Everyone Is Getting Hilariously Rich...Again

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Everyone’s Getting Rich, Again:

In January of 2018, the New York Times published an article titled Everyone Is Getting Hilariously Rich and You’re Not. The intent of the article—besides the clickbait headline and memes that followed—was to capture the crypto zeitgeist of the moment.

At the time the article was published, Bitcoin was trading around $14,000 but off more than $5,000 from the highs set in December 2017. However, that same year it had also risen from $800 to more than $19,000.

During the parabolic rise, there was a fever pitch around crypto—specifically Bitcoin—as it was the one that the main stream media discussed the most. ICOs (initial coin offerings) were also very popular during that time as normal people, celebrities, and coders alike could write a few lines of code, launch a cryptocurrency and potentially hit the lottery overnight. That’s essentially what happened with Dogecoin.

Dogecoin started in 2013 as a joke between two engineers. IBM software engineer Billy Markus and Adobe software engineer Jackson Palmer had never even met when they successfully combined two of 2013's greatest phenomena: Bitcoin, and "doge." The result was Dogecoin which now commands a staggering $40B market cap.

As the 2018 crypto winter began, many of the so called shitcoins (and the celebrities who pumped them) disappeared into oblivion. Even the more popular cryptos such as Bitcoin and Ethereum took substantial haircuts—losing 85 and 95 percent from the peak, respectively. But behind the scenes, determined founders and creators were building networks and applications around these cryptocurrencies and we are seeing the fruits of their labor today.

Many of these cryptos started picking up steam in mid-2020 and have catapulted to new all time highs which now make the 2017 “bubble” look like a mole hill.

One of the hottest right now is Solana, a rival to Ethereum. Solana began 2021 at $1.51 and is now at a staggering $174 as I write this. That’s a casual 11,400% YTD return. Read Packy’s Not Boring post on Solana if you want a better understanding of it. Not saying he’s the next Buffett but when he published the piece on August 23rd, Solana was trading at $75. It’s already more than doubled since.

Solana, Ethereum, Bitcoin, Dogecoin, NFTs, are just the tip of the iceberg. Some serious money has been made in crypto land this year. And unless you mute the keywords and high profile accounts on Twitter that discuss these topics, it is very hard to get away from the space. It seems it’s all anyone talks about anymore. Stocks? Never heard of them.

It also makes people who aren’t involved feel an intense amount of FOMO when they see digital rocks selling for $1.5m while they’re holding boomer dividend stocks like AT&T sporting a 7% dividend (points at self in mirror).

Just look at how many Ethereum addresses are holding more than 1k ETH. Assuming each wallet has a single owner, that would mean 6,400 people own $4,000,000 worth of ETH. Wild.

Now do Bitcoin.

According to glassnode there are about 16k addresses with a balance over 100 BTC. At current prices and assuming there is no overlapping individuals holding multiple wallets, that means 16k individuals own $5,000,000 worth of BTC.

It’s also interesting to note how the number of HODLers peaked near the end of 2017 but has essentially flatlined over the past 2 years.

This is truly life changing money that was also made in a very short amount of time. That’s crypto in a nutshell though isn’t it? The next time you see someone purchasing a squiggly line or bored ape NFT for hundreds of thousands of dollars (denominated in ETH), just assume they are one of these addresses with millions in crypto.

The last point I want to discuss is fighting the FOMO when everyone is seemingly getting rich around you. As Michael Batnick wrote in a recent post:

If you’re curious, by all means, I would encourage you to learn, much like I am. But I cannot emphasize enough that you have to control the temptation to get rich quick.

Kudos to all of the people that were early to Penguins and Apes and Ada and everything else that’s going vertical. But this idea that you’re going to replicate their success is probably delusional, no offense.

I completely agree that the only true way to fight the FOMO is to get involved in the space—whether that’s limping in and buying some coins or an NFT or reading crypto books. Just get involved. It is critical to spend time understanding the space. All of the cool kids are doing it.

Here’s the other thing: You can still participate with a small percentage of your portfolio. You don’t have to be one of the addresses that has $4-5m in crypto. Honestly, even just making a few hundred or thousand dollars in the crypto space will completely change your frame of mind.

As everyone gets hilariously rich, again, try to keep your risk profile in perspective and you can join in on the fun too.

Performance Update:

Now let’s see how the People’s Portfolio did this week…

We locked in back-to-back weekly gains as the overall market melt up continues. The jobs number on Friday was abysmal. The U.S. economy added just 235,000 jobs in August, the lowest number since January and vastly missing expectations. The market didn’t seem to be bothered too much by the news as it traded sideways into the holiday weekend.

On Friday, we voted Coinbase (COIN) to remain the portfolio. COIN had a positive week, trading up nearly 7.5% as the crypto market continues to be red hot. However, COIN is still 35% off the IPO highs from a few months ago.

Penn National Gaming (PENN) is on the chopping block next week for the 2nd time. We’re currently holding onto a -9.01% loss over the past 19 weeks even after a 20% rally off the lows in the past 2 weeks.

Keep an eye out for the new Twitter poll every Friday. Follow along in real-time with nearly 300,000 others on Public.

Portfolio News Highlights:

The biggest stories affecting our portfolio this week:

• Nvidia Aims To Beat Amazon, Alphabet With New AI Speech Technology (Benzinga)

• Oil Remains Elevated After Hurricane Ida Hurts Supply (Yahoo)

• Airbnb Did Not Deliver Vaccines- But It Is Just As Much Of A Hero (Benzinga)

• How Square Grew Into a $100 Billion Company in Just 11 Years (Fool)

What Else We’re Reading:

Blogs/Articles:

1. Three Things I Think I Think – Everything Goes to Zero in the Long Run - Cullen Roche (Prag Cap)

2. The Concentrated Stock Puzzle - OSAM Research Team (Canvas)

3. Sweetgreen CEO: Vaccines and Masks Will Not Save Us, But Salads Might - Edward Ongweso Jr (Vice)

4. Twitter appears to be adding the ability to tip using Bitcoin - Tim Copeland (The Block)

5. Loot is a viral social network that looks like nothing you've ever seen - Casey Newton (Platformer)

Books:

Think Again: The Power of Knowing What You Don't Know - Adam Grant

Need new reading material? Visit my Amazon page for my most purchased book recommendations.

Tweets of the Week: