Crypto Markets and Kids Soccer

On Wednesday May 12 at 5:06pm CT Elon Musk tweeted that Tesla would no longer accept Bitcoin to buy cars. The company also has $1.5B of Bitcoin on their balance sheet, reported $300M of which they’ve sold. Musks message is about the carbon footprint of Bitcoin. Odd since this isn’t new information.

Anyway, my commentary is not about Musk’s position but the market reaction. Immediately, as one would expect, Bitcoin dropped 10%.

BTC

Now lets talk about kids soccer. Any parent that has watched their kids play soccer knows what it looks like. There is a big group of kids chasing the ball around with no tactics or strategy. Ball is over there, run and get it.

The crypto market was all kids soccer with this. Filecoin, which has nothing in common with the Bitcoin news dropped nearly the same, with a slight time lag.

FIL

Then Cardano drops the same too. Cardano however is a massively more efficient blockchain. The fundamental argument doesn’t apply. They even told that story.

ADA

The point here is that these markets and investors are still treating all of these assets as a single thing. Only Ethereum in recent months has broken out and moves materially on its own. I put this in my approach, but I think it is really important. You need some mental model of the utility for each of these assets. That utility should drive how you value them, and how you differently value them.

Jamie Thingelstad @jthingelstad

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