Crypto Money Floods the Stock Market

Dear stranger,

Markets rallied on Friday to provide a much-needed boost to the retail investor.

Not sure investors can face another down day, as things would have gotten even worse.

But for now, at least, it has avoided a bear market for the S&P 500.

This is because we had crazy buying activity during this market correction.

Most notably, after hours last night, crypto billionaire Sam Bankman-Fried revealed that he bought a 7.6% stake in Robinhood (NASDAQ: HOOD) at $8.56.

He now owns 56.3 million shares through his investment company Emergent Fidelity Technologies.

After the announcement, volume soared and the stock soared 30% in premarket trading.

This comes as crypto hodlers around the world are reeling from massive losses.

Not to mention all the Fidelity investors who have chosen to add Bitcoin to their 401(k) plans.

Ouch…

They now realize that they need a place to put their money where it will grow safely, albeit slowly.

And in an inflationary environment, there’s no better place to put your money than stocks. You can see the light bulb going on in people’s minds now that stocks are rising.

The most frightened, however, turn to money…

Coinbase CFO Alesia Haas recently said the company is switching to cash in order to weather the “crypto winter.”

That’s not a good sign for a company with nearly half a trillion dollars in trading volume every quarter.

I argued last year that Coinbase would go bankrupt…

It could come sooner than expected, as it posted a disappointing negative $430 million in revenue and a 19% drop in users.

The company even said that if it went bankrupt, it would wipe out all users’ crypto holdings…

What a corporate scam!

Company insiders won’t even touch the stock.

In the past six months, it has fallen by almost 80%.

Not a good look for the crypto brand…

Haas says Coinbase’s long-term goal is to bring one billion people under its umbrella and create economic freedom for all.

What she really means is that Coinbase will take care of its own employees first, as evidenced by the fact that the company has no near-term intention of returning capital to shareholders in the form of cash. a dividend or share buyback.

So while the masses speculated on the next coins, the management pocketed billions.

This shift to cash indicates that permabulls are not so confident in the sustainability of crypto after all.

In August 2021, Jesse Powell, the CEO of Kraken – a major crypto exchange – predicted that Bitcoin would hit $100,000 by the end of the year, stating, “I think we could see $100,000 plus a part at the end of this year or the beginning of next year. He also said that Bitcoin will reach “infinity” by March this year.

Now he is unsure where the crypto is going. In an interview with Bloomberg Technology, he said, “It’s hard to know where this is going…”

Whoops.

For now, it looks like the crypto will remain negative, as we can see from some of the most popular digital asset prices:

crypto

What we do know is that the best crypto holders will not want to lose money during this long, cold crypto winter.

So, despite all the wacky good intentions of democratizing finance for all, when real money is involved, cash (and securities) is still king.

Crypto Hierarchy

According to a recent study by the National Bureau of Economic Research, only 0.01% of Bitcoin holders control 27% of the digital asset. This is compared to data from the Federal Reserve indicating that the richest 1% of households own a third of all wealth in the United States.

It’s no surprise that even in this decentralized financial world, wealth inequality is as stark as it is in traditional finance.

Crypto now represents economic freedom, but only for the top 1% of crypto holders, including celebrities like Elon Musk and Jack Dorsey, and institutional investors, like MicroStrategy CEO Michael Saylor.

Crypto advocates cheered when Tesla announced it would accept Bitcoin as payment for its vehicles. But just as we see everywhere this year, Musk went back on his promise, citing environmental concerns in a Twitter post:

We are concerned about the the rapid increase in the use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of all fuels.

China has also taken the environmental angle, saying Bitcoin mining is extremely harmful and undermines its goal of carbon neutrality.

Last July, China banned bitcoin mining in its province of Sichuan, which at the time controlled two-thirds of all bitcoin mining in the world. Then the country ordered banks to stop supporting crypto transactions. Then the country’s central bank, the People’s Bank of China, banned all crypto transactions.

I suspect the environment is just a scapegoat as nations around the world feel increasingly threatened by decentralized finance and the 1% that controls it.

At least, until the most recent crash.

Money (that’s what I want)

So where does all the old crypto money go?

In undervalued stocks, of course.

And that creates upside volatility, which in turn generates profits if you know how to play it.

We insisted on buying the dip here at foreigners clubeven though it may seem painful at the time.

Because just like the average investor, we are not interested in capital preservation; we seek to grow capital in every possible way.

That’s why tomorrow you should join my colleague Sean McClosky as he unveils his new market strategy to the world.

Last week, when the markets crashed, Sean closed two triple-digit gains. This is just the tip of the iceberg when it comes to the feedback Sean has shown his readers.

So if you want to take part in this free trading session and mark the start of your best trading year, just click here now and enter your email address to be placed on the shortlist.

stay free,

Alexander Boulden
Editor, foreigners club

After Alexander’s passion for economics and investing drew him to one of the world’s largest financial publishers, where he rubbed shoulders with former Chicago Board Options Exchange traders, hedge fund managers of Wall Street and International Monetary Fund analysts, he decided to pick up the pen and guide others through this new era of investing. Check out his publisher’s page here.