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COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. (MP3 /Apple Podcasts / hi@cointalk.show)
PLUS: The Floyd Mayweather / DJ Khaled -shilled coin Centra is unsurprisingly a scam. Which celebrity ICO promoters would we trust? And a full breakdown of everything we got wrong in our blockchain episodes (thanks to the listener fact checkers out there!)
Aaron Lammer: Welcome back to Coin Talk. Our very first repeat guest, Mr. Ledger Status.
Ledger Status: Hey guys. Thanks for having me.
Jay Kang: Is that true?
Ledger Status: I’ve listened to every episode, and I’m pretty sure I’m the first repeat.
Jay Kang: Well, congratulations.
Aaron Lammer: We’ve got a super fan and repeat guest then. I think you must be the only person who’s listened to every episode.
Ledger Status: I highly doubt that. That will put my repeat guest status on my wall of honor, which doesn’t exist.
Jay Kang: You’re in the Coin Talk hall of fame, Ledger.
Ledger Status: That’s right.
Aaron Lammer: So, how has it been watching us, who you saw as little tadpoles, swim into the world and get eaten by larger frogs?
Ledger Status: You mean by bears?
Aaron Lammer: Bears. Yes, venture out of the pond and get eaten by bears.
Ledger Status: I think y’all are doing a great job, and I am appreciative of the perspective that you bring to the market because you’re very honest, which most people, if you look at Crypto Twitter or whatever, it’s so ridiculous, but it’s people are often unwilling to admit mistakes, so y’all talking about your mistakes is, I think, really good for people to hear. You’re not alone. I can assure you of that, and I think listening to what y’all have talked about, like when Jay got mostly out of the market, I was like, “Come on, Jay! You’re selling the [inaudible 00:02:44].”
Aaron Lammer: While we’re on the topic of mistakes, I wanted to bring up we got some mail bag here from Laura Shin, one of my favorite crypto journalists, pointing out several of probably many, many factual errors I have made on this show.
Jay Kang: I feel like she was kind to us and only pointed out the biggest ones, but she might have a spreadsheet that is very, very long.
Aaron Lammer: I was gonna say her tone was generous, and she didn’t make me feel bad about it; she just wanted to educate me, so I’m just gonna put them out here. Most of these related to our blockchain show, which I will acknowledge, Jay, that we were pretty sure we got so much stuff wrong that we almost canceled releasing that show.
Jay Kang: We had, I believe, what was like a 20 to 30 minute long conversation about how embarrassingly wrong we were probably about every single thing-
Aaron Lammer: Okay, so here-
Jay Kang: … necessitated us actually canceling that show.
Aaron Lammer: Okay, so here are a few of the things that I got wrong in those two blockchain episodes. One, proof of work was invented in 1993. I think I insinuated that proof of work was a Bitcoin innovation. Totally wrong. Not right at all. I also think, I haven’t even actually gone back to listen to these things because I’m too embarrassed, but that I have said on this show that blockchains existed before Bitcoin. That is also not true.
So, just two of the things that you should do your own research on, as well as not taking anything in this show as investment advice.
Jay Kang: And also, you know, I think that we’re being big men here. I’m proud of us. We have a rigorous correction policy, and anyone else who says that we get anything wrong, we will look over it because we don’t really know everything about everything, and it’s very hard to sort of fact check while you’re on a microphone, but you know what? Thank you Laura Shin for pointing that out. That’s a sincere thank you.
Ledger Status: To be fair, y’all didn’t have that conversation like it was in total authority. You weren’t like, “This is exactly when proof of work was invented, and this is how all this stuff fits together.” Y’all were like, “It was around this time, and somebody did this, right? I don’t know.”
Aaron Lammer: I’d like to nominate Laura as our public editor who can investigate various ways in which we’ve gone astray, and I’d also like to invite her on the show if she will ever come on the show. She runs one of our favorite podcasts on crypto stuff, and I highly recommend people check that out.
Jay Kang: All right. Should we get to some news?
Aaron Lammer: Yeah, so I guess let’s do a little news with Ledger here, and then we’ll ask him a little bit about what he thinks about the market. I actually mostly invited him on this show just so that I would have someone to defend my bullish positions for me, so I’m hoping that occurs.
