Newsletter Issue #41

December 16th 2022

GM. This is Ponder Crypto.

The newsletter that will give coal to every exchange for Christmas with balance sheets two sizes too small...

This week's topics

👇 CPI and Funds Rate Reduction

🔍 SBF in Handcuffs

🤔 A Few Lessons Learned

💨 Will We Run Out of Bitcoin?

🎥 This Week on PonderTube

😂 Meme of the Week

👇 CPI and Funds Rate Reduction

Powell just announced another rate hike of 0.5%, bringing the federal funds rate to 4.5%.

The crypto market is up nearly 5% over the last 7 days even with the news.

2023 projections were also disclosed, stating an end-of-the-year federal funds rate between 5.25% and 5.75%.

Not sure if you did the mental math while reading this but that means they plan to raise the federal funds rate no more than 1% over the ENTIRE 2023 year.

Quick recap highlighting the last 6 increases we've had:

• May 5th, 2022 | 0.5%
• June 16th, 2022 | 0.75%
• July 27th, 2022 | 0.75%
• September 21st, 2022 | 0.75%
• November 2nd, 2022 | 0.75%
• December 14th, 2022 | 0.5%

1% over the entire year is nothing compared to what the market has absorbed over the last 8 months.

Now, will they stick to the plan? Who knows. But that's definitely a major shift in the future outlook from what we've been told since the summer.

CPI (inflation) numbers were also announced and came in at 7.1%; down 0.6% from the previous period. 

Heading in the right direction, but still high as hell.

I think the markets are ready to put 2022 in their rear view mirror.

Expecting mostly stability with slight sell pressure over the next two weeks as people close out any trades in preparation for tax season.

🔍 SBF in Handcuffs

This title is not a drill! Nor is it a description of the activities SBF engaged in with his 10 polyamerous friends...

SBF has been arrested in the Bahamans with an extradition request from the US likely on the horizon.

This happened soon after John Ray III (current FTX CEO) released a summary of his findings.

You can read the full 7-page summary here but Ponder Crypto has your back with the main highlights below:

1 / The FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals.

2 / Thus far, we have secured more than $1 billion of digital assets to protect against the risk of theft or unauthorized transfers.

3 / We are not relying on prior management but instead have hired a new Chief Financial Officer, a new Head of Human Resources and Administration, and a new Head of Information Technology.

4 / The entire process is being overseen by our newly appointed independent Board of Directors, in consultation with its independent counsel at Quinn Emmanuel, a firm that also has deep investigatory experience.

5 / A fundamental, overarching challenge with each of these objectives is that we are, in many respects, starting from near-zero in terms of the corporate infrastructure and record-keeping that one would expect to find in a multi-billion dollar international business.

6 / But never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever.

I wasn't confident SBF would go to jail a week ago but if you consider:

• All of the interviews SBF did and how he framed the collapse
• The outlandish findings of John Ray
• The fact that the SEC and DOJ has officially charged SBF

It's hard to believe that they don't plan to throw the book at him.

Let's just see if it's an encyclopedia or a pamphlet.

🤔 A Few Lessons Learned

Image by @yeg0rpetrov

Having survived multiple Boom/Bust crypto cycles, I've learned a few lessons you might find invaluable.

1 / Never keep the bulk of your crypto holdings on any exchange

Many exchanges sell you "paper" Bitcoin which means that it looks like you hold Bitcoin on your account but it is merely an IOU. The only way to guarantee you own Bitcoin is to buy and withdraw it from an exchange into an address you control.

2 / Do NOT overcomplicate securing your private keys

You may have a method to the madness at the time of creating your super protective strategy, but make sure five-years-from-now you will know how to traverse the spider web of riddles and passphrases you put in place to keep everyone else out or you'll find yourself being locked out too!

3 / Time in the market out-performs timing the market

You will never know when the bottom is in nor will identify the top. You'll waste more time and energy analyzing the best entry point just to pick the wrong one in the end. Consistent dollar cost averaging is your friend.

