin tell me they want to invest in it is that governments can’t mess with it and cyber coins autonomous qualities. Excuse me, but Bitcoin and other cyber currencies are anything but autonomous. A dollar bill or gold coin has no memory, which is to say what it was spent on is forever unknown to the next holder. Look at a dollar and tell me what is has bought. Ditto with gold and silver coins. Cyber coins however, being in cyber space, forever maintain a record of where and when it moved. This is the ultimate in a tracking history should governments wish to install themselves more into the universe of Cyber. That the anti-government and conspiracy crowd flocks to this anti-cash asset where its record keeping is airtight and written in stone forever, is to me, more than baffling.

“Watching the markets so you don’t have to”

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(As mentioned please use the below disclaimer exactly) THANKS (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214

The stable coin- bitcoin blow up Update June 8, 2022

Is the crash in Cyber tokens over?

After nine straight weeks of a bitcoin decline, now the experiment that combined math and software to get a digital currency to behave like a U.S.dollar crashed in dramatic fashion, posing the biggest threat yet to develop a decentralized cyber currency.

TerraUSD, or “UST”, is another in a long line of attempted cyber currencies, called “cyber coins”, the most celebrated of which is Bitcoin.

TerraUSD, was called a stable coin, which, unlike its thousands of counter parts which include bitcoin, was developed to provide a “stable” valued vehicle in the cyber coin universe. Investors in cyber tokens know of the wild swings that cyber coins can have. Terra was an attempt to provide a coin that would retain its value at par, which is to say, remain worth one U.S. dollar at all times.

TerraUSD, an “algorithmic stable coin”, uses a variety of methodologies and incentives in an attempt to maintain its peg of one-to-one to the dollar. It strives to accomplish this by working with a crypto token in the same ecosystem. That token, called Luna, can be swapped for Terra and vice versa.

This back and forth swapping by traders supposedly keeps the price of a Terra where it should be, which is walking in lockstep with the U.S. dollar.

The thinking around developing a stable vehicle was to enable crypto traders to make transactions in differing cyber coins easily and quickly without needing to leave the digital asset universe. It also was thought to alleviate intermediaries and the concerns the value of various coins would fluctuate when trades or swaps were executed.

If it all sounds a little gobblydegookish, it’s not you. I have found unless one is a full on member of the computer geek squad, the world of cyber coin will be more than a bit confusing.

Even for experienced Wall Street alumni like myself, although millions of people trade and write about the world of cyber coin, there is much we plain folks don’t understand about exactly what is going on in the cyber coin universe.

A month ago, the future looked bright for TerraUSD. Until last Monday, when all of the mechanisms that were supposed to keep TerraUSD stable, were anything but stable.

TerraUSD fell to a low of 60 cents on that day, and reached a further low of around 20 cents in another crash on Wednesday. At the time of this writing, it sits a two cents.

(June 29, 2022-https://www.coindesk.com/price/terrausd/ )

Pretty rocky stuff for a coin called “stable”.

The event took down the market cap of TerraUSD from $18.4 billion to essentially zero. The Luna “backbone token” also avalanched.

Nikita Fadeev, head of crypto fund Fasanara Digital, which de-risked its position in advance of the crash, said: “Everything broke. It is full capitulation.”

Exactly why all of the so called “stable” UST mechanisms failed remains unclear. Conspiracy theories abound as to what happened, but in this analyst opinion, when vast amounts of monies are floating around in cyberspace, this whole fiasco comes as no surprise. Once again, many lost everything while others walked away very rich. Nothing new in the world of cyber coin.

I know there are a lot smarter people than me when it comes to the net and the cyber coin playground. As a result, it’s no place I want to put my hard earned money, and I doubt the average Joe Shmoe should be doing it either.

The move is on to provide more backing to TerraUSD to once again stabilize its value, with figures around the 1.5 billion being tossed about. But since none of this is government backed, I view the entire cyber coin universe and its multiple trading platforms to access it, one big Wild West show. There are landmines everywhere, it rife with amateurs and novice traders, and its run by techno wizards of unknown repute.

The whole thing, at least to me, reminds me of a three ring circus, complete with the “3 Card Monty” con game, where everybody that plays never seems to win, at least for long.

With the latest collapse of the cyber token called “stable coin”, I can say it comes as no surprise. What is ironic is that what was supposed to be the epitome of why people flock to the bitcoin game, which is autonomous stability and safety, failed miserably in both respects.

Concluding, if some people still elect to play in the cyber coin universe after this collapse, it will be one of most baffling investor decisions I have ever seen.

“Watching the markets so you don’t have to”

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(As mentioned please use the below disclaimer exactly) THANKS (Regulations)

Voted Best Financial Advisor

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Warning Crash Ahead Update June 24 2022

The markets stopped their seemingly weeks long freefall last Friday, May 13^th, with green numbers across the board. Not all stocks went up. I can’t actually recall a day when every stock did go up, but certainly Friday was a welcome sea of green in an otherwise month or three of mostly red.

Although no one can forecast market direction at any time with certainty, Mr. Market does speak to those analysts that are listening and know its language.

It’s a difficult thing to interpret, Mr. Markets language, but serious students of the equity marketplace and those having the experience to have lived through many a correction and rally can at least get a grip on the mood of Wall Street if they take the time to listen.

When markets start to fall, certain things can occur that, when watched, lead the analyst to draw at least a few conclusions. When Wall Street’s mood turns negative and stocks pull back, it is common to see certain sectors rise in a contrarian move to those stocks that are falling. Consumer staples (things like soap and things that people have to buy) can rise. Food stocks can also move opposite to a falling market. So can bonds and utility stocks.

If a sell off continues, the contagious mood of stock selling can begin to lead these same stocks to flatten out and then fall in concert. Basically, even though an initial selloff can move some stocks up at first, the longer the selloff, the more things tend to get sucked down the same black hole of a falling market.

Think of it like a series of lights that is often seen at automobile drag races. The “Christmas tree”, as it is called, is two rows of colored light mounted vertically, that illuminate in series, going from red to green, where green means both dragsters floor it.

In stocks, invert the colors, and you have a warning `system` that goes from green to red. Green means all is well, then as a crash progresses, more and more orange lights illuminate until the red ones finally do.

Green means go and stocks are rising, then the first orange light gets lit, meaning markets are pulling back. Imagine another orange light illuminating that may mean more money is moving to bonds, utilities and staples. A continuing crash illuminates another orange light, gold might start to rise while utilities, staples and other contrarian stocks many stop their ascent. Another orange light and these stock now start to pull back as well, following the general market down. Moving further along the warning lights, market leaders (like an Apple or Microsoft), which may have held up relatively well (being favorites of many an investor) finally break down as well. The final orange lights might light up when markets further accelerate downward with seemingly little support. The final red light on our financial Christmas tree of warning lights might occur when all out panic selling obliterates every stock in its path. Also known as a “Capitulation” event, the market is now yelling loud and clear “We are in a full fledge crash people!”

As if anyone wouldn’t know it by then right?

Although there is no financial Christmas tree in real life, I do picture this tool when I review markets both on a daily, weekly and monthly basis.

I ask myself, how many lights are lit? How many signs are flashing? Is it getting worse or better? What stocks are moving up during the crash, and what sectors are they in? How fast are they moving and is it accelerating?

Barring an unexpected and out of the blue event known as a “Black Swan” like 9/11, tsunami or major political event, the markets lingo may indeed be very difficult to understand.

But considering education is the cornerstone of progress, the more you know about the markets, the better listener you will be, and hopefully a bit more tuned in to what the market it is trying to tell you.

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Market Upheaval June 22,2022

The S&P reached official bear market territory last week, albeit closing just above the down 20% benchmark of a bear on Friday. Records are being set in many securities as the ongoing market carnage continues. The Dow is on track to have its longer losing streak in over a century.

The major stock indexes continue to erode, the key word here being “erode” in lieu of an all-out fast crash.

Erode means a continuing disintegration over time. As painful as that is for investors, the next event could be even more so.

As mentioned before in Money Matters, historically, when markets experience a continuing erosion over a prolonged period of time, a capitulation event may need to occur before the fall in stocks comes to an end.

Capitulation is a throw-your-hands-up, toss–out-the-baby kind of sell-off which signals investors as a whole have reached a breaking point where they just sell, regardless of any rhyme or reason.

In light of the brutal daily declines we have seen in the Dow in the last few months which have included more than a 1,000 point drop on May 5^th, a capitulation event could be in the order of a several thousand point drop in the Dow if and when it occurs.