What do you want to talk about this week?
Jay Kang: Something caught my eye, and it really sort of is in the intersection of my interests, which are sports, and for a while I was very into boxing and also sort of celebrity fraud and ICOs, which is that … I’m not sure if you guys saw this, but Centra Coin, which is one of these coins that is sort of said that it was an amalgam of financial products on the blockchain, blah, blah, blah; here’s our ICO, here’s our token. It was one of these things where it felt like you just cut and paste words from different white papers and then sort of processed them all through some sort of random word generator, and you pop out with white paper.
They were sort of hit with the SEC saying that they were a scam, so Nathaniel Popper reported on this, but you know, it was an SEC release, so a lot of people got it, but the SEC complaint alleges that Sam Sharma and Robert Farkas, co-founders of Centra Tech, masterminded a fraudulent ICO in which Centra offered and sold unregistered investments through a CTR token. Blah, blah, blah, blah, blah.
But the, I guess, lead in all of this or the most important part is that this was the coin that was endorsed by Floyd Mayweather and DJ Khaled, and so-
Aaron Lammer: Didn’t they basically say they didn’t even really know who they were dealing with though, right? Are these the same guys who were like, before they did this, they were running a scheme to rent Lamborghinis to people and like a fake high-end car rental service or something like that?
Jay Kang: I think that they are pure grifters, like if you wanted to make a film about grifting in 2014 through 2018, this would be a great template for it.
Aaron Lammer: I was gonna say, this story just smells like the outer rings of Miami.
Jay Kang: Or Las Vegas, right?
Aaron Lammer: Or Las Vegas.
Jay Kang: There’s part of it that-
Aaron Lammer: They’re from Florida, though, I think, right?
Jay Kang: Yeah, yeah, yeah. There’s definitely part of it that I respect, which is that I kind of respect all forms of blatant grift, and I think that it sort of shows that the things that people were saying that a lot of people who have entered the ICO space are just straight up scammers who don’t know anything about Bitcoin or any of this stuff. I think it did sort of happen and that it did sort of come out around these celebrity endorsements.
Now, the one thing I’ll say is that I actually was, as I’ve always said, I’m mostly in Bitcoin for the memes, and I gotta say, I’m a little bit disappointed that it seems like every single thing that any celebrity endorses, whether, like, Paris Hilton or Steven Seagal or Floyd Mayweather or DJ Khaled, ends up being a scam, you know? But I guess it’s really just the best way to locate a scam.
Aaron Lammer: It’s funny how when people will be like, “We can’t let celebrities endorse these ICOs. I mean, how are people gonna know which ones are real and which ones are scams?” It’s like, people will know. They’re all scams. There’s no real product that would try to get Floyd Mayweather to sponsor its ICO. They’re 100% scams. There’s no sheep in the wolf pack.
Jay Kang: I’ve got a question for the two of you about this, which is that is there a celebrity that you would trust enough where if they endorse an ICO … Look, like Floyd Mayweather has been caught up in legal problems his entire career; Steven Seagal, he’s Steven Seagal; Paris Hilton, pretty washed up; but is there a celebrity where if they’re like, “I am really into this cryptocurrency,” that you would listen and you would think maybe actually that adds credibility to it. What is the line?
Ledger Status: I would say maybe like Ashton Kutcher ’cause he has a VC firm.
Aaron Lammer: Wow.
Jay Kang: Okay. Ashton Kutcher. That is one that came to my mind as well.
Aaron Lammer: Ledger went there. Straight to Ashton Kutcher.
Ledger Status: I mean, I’m not saying I would love it. I’m just saying I wouldn’t discount it. He’s at least got a real business, but I think a lot of celebrities have VC firms, so maybe it’s just more of a critique of VC firms.
Jay Kang: I think half the Golden State Warriors have VC firms at this point, too, but I think Ashton Kutcher is on the far side of credible. Is there somebody who you would be a little bit more uncomfortable with but you would still say, “Eh, maybe this is real.”
Aaron Lammer: Wait, Jay, you’re saying that Ashton Kutcher has too much credibility to be used in this game? Come on.
