Santa and the Infinite December

December 21, 2021

There is one night when time stops for many children around the world. It seems never to come and when it does finally, after an eternity, arrive, each minute during that evening becomes an infinite moment. I’m speaking, of course, of Dec 24th, the night Santa slides down the chimney and, for good girls and boys, deposit a treasure trove of presents. As a child growing up in the USA this was the night. Though I was always fairly certain that I had been good enough and that the magical present stash would appear (along with a half-eaten cookie) on the morning of the 25th, there was always this ever so nagging question that haunted. What if I’ve been naughty? What if Santa doesn’t come? In a child’s mind December, inside of the Santa mythos, does indeed last forever.

Is Rudolf a Bull?

Waiting for the next leg of this bull run is like a child waiting for Santa. We’re ready for it. We’re waiting for it. And it feels like we’ve been waiting an eternity. Last December the crypto market exploded and it was, indeed a Happy New Year. This year, with a host of challenges, it is certainly a bit subdued though it’s worth noting that the premier crypto asset is approximately double its price from this time last year, hovering between $46K and $50K. Yes, only doubled.

Many pundits, like a kid on Christmas, are still anticipating huge movement in the markets. The question of course is when, and it may well be that this present doesn’t arrive until Q1. I would argue one of the main reasons for this is uncertainty. Markets – and I mean all markets – hate uncertainty.

Omicron, of course, is now on everyone’s mind and is one of the key drivers of this uncertainty. Just as a weary world seemed to be getting its hands around the pandemic, Omicron has thrown a dire wrinkle and well, the truth is, we don’t really know what it’s effect might be.

Couple this with a $1.75 Trillion “Build Back Better” spending bill that now seems to be in jeopardy (with negotiations spilling into next year) and with decreased federal bond buying as an attempt to combat inflation creates questions on how the economy will respond, also creating uncertainty across all markets.

If you are a frequent reader of this blog, then you’ll note how often I encourage us to “zoom out”. In this case, these December events are impactful, certainly, but thrown on the stage of inflation and money printing that we’ve seen over the past year, I would suggest they are speed bumps. We may or may not get to “Build Back Better”, but the fact is the fed’s balance sheet has doubled over the past 18 months. This has propped up the markets, but the true consequences have not been realized and begs the question, “In what world can you continue to print money and have that money increase in value?” Is it any surprise that the consumer price index is up 6.8% year-on-year? This is a 39-year high.

Inflation is here. The secular shift from deflation to inflation is upon us. This is the exact case that drove many high-profile investors to move into bitcoin earlier this year, and this event is now unfolding as they expected. Once we get some uncertainty out of the market, we expect it to march higher.

The Elves Have Been Busy

Regardless of what is happening with the markets or bitcoin, there have been a lot of moves in the world that point to the fact that they world of crypto assets are now firmly cemented.

One of the more public facing adoption event is that fact that Crypto.com recently assumed branding rights to the venerable Staples Center in Los Angeles and it is now the Crypto.Com Arena. What a tide change this is and clearly, they feel the $700 Million price tag for 20-year naming rights is money well spent. Wow, think about that.

Slightly less notable but no less important is that Visa now has Crypto Consulting services, and that stablecoins – crypto assets pegged to other sovereign currencies like the US dollar – are coming into their own. I would expect to become a much more mainstream use of crypto assets over the coming years.

NFT in Your Stocking?

NFT or, Non-Fungible Token, is now the word of the year according to Collins dictionary. Indeed, NFTs took over Art Basel, were loudly endorsed by business magnates such as Gary Vaynerchuck and seemed to be everywhere. Currently hyped up heavily in the art scene, a Non-Fungible-Token is simply digital item that can be provably unique. That’s it.

What’s important about this is not the hype in the art world (yes, this current iteration is likely a bubble that will pop soon), but the fact is that NFTs provide ownership of unique items in the digital world. Nike certainly sees this as an opportunity as they bought digital sneaker company RTFKT. They are doing this, of course, to firmly establish their presence in the “Metaverse”, the collection of digital worlds that many are predicting will become a true reality alternative in the coming decades. In this world, digital people (your avatar) can own digital things (like sneakers). This is the true and real power of an NFT – it’s not about an exclusive ape you can hang on the virtual wall, it’s about actually owning digital items and proving they are real and unique possessions.

I’ll be exploring this in detail in future blogs, but I had to at least touch on this. While it’s impossible to understand exactly what the metaverse will be, I find that Steven Spielberg’s “Ready Player One” does a good job of showing what this world could very well be like. I encourage you to see it. Not because it’s Spielberg’s greatest (I could personally take or leave the storyline), but because the picture it paints is one of a reality that could be in front of us before we know it.

Jake Has Been Good

As we wrap up this year this is the part where I get to acknowledge my business partner, Jake Ryan. He is the go-to crypto contributor to Ric Edelman’s Inside Digital Assets, he’s received tweet acknowledgement from CryptoDad himself, former CFTC chair Chris Giancarlo, who calls Jake “The Real Deal” and also a shout out from hedge fund giant Mark Yusko who directly urges his followers to read Jake’s well-received, Crypto Asset Investing in the Age of Autonomy

Well done, Jake. Well done indeed. You’ve now set a bar that you’ll have to exceed in 2022, and we’re all eagerly looking forward to your leadership in this space.

In Closing

With that I’ll wrap up the December 2021 edition of Crypto Decrypted. We’ll have to wait and see whether or not Rudolf is indeed a bull, but there is no doubt in our minds that 2022 will continue the incredible growth in the crypto market.

Regardless of your faith or beliefs, I hope this time of year is one that allows you to settle down and enjoy time with family and friends, slow down a bit, and find some joy in the midst of our uncertain times. It’s been my pleasure to write and distribute this blog as it’s my way of lending some clarity and understanding to this strange new world in which we live.

I wish everyone Happy Holidays and a safe, healthy, and prosperous New Year. I’ll see you all in 2022 where I’ll continue to Decrypt Crypto for you.

About the author James Diorio

James is a Principal and Chief Executive Officer of Tradecraft Capital.