Keep in mind no one can forecast market direction at any time and markets may not necessarily repeat past movements. It is concerning however that an event such as a sell-off of that magnitude is possible.

Prudent money managers and option traders utilize stop loss strategies to limit losses and it is in my opinion that retail mom and pop investors should emulate such methodologies. This is done by lightening up on holdings along the path of a sell off event. In speaking with many investors of late however, many are just painfully sitting on holdings and hoping things get better.

It is true over time, the market has recovered from every set back, although some setbacks hurt balances so bad, it took a long time to recover losses.

No doubt, selling some stocks on the way down raises cash so when the bottom does materialize, there is dry powder to buy stocks at much lower levels. The more severe the crash, the better the prices on stocks will be at the bottom and the higher the yields on dividend paying stocks will go.

Selling also gives the investor at least some peace of mind that something proactive is taking place. Buying stocks at lower prices with raised cash from previous sales also helps recover losses quicker than just riding out the crash fully invested.

Those with cash from selling during the plunge might look back years later and think “thank heaven I had some cash and picked up some great buys in the midst of the carnage”.

Having a plan goes a long way in helping calm nerves during time of market duress. It also can be prudent money management and installs some loss-control machinery and provides a blueprint for how to maneuver during crashes before the event occurs.

Concluding, the time to have a plan is before the markets correct. Calmer heads will then prevail during times of market upset knowing a plan is in place. Like a fire evacuation plan, the time to formulate such plans are not in the midst of crisis.

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Crash ! Update May 1 2022

CRASH

Friday, April 22, the Dow lost almost 1000 points. We had not seen that bad of a day since 2020 when CoVid hit.

Keep in mind, after that similar day in 2020, the Dow screamed back even higher soon thereafter, so hope springs eternal.

Investors might take heart knowing that bad sell-offs can be followed by equally eye-popping rallies. Not to say the pain is over, as there usually are reasons for massive routs, and this crash is no exception.

The NASDAQ actually started its slow motion crash late in 2021. In my opinion, the sector represented by the NASDAQ simply got too frothy, and it finally reversed as investors took profits.

That was followed by investors finally taking notice, at the start of 2022, of the inflationary forces that had been accelerating for about a year. Consumers likely knew prices were jumping more than usual. You would have had to live on the moon not to notice. But in the market, fear tends to surface all at once, and can come to a head in a horrific crash on any particular but obscure day that no one can predict.

Detailed in numerous Money Matters shows and articles, and shouted from the roof tops on many news media outlets, inflation had been getting worse for months, and it was only a matter of time before the Federal Reserve (FEDS) decided to do something about it. Originally believing it was “transitory” (in their own words), inflation was actually just getting started, and similar to other times in history, the FEDS were late in correctly assessing the severity of the crisis.

FED speak soon hit the newswires, and they warned a reduction in Quantities Easing (Q.E. for short and basically is money printing) was coming. They also revealed an increase in interest rates was to be undertaken. The news prompted the first sell off beginning in January. The market anticipated the usual 1/4% increase we had often seen in the past.

Once that bitter pill was swallowed, the markets somewhat stabilized, only to be rocked again when the FEDS upped the ante and starting talking about 1/2% increases. Investors appeared to shake that off after another market set back, and then the Ukraine problem hit the wires.

The first few weeks of late March and early April offered up some hope with some green numbers bouncing the markets and indeed, many key metrics signaled the worst might be over. The market looked like it had somewhat stabilized until the FEDS once again raised the stakes and mentioned possible 3/4% increases were on the table.

Subsequently, and hence therefore, Friday turned more than ugly. Investors likely saw red in their portfolio balances and probably more red then they have seen in a long, long time.

Keeping in mind no one can predict market movements at any time, we can only guess as to what will happen next. Will we once again wash the bad news down with the elixir of time, and see the markets rebound? Or will the carnage continue and test the March lows once again, which would be another 900 or so Dow points? Could it even go lower?

We won’t know the answer until it is well in the rear view mirror.

One thing is certain. Inflation is bad and getting worse. Ditto for the FEDS interest rate forecasts. Keep in mind, the FEDs haven’t even done anything yet. So goes the effect of interest rate announcements on the market. Sometime the anticipation of the event causes more damage than the event itself.

The key to the whole thing will be how inflation responds to the FEDS actions and whether the FED’s current plan of interest rates increase does the trick, or if even stronger medicine may be needed.

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