Jay Kang: Yeah, he’s walking around with tons of credibility on this.
Aaron Lammer: Come on. He was on a hit sitcom and has made some tech investments.
Jay Kang: Yeah, yeah. That’s pretty good, I think.
Aaron Lammer: The crazy part here is that it’s almost all scams. People aren’t lending their credibility to like angel investments that got set up at like a Starbucks in Palo Alto. These guys are like Florida luxury car scammers.
Jay Kang: Aaron, Aaron. Can you answer the question please?
Aaron Lammer: Can I answer the question? Well I have to say that when I saw some project that Mark Cuban had said he was sort of involved with, and I was interested.
Jay Kang: But he’s way far on that side, too.
Aaron Lammer: Oh, you’re saying I have to go dirty.
Jay Kang: Yeah. Who is the person who is right on that line where you’re like, “I don’t know,” but then you end up saying, “Okay, maybe I trust them.”
Ledger Status: Tom Brady.
Jay Kang: Tom Brady. Like a Avocado Coin.
Aaron Lammer: I’d say Draymond would be right on the border area for me.
Jay Kang: I was gonna say, “Which one of the Warriors were tied up in these VC firms?”
Aaron Lammer: I mean, I would say that Iguodala is a definite no problem; go for it. Draymond is straddling that line ’cause I could see Draymond getting taken in by some swindlers.
Jay Kang: What about Clay Thompson?
Aaron Lammer: Clay Thompson I would absolutely not invest in anything that Clay Thompson’s invested in. I know way too much about Clay Thompson. I’ve followed his Instagram for too long for me to ever consider taking advice from him.
Jay Kang: Ledger, is there someone closer to the line that you would listen to if they were giving you ICO investment advice?
Ledger Status: I can’t imagine many sports figures since we’re kinda on that frame.
Aaron Lammer: Bobby Knight.
Ledger Status: Definitely not Bobby Knight. Maybe-
Jay Kang: Definitely not Bobby Knight.
Ledger Status: Maybe the guy from the Seahawks. Sherman.
Aaron Lammer: Oh, Richard Sherman?
Jay Kang: Sherman.
Ledger Status: Richard Sherman. That’s about the closest to the line. He’s like super smart, but he’s got that-
Aaron Lammer: He got released.
Ledger Status: He’s got an ICO attitude, you know?
Jay Kang: Yeah, no, [, I mean he is very smart, and he’s very entrepreneurial, and he’s also into Bitcoin. I was thinking about this, and I was like, “If Lil Wayne endorsed a coin, would I be okay with it?” And I think the answer is yes because I don’t think that if you’re that famous and if you have that much money that you would be sort of putting your money behind a scam for no reason.
That same argument could be made for Floyd Mayweather who has tons of money, but Floyd Mayweather lives in Las Vegas, and he’s always been caught up in this sort of stuff. I think I would trust Lil Wayne.
Ledger Status: This isn’t a far cry anyway when you consider John McAfee is considered like a influencer in the crypto community. We have real versions of this; we really don’t have to imagine it.
Jay Kang: Did you see today that John McAfee said that he was getting paid $101,000 per tweet?
Ledger Status: I did.
Jay Kang: He said he was endorsing … That’s incredible.
Ledger Status: $105. You gave him a $4,000 discount.
Jay Kang: $105,000.
Aaron Lammer: Okay, so both of these topics actually speak to what I wanted to talk about in kind of similar ways. We’re basically talking about the deep need for marketing within cryptocurrency. John McAfee, these celebrity ICOs, they’re all basically forms of advertising.
We got an email, Jay, from a reporter asking us about the ban in Google and Facebook. I think MailChimp has now banned crypto ads. What do you guys make of this? Do you think this matters at all?
Ledger Status: No.
Aaron Lammer: Swift no from Ledger Status. Jay?
Jay Kang: No. I don’t think it matters so much. I mean, I think that the idea that the hyper accelerant of the crypto prices between November and December of last year was because everyone started seeing James Altucher’s face on their webpages. I just don’t buy it. If anything it was because the media hyped it up; you know, places like Bloomberg or CNBC. I don’t think it was because of these insidious ads that were everyone.
I think in all things, and we don’t have to go down this rabbit hole, but people sort of really overstate the influence of things that people kind of ignore when they pop up on their page, right? So, I don’t think that it matters that much. It does matter for the ICOs, but it’s good to have those scams out, I think, ultimately.
Ledger Status: But Altucher, I mean, he was promoting himself, probably some kind of course or something, whereas an ICO, especially by American law, but even … Not law, but regulations and guidance that’s been given out. Even in Europe, really they shouldn’t be going after the type of people that you would advertise to on Google of Facebook or Twitter. Something like that where you’re going after business people, but you shouldn’t be going after nonaccredited investors anyway, so it shouldn’t influence the ecosystem aside from the type of stuff that shouldn’t be happening anyway.
Aaron Lammer: Wait, Ledger, I have a question there because, and you’ve been around a little bit longer than we have. So, we all know about Altucher style ads, and I’ve seen ads for like, “It’s the hottest new coin!” Just like totally no name, bozo advertisements, but are Coinbase and Gemini also feeding their new user flows with this kind of advertising you think? Or is this only like the scammier end of the pool?
Ledger Status: I mean, I don’t know what percentage of their onboarding is based on advertising, but I have to imagine that, especially Coinbase, didn’t really have to do a lot of paid advertising because they had everybody at Thanksgiving with word of mouth advertising. I think maybe it’ll become more of a thing to try to track new customers now that they’ve all scaled up their staff and stuff, but leading into this market, I don’t think so.
Aaron Lammer: I’m gonna take the opposite tact here, which is I think for the next plateau to be reached, and we’re like so far below the previous plateau that maybe it doesn’t even matter, but I kind of think that these huge companies that want to do Silicon Valley type scale eventually are gonna need to use advertising and marketing to pad their user numbers. I guess it depends whether you look at the metric of crypto as how much money is in the system or how many people are flowing into the system, but to flow a lot of people into a tech product, you generally need to put out a lot of money.
Ledger Status: Yeah, and I’m sure these bans on advertising with Google, Twitter, Facebook … MailChimps is probably because of spam, and they’re wanting to maintain deliverability of their entire network, but for these other ones, they’re just painting a broad brush right now, and maybe they’ll try to figure it out as it’s appropriate over time. Like, you wouldn’t want to prevent Coinbase or Circle, somebody like that, from being able to advertise their services, but right now, it’s so much easier just to ban anything around any sort of crypto based word because that gets rid of the majority of the garbage, and then you start layering back and allowing things over time, but that just kind of gets the monkey off your back on the front end.
Aaron Lammer: Yeah, I mean, full disclosure, I also host a podcast about the one other thing that you’re not allowed to advertise for online, which is weed. It’s notable to me that all of these companies in both cases were like, “The potential upside for us of this advertising market is not worth it to deal with the crap we’re gonna have to deal with around scams and bad actors, and it would actually be better for us to just not even touch this market.”
I think that’s, in the long run, has a little bit of a chilling effect on me thinking about the longterm potentials. Thinking also like, Jay, remember we were talking last week about how there was issues of dark web stuff and crazy, bad porn shit stuck into the blockchain?
Jay Kang: Yeah.
Aaron Lammer: Another thing that’s come out in the last week that it’s also a big problem with European privacy laws where there’s laws that you have to be able to take someone offline if they request-
Jay Kang: Oh yeah, yeah, yeah, the Google forget laws.
Aaron Lammer: The Google forget laws could be a big problem. All these things are individually … I acknowledge them as somewhat trivial, and clearly there are outcomes where they’re not a problem, but all of this stuff does make me think crypto businesses are kind of a pain in the ass for regulators and for internet companies and for all of these people, and people assume that people are gonna root out the bad actors in the system and that the good actors will thrive.
There’s another direction, which is that the baby gets thrown out with the bathwater, and people just don’t want to deal with it at all.
Jay Kang: Yeah, but I don’t know if the ad stuff really affects that because look, I agree with you mostly here, but I would say that the one distinction that I would make is that what we’re talking about still and it’s one thing that I don’t think we’ve reached is a revolutionary movement. Like a moment where things just sort of flip and where there’s wide scale adoption, and for whatever reason, and it could be a catastrophic reason, that there is wide scale adoption of Bitcoin and people start taking it very seriously for reasons outside of just the price.
And for that, I actually don’t think that the advertising matters. Now, I think it probably does matter for a company like Coinbase. I agree with you in the sense that at some point they’re gonna have to remind people that Coinbase exists, and it’s hard if you can’t advertise on the biggest platforms, but I don’t think it really matters in terms of what we’re actually looking for if you’re a super bull longterm case is like a reason for a whole bunch of people to start taking Bitcoin as a currency that they actually use seriously, and I’m not sure the advertising at that point really matters as long as somebody can make an eloquent case that this should happen given this catastrophe or world-changing event happens.
So, in that sense, like very longterm, I don’t think it matters. I do think it matters for the extant companies right now that are out there, but maybe not as much as it might for like Silicon Valley stuff.
Ledger Status: I personally think it’ll be along the lines of advertising to use or participate in a service or an application versus advertising like, “Buy our coin,” or “Invest in our thing,” because that’s like saying … I mean, Apple doesn’t run ads saying “Buy Apple stock.” They run ads saying, “Buy Apple computers.” And as blockchain based applications begin to exist in a real world with products that people can participate in, that type of advertising should and will be allowed, in my opinion, and it’s the, “Hey, buy our ICO,” type stuff that is gonna go away, and that should go away. That’s ridiculous.
Aaron Lammer: Well, I’ll also just say as a side note that if none of these people want to take advertising dollars, it’s an opportunity for people to create crypto-related entertainment and informational products, which conserve those ads. Our sponsor lines are open. Hire cointalk.show.
Ledger Status: Plus one on that.
Aaron Lammer: Yeah. Hey, Ledger Status.
Jay Kang: The Ledger podcast, as well.
Aaron Lammer: Yeah. Ledger’s podcast, Ledger Status, and so I don’t forget later, where can people find all your stuff on the web, Ledger?
Ledger Status: It’s just LedgerStatus.com, and our podcast is called Ledger Cast, and you can find it there.
Jay Kang: So, let’s talk about what we brought Ledger on the show for, which is that, and this is something you’ve told us privately on telegram and through messaging, which is that the tone of the show has become very, very bearish. Basically every week we’re like, “Oh my God, my bags. My bags are so bad. The bags are never gonna get better. I’m so glad I sold some of my bags.”
Aaron Lammer: If you were to write one sentence that describes the extant arc of this show, it’s Jay convinces Aaron everything is bad.
Ledger Status: I’ve noticed.
Jay Kang: So, Ledger, we wanted to have you on because we respect your opinion on these things. Of the guys who are on Twitter talking about the markets, we think that you are a standup guy, that you don’t have ulterior motives, that you do see this as an educational experience. So, what is your sense right now? You’ve read all the headlines. It’s very bad; things are down 60% from all time highs; they keep going down. But you seem to remain bullish on this. Can you explain to us why?
Ledger Status: Yeah, so I would ask yourself fundamentally what is different if not better in 2018 than it was in 2017 when everybody was fine with the fundamentals because the price was going up. When you look at it now, in my mind, a lot of the things we needed clarity on, we found clarity, and a lot of the things we were anticipating, we’ve started to receive.
For example, we were worried about the impact of Forks, and people that love BCash can come at me, but BCash has been, for the most part, not a huge factor.
Aaron Lammer: You heard him people. Come at him.
Ledger Status: Yeah, come at me.
Jay Kang: Yeah, come on BCash rappers. Drop a verse.
Ledger Status: The exchanges are seeing the benefits and getting requests from their customers to enable SegWit, and they’ve done so, and it’s started to improve the transaction times and the cost of the transactions and getting transactions verified one block after they’re made. We’re seeing the Lightning Network be deployed and put on a mainnet and get thousands of full nodes running, and you can run those nodes from almost anywhere, and it’s opening up a whole new spectrum of what’s possible, and there’s, like, I don’t know, four or five different Lightning implementations that people are competing on. That’s super bullish, and those are things that we were looking for and worried about, vice versa, in 2017, and now they’re showing up.