4 / Recognize it's easier to buy the highs than to buy the lows

It's human nature. When something is down, it feels like you're buying a bad investment. But when something is at a peak, you feel like it'll keep going higher and you can't lose. If you have conviction in an investment, you should take advantage of the times when you can buy at a discount! Do not FOMO (dear of missing out) in at the top.

5 / Never brag about your holdings to others

When asked, "How many Bitcoin do you have?" The answer is always "not enough!" Do not make yourself an unnecessary target by bragging you just became a whole-coiner to the world.

💨 Will We Run Out of Bitcoin?

The question is "will we ever run out of Bitcoin?"

It's a good question and here's why:

1 / People lose access to their holdings everyday

You might have seen the guy searching through the trash dump that has over 8,000 Bitcoin protected on a hard drive he decided to throw away when Bitcoin was worth basically nothing.

That Bitcoin is likely GONE FOREVER.

2 / People send Bitcoin to an invalid address

If you send Bitcoin to an address not registered on the blockchain because of a typo or ctrl-c ctrl-v mishap, those Bitcoin will be lost forever. 

POOF! GONE.

3 / Someone buys Bitcoin and chooses to NEVER sell

Satoshi (whoever they are) is still sitting on over 1 million Bitcoin that have never been moved and possibly never will be. 

Locked away and probably GONE FOR ALL ETERNITY.

So, if there are so many ways to "erase" Bitcoin and there will only be 21 million, can't we theoretically erase ALL the Bitcoin?

No for two reasons:

1 / There will be improvements protecting transactions to invalid or incorrect addresses.

This will take time but wallets and applications will address this with future enhancements so that it happens less and less.

That's the beauty of software.

2 / You can look at "lost" Bitcoin as Bitcoin in cold storage.

When increasing amounts of Bitcoin are taken out of the circulating supply, the market price will increase in value over time assuming consistent or increasing demand.

This happens because you have more inflationary currencies (US Dollars, Pesos, Yuan etc.) chasing a deflationary asset. 

If the price increases, smaller amounts of Bitcoin will be affected by scenarios that make them inaccessible.

Pretend for a second Bitcoin was $100 *drool* and you send someone $10,000 worth of Bitcoin to buy a used car (i.e. 100 Bitcoin), only you send it to an invalid address.

There goes 100 Bitcoin out the window.

Now say Bitcoin is worth $1,000,000 *also drool* and you send that person $10,000 worth of Bitcoin to buy the same used car (i.e. .01 Bitcoin) to an invalid address.

.01 Bitcoin is now burned from the network never to be accessed.

So as the price goes up, a smaller QTY of Bitcoin will be impacted by destructive scenarios.

It's unfortunate but the Bitcoin network is unaffected by lost Bitcoin.

If anything, it's a generous donation to the entire network when Bitcoin are burned because that removes that much more from the circulating supply. 

🎥 This Week on PonderTube

Inflation is Destroying Your Future - How to Fight Back

Inflation is a part of our everyday life and something everyone has been born into accepting that some level of inflation is natural for a healthy economy. 

The reality is, most people don't know that inflation has been manufactured by those in power and allow them to benefit financially while the middle class and poor are left behind.

Inflation will continue to steal from your future by reducing your purchasing power UNLESS you invest in assets that will appreciate and are DEFLATIONARY at their core.

Bitcoin is the most pristine deflationary asset available and is positioned to have the highest upside relative to all other alternatives.

😂 Meme of the Week

This is not financial advice. I am merely stating my own opinion on how I am perceiving the current market structure and conditions. Consult with a legal investment advisor and all the other good legal stuff that needs to be said.

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Housekeeping Stuff

Disclosure: All content shared in the Ponder Crypto website, newsletters, video channels or any other medium are for entertainment purposes only and should not be received as legal or financial advice. We are not legal experts or financial planners so please, exercise proper due diligence and do your own research.