Naked

No major economy, let alone the world’s biggest, has been more crypto-friendly.

Trump said America would be the crypto capital of the planet. It is now. Congress is smiling upon the fake money. So are the regulators. Gullible little investors can be fleeced buying s crypto ETF on their phone. The US president’s family has its own crypto platform, World Liberty Financial. In fact Trump issued his personal meme coins. So did whazzername, the stiletto lady. (Melania’s coin has lost 98% of its value.)

Trump even pardoned the billionaire felon Changpeng Zhao, head of Binance, the world’s largest crypto exchange, a few months ago. Zhao was jailed after pleading guilty to allowing money laundering on his platform, which was also fined $4 billion. This came after Binance helped bail out the Trump family crypto business – as did UAE (which is getting Nvidia chips in return).

Wow. How could crypto investors not score big with this level of self-dealing, apparent corruption and front-running going on?

Well, it’s currently not a happy time for the Bitcoin gang. The token has lost half its value in just a few months and is jerking wildly. Last week Bitcoin plunged to its lowest level since before Trump 2.0 came to office. It rallied back somewhat on Friday. It took another beating today.

The Bitcoin Volmex Implied Volatility Index hit a staggering 97%. What was valued at $126,000 in October was selling for $68,000 as this is being written (and not by Chat GPT). In the past few weeks one of the giant crypto beliefs has been proven a lie – that, like gold, digital tokens can be a storehouse of value and a safe haven during periods of geopolitical uncertainty.

As we all know, the rush out of BTC was happening while Trump threatened Greenland, while the very existence of NATO was thrown into question, as masked paramilitary troops snatched citizens from American streets and the world’s great powers worried what Bad Bunny might say at the Superbowl (he said, “God bless America”).

During this time we also saw gold shed 12% of its value in a day, then regain its lustre above $5k an ounce, Silver crashed 30% in a few hours, recovered and today was whacked back 15%. Volatility, it seems, has hit the ‘haven’ assets hard, even as the stock market marches higher. In case you missed it, the Dow has passed the 50,000 for the first time, with Wal-Mart becoming a $1 trillion company.

Now here’s something interesting. While Bitcoin was spurting blood from every orifice last week, investors were rushing to buy in. ETFs holding the token recorded an inflow of $221 on Friday. Analysts now say BTC will either recover or crumble. Pick one. Hope for the best. Greater fools abound.

Source: New York Times

As you probably know, Bitcoin is not money. It never will be. With volatility this extreme, it can’t be. It is not an inflation hedge. It pays no interest or dividends. It’s easy to buy and a lot harder to sell. Compared to equities, bonds or almost any other publicly-traded asset, it is thinly regulated. Crypto, and Bitcoin, are susceptible to fraud, theft and exchange collapse.

Gains and losses are spectacular, which underscore what this is. Not a medium of exchange. Not currency. Not a stable investible asset. But a token for gambling, like a casino chip.

Now we seem to be in a crypto winter. Exchanges are laying off. Legislation is stalled that would make this stuff even more accessible to small-time, naïve, thinly-informed investors. The value of crypto firms has sunk on equity markets and increasingly this asset class has come to be seen like tech stocks – which lately have been causing a lot of nosebleeds among portfolio managers.

Strategy, a company that buys Bitcoins, has lost 75% of its market capitalization. This outfit just recorded a net quarterly loss of more than $12 billion. Yes, that’s almost a billion a week.

Leverage makes it all worse. Lots of folks borrowed big when Trump came back into the White House promising a bold, beautiful new age for crypto, token-friend regulations and pushing his own coins plus his family’s personal crypto expansion.

But the emperor – like some of these tokens and digital creations – has no clothes. There is nothing backing crypto. No central bank. No vaults of gold. No power of the state to tax and raise revenue. If a few things go squirrely – expected laws that don’t pass, another corrupt exchange or even a new Fed chair – greed instantly becomes fear. That’s what gambling is all about.

It’s why the families my colleagues and I look after shun crypto. Ditto for you.

About the picture: “Loki is our Pomeranian-shih tzu,” writes Josh. “He causes trouble all day and then is cute as can be when he settles in for the night.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/02/09/naked-3/