We’re just all sad and depressed or whatever because the price is down. What we’re seeing is a lot of it’s natural. Market cycles affect everything. As much as I wanted to ignore it, I was thinking like, “Okay, 11, 5, 12. That’s a normal drawdown,” and we had a non-normal drawdown, but we had a non-normal markup period, as well. Sometimes you have to pay the price on the downside to take the time to reset everything, and unfortunately, and this is just the way markets work, you’re taking as much money as possible out of retail hands and putting it in institutional hands.
One of the news items that I linked to y’all earlier was about the increase in over the counter trading, OTC trading, of large amounts of Bitcoin and other cryptocurrencies, and that’s, to me, a sign that institutions are getting even more heavily into all of this, and that’s a big deal.
Aaron Lammer: So then the narrative that you’d basically be formulating there would be people buy during the big manic up period, sell as it crashes, weak hands, et cetera, big investors buy up that cheap supply, ride it back up.
Ledger Status: Eventually, yeah. I mean, these things take a while, too. A lot of times you need an accumulation period is kind of the word you would use on something like that, and we could very well have not seen the lows, and my point would actually be not to say, “Oh, well, these are just weak hands; people shouldn’t have sold.” But there is a point where it was a good idea to sell, and then there’s a point where it’s probably the worst time to sell, and we’re getting to the buying side of things, not so much the selling side of things.
You could sell today, and we’re roughly around $7,000 and maybe you can buy back for $5,000, but you might not be able to. You could see a rapid price reversal, and we could be at $9,000 or $10,000 before you know it. You sold at $7,000; you panic buy it back because you think the party is getting started again, and then it crashes on you again and does go to $5,000, and then you’re just gone. You know?
I mean, these are vicious markets, so …
Aaron Lammer: This is basically a preview of my future. You’re [crosstalk 00:27:05].
Ledger Status: Pretty much.
Aaron Lammer: Where I see the next month of my life going.
Ledger Status: I’m just saying it’s a possible scenario.
Aaron Lammer: Can I get you to come on and just say, “I told you so,” when that exact thing happens to me? ’Cause literally the question I was about to ask you was, “Well, so, if we’re kinda sitting here in shark-infested water, and yeah, we can expect a return to $9,000 or $10,000 at some point, but we could see a drop, I’m kinda like why shouldn’t my money be on the sidelines right now? It seems like no one knows what’s happening right now.” And you’re kind of espousing something of a HODL philosophy.
Ledger Status: I hesitate to say I’m espousing a HODL philosophy. I would say I was especially cognizant of this as we were beginning this week, and that was that the downtrend line and the uptrend line … If you just threw those diagonals, and people don’t really have to understand charting, but just imagine it ends up in this big triangular form where Bitcoin went up, whatever, 15 X in 2017, and it’s dropped 60 something percent, we were basically right in the middle of that going into last week, and then we dropped below.
So, we dropped below that trend line, and that was a big deal. We are now clearly in territory that people would call a bear market. That’s, if you look at moving averages, this is historically with stocks and stuff, so if you’re below the 200 day moving average, then you’re in a bear market, but eventually you arise from a bear market.
Aaron Lammer: Wait, wait. Ledger, wait. I want to pause you there for one second. I wanna pause you for one second. Jay?
Jay Kang: Yes.
Aaron Lammer: You have been calling for this bear market actively on this show, cheering it on like it was a college football team. How did it feel at the exact moment that Ledger just described as where everyone was like, “Yeah, but there’s gonna be that tipping point, and it’s not gonna go below … “ How did it feel as it crashed through there for you?
Jay Kang: I just … Look, everything is random, right? This is something that I learned just from years of being bad at fantasy baseball, which is that you have to sort of take out the narrative part of it and what you thought, and so my thought, essentially, was a narrative-based idea, which was essentially that I felt like the buzz that went on around the holiday seasons was gone, and that a lot of sort of the scammier things, whether it was Tether and Bitfinex, which I think was overblown but certainly was not false, you know?
Ledger Status: Oh, it was totally false. It was unproven.
Jay Kang: But do you feel like there was no sort of spoof trading or fraudulent trading going on, not only on Bitfinex, but also on Korean exchanges or Japanese exchanges? I mean, of course there was.
Ledger Status: I think the stuff going on with Korean exchanges is you have a much better argument than just saying that they’re fraudulent Tethers. That guy that promoted all of that, I think, has been one of the most ridiculous characters in crypto because he can’t prove anything.
Aaron Lammer: Shots fired.
Ledger Status: Well, my point is, while I think it’s ridiculous that there’s not an audit, but there’s just no full justification that there’s not those dollars, so you’re talking about collateralizing a stable coin, basically, and when more people want it, then you print more, and then you put more money in the bank to be able to manage that, and as the ecosystem’s growing, you need more of those dollars to provide enough liquidity for people that want those dollars to trade in and out of.
Jay Kang: Okay, that’s fair. Look, we don’t have to full on endorse, and that’s why I tried to hedge a bit. We don’t have to full on endorse what he said, right? But we can say that there are things that would catch the eye of any sort of financial regulator, and I do agree that what was going on in Korea with sort of money laundering, but also as for the trading that was going on over there ’cause they had absolutely no regulations on those exchanges, that it probably did drive the price up some, so I was saying that because Korea clamped down on regulations and sort of eliminated a lot, maybe not all, but a good portion of the Chinese money laundering, that I just thought that the main things that were driving the market up were going to disappear now.
This is all a way of saying that I don’t think that I right or wrong about that, but that was just the reason that I gave, and I actually still don’t know if the … it’s just one of sort of linear argument things or causation/correlation things. Is that why the market keeps going down? I actually don’t know. I can’t say yes or no, but that’s the way in which I grasp these concepts, and that was what was telling me that it was gonna go down all the time.
I don’t know if it’s even really interesting to figure out whether I was right or wrong, but I do have a question for you, Ledger, which is that like-
Aaron Lammer: It’s unknowable in a way.
Jay Kang: It is kind of unknowable because we’re just dealing with random, right? So, the question that I have for you, which is that I don’t want to mischaracterize myself and say that I’m super bearish for life, right? Like I think that the technology is good. I think that cryptocurrency is philosophically interesting.
Aaron Lammer: I’m thinking about becoming an optimist once I’m rich enough to retire.
Jay Kang: Isn’t there a way to do a bullish attitude towards crypto that is not like, we should by now, you know? That it’s time for the market to turn. Because the one thing that I’ve noticed is that a lot of the traders, and I don’t include you in this necessarily, but that the people who are on Twitter, who are on Telegram, who are talking about charts that they have a very short-term, almost day-trader type attitude towards it. Isn’t it just possible that this just keeps going down for a while and that in the long span, even in the life of Bitcoin, which now is about 10 years or something, that it’s really not that long of a time for this to be going down, but that it might just be another six months of this and that maybe it’s better to be on the sidelines for that?
Ledger Status: Yeah. I mean, saying you should sell sometime is not to … That doesn’t mean that you don’t believe in crypto. There are people that are extremely good at this stuff that always have a position in cash ready to buy when the time is right, and then in these markets where they saw what was happening, and they saw the euphoria, they saw the separation of price from the averages. So, like, the price was just escalating too quickly. I know people that’ve been into Bitcoin for years and years, and they were selling heavily above $15,000, and they knew they weren’t going to catch the exact top, but they were seeing the possibility of what was there and that there had to be corrections.
The difference was that along the entire bull trend, the latest one, that spans … The big bear trend started in late 2013, and then there was a year of cumulation that we could have ahead of us using the same parallel. So like if you look at where we are compared to that bear market, we could easily, easily have a year or more, like maybe two years even, where we don’t reach the all time high. We didn’t reach the all time high from the last bear market until 2017. We spent over a year in the downtrend after the last kind of euphoric top, and since we’ve pretty much broken the cycle if you will, the likelihood is that it will take quite a while.
I think if you want to compare it to something, if you think of the way when the NASDAQ popped back in 2001, it took like 10 years to come back. So, if you shrink that market cycle, but if you look at the chart, it’s eerily similar to what we see with Bitcoin. That slow grind, that bleed, could take us easily to $5,000; some would say $3,000. There’s a technical support level in both regions.
I just know, personally, my philosophy would be I’m gonna get as much Bitcoin as possible if we go $3,000 to $5,000 because I do believe there will be another day where we’re $20,000 plus, and if we’re at $6,800, $7,000, $7,500, whatever the price is when this episode is released, that’s close enough to the $3,000 to $5,000. Sure, that’s another 50% drop, but my goal is just to get more Bitcoin because I do believe in this ecosystem broadly, and there are enough bullish fundamental reasons to believe that the price will go up in the future to make that a worthwhile endeavor for me, even if the US dollar equivalent is not great.
Aaron Lammer: But you are holding some cash to potentially buy at a $5,000 or a $3,000 level should it reach there?
Ledger Status: Yes, if we get to $3,000 and $5,000, I’m going to find cash in any way possible.
Aaron Lammer: I will start robbing banks.
Ledger Status: No, no, no.
Aaron Lammer: I have a broad question for you and Jay then.
Ledger Status: Sure.
Aaron Lammer: If you were actually truly bearish right now, which means you don’t think it’s going to go up [crosstalk 00:36:18] from here where are at $7,000. Yeah. Basically you’re like, “Bitcoin’s not dead.” What do you think, Jay, it would feel like if Bitcoin did die? What would tell us, both of you guys, what would, like moment would tell you, “Holy shit, this really could be a death spiral?”
Jay Kang: Yeah, I mean, look, I think that I would … I don’t have interest in reinvesting until it hits about under $5,000 or $3,000. I think at $3,000 I would probably get back in, but, I mean, I think that if it kept going down for another year then, like sort of this slow grind that’s happening right now, like grind down, then I don’t think I would worry longterm honestly. I still think longterm it’s a good idea, and it’s a good investment. I think that a lot of people might lose interest and that it might take a little bit longer to rekindle it.
And like I said, my general thought is there’s no sort of market action or spike up that’s going to rekindle this. It’s gotta be like something big happens. I don’t know what it would be. Like it might be a massive market crash, and people make a good case that we should be investing in crypto instead, or it might be that a major economy fails, and a lot of those people start to convert into crypto. I just think it’s going to take something like that, but that sort of stuff happens all the time, so I’m not saying that it’s not gonna happen. It will certainly happen. I just don’t know when that’s gonna be, and I’d rather have some sort of confirmation that that had happened to get back in than to sort of get back in and hope, you know? I don’t know if that makes sense.
Aaron Lammer: No, I think that makes sense.
Ledger Status: Some of that’s generational, too. The people that do traditional markets trading or they look at … I listen to some podcasts that cover traditional markets and currency trading, commodities trading, all that kind of stuff, and there’s a ton of uncertainty in the broader market right now; not just the stock market, but also the way that monetary policies work from governments, the way central banks are required to do things, whether or not the dollar will continue to be the global world currency.
Like just recently, for instance, China started saying they were gonna not use the dollar as their price basis for buying oil, and there’s all these concerns that there’s gonna be a bear market in bonds. There’s also a broad consensus, and it’s not that the stock market is gonna crash tomorrow, although I guess that’s possible; it’s had a rough month.
Aaron Lammer: Or maybe it will.
Jay Kang: Or maybe, yeah, today was rough, man.
Ledger Status: But the people that I listen to that are very smart, they tend to think it’s not that the market’s gonna crash right now, but essentially we’re on the latter part of what you would call the business cycle of the stock market, so we’re closer to a recession than we are to just an extended boom.
We have interesting years ahead, and Bitcoin’s gonna be a part of that conversation, and crypto is gonna be a part of that conversation, and right now there’s definitely a lot of correlation between the crypto markets and the traditional markets.
Aaron Lammer: Is that particularly true among tech stocks? From my understanding, the most overlapped investor pools are people buying tech stocks and buying cryptocurrencies.
Ledger Status: That’s probably true. Bitmex has great research on their website, and they noticed a broad correlation with the entire S&P, but tech stocks are an outsize portion of the S&P, too, right now, so I think that’s a fair statement.
Aaron Lammer: Yeah. And are getting crushed right now-
Jay Kang: That’s me.
Aaron Lammer: … pretty much across the board, right?
Ledger Status: Yