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Let's get ready to RRRRRumble!

Bostoncoin update Dec 2021-Jan 2022

Let’s get ready to RRRRRRumble: 300 reasons to love your Bostoncoin

Let’s face it: 2021 was a rough year, possibly even rougher than 2020. The pandemic continued, stock markets were choppy, businesses faced multiple closures, employees had multiple lockdowns, family members were quarantined and separated. We all missed loved ones and missed out on many special occasions.

For the year that was 2020, worldwide COVID cases were an unprecedented 83 million. For 2021, the cases rose to a staggering 274 million.

The 2021 year started in the first week of January with civil-war-like riots in the USA, between people who respected the electoral process and those who believed the election was stolen, and it did not get much better from there. (Those same rioting people also believed that Oprah was a hologram and JFK was coming back from the dead at a Rolling Stones concert, so judge them as harshly as you wish.)

The S&P500 US stock market index was up around 29% for the year, with Australia trailing behind at around 14%. This may sound good, until you adjust for “true inflation” (not the government “official figures”) and the incredible amount of stimulus cheques and fiat cash printing.

On average, the US Fed has printed $4 Trillion per year since 1969. This increased after the 2008 GFC to around $10 Trillion, and in 2021, to over $21 Trillion. The USA’s M2 fiat cash supply increased by over 37.5% in two years since the start of the pandemic in 2020, with many other countries following similar lines.

It is hardly surprising to see a corresponding 30-40% rise in the prices of property, stocks and other assets, when there is around 40% more cash sloshing around in the system. If we adjusted for cash printing and inflation, stock markets are close to negative for 2020 and 2021, with property prices basically stagnant. But luckily, we have crypto…

Has it all been rosy in Cryptopia?

Cryptocurrency is a small sub-section of the world economy, and just like any other section of the market, crypto can be affected by global macroeconomic events as well as market sentiment. Fear, greed, FOMO, panic and other emotions can make massive spikes and troughs in any asset class, and crypto is no exception.

At the start of the pandemic in 2020, practically all markets panicked, and Bitcoin dropped 60%. (Due to its diversification, Bostoncoin rose 50%). When central bankers started their familiar trick of printing cash, this lead to fears of hyperinflation, and BTC rose around 400% from its lows.

More financial institutions started to jump onto the crypto bandwagon in 2021, and popular crypto exchange Coinbase listed its IPO. By mid-2021, Bitcoin was adopted as the national currency of El Salvador, and had reached a price almost 850% higher than where it had been at the start of 2020.

After such a huge climb, there were bound to be some pullbacks, and prices dropped again by around 50% at the start of the third quarter, before slowly climbing back up again.

Yet even this rise was temporary, as prices dropped again upon the emergence of a new disease variant. The old stock market adage holds true: “elevator down, stairs up.” Sometimes the drops can be very rapid, and markets take a while to recover.

It is important not to panic when the world seems to be losing their minds. The patient and prudent are usually rewarded. You just have to keep your faith in fundamentals. No matter how many outbreaks, lockdowns, furloughs or closures occur, no matter how much cash is printed by central banks, one thing remains constant: there will only ever be a maximum of 21 million Bitcoin.

The US Fed can print another $20 Trillion, or $50 Trillion or $100 Trillion, as can any other central bank in the world. Prices of goods and services (as measured in dollar terms) will generally increase by around the same amount. We are not the first generation to see hyperinflation, and, so long as fiat cash is unbacked by scarce commodities, we will not be the last.

Volatility in crypto is always going to be there, just as it is in stock markets and other markets. It is important to zoom out on the charts, and focus on long-term trends, rather than seeing short-term movements and daily news.

The price of Bitcoin did indeed fall 50% in July 2021, but by the end of 2021, the price was still around 700% higher than the start of 2020. Stay strong and HODL.

How are we doing?

Whilst crypto prices seemed turbulent, there seemed to be a lot more ups than downs, if you knew where to look.

Our early investment in (CRO token) paid off to the tune of over 700%. We made over 1 000% with LivePeer, and we are up over 9 000% on Celsius. Our investment into XYO is outperforming almost everything, with over 13 000% gains for the year.

Obviously, not everything can have five-figure gains; that is the whole point of diversification. Something that is up 10 000% today can easily drop 50-90% tomorrow, because, as we all know, crypto is volatile.

The Bostoncoin team balance the portfolio, and know that today’s winner could face a significant loss tomorrow. We also know that a coin that has trailed behind for a while can easily emerge as a winner when others fall.

This was almost certainly the case with Solana, which sat flat for almost two years after we first bought it. Then, with downturns in market favourites Ethereum and XRP, Solana suddenly surged up over 1200%.

Many old-school investors will suggest that gold is an important part of a stock portfolio, as the ancient asset performs well when everything else turns to glop. We at Bostoncoin aim to always hold defensive positions. These conservative plays will sometimes drag the average down when markets are at maximum greed, but when the market hits maximum fear, we are still safe.

OK, so what’s with all the “300” pictures?

Those who have been readers and investors for a while, will know that we generally feature half a dozen puppy pictures, and an overall upbeat theme for the monthly updates.

We have done a “Star Wars” theme to honour the rebellious nature of crypto versus the empire of central banks, we covered The Avengers and the importance of having a supportive team. We did a “spooky” theme for Halloween, a superhero theme for superannuation news, and even a cowboy theme showing that crypto was an unregulated wild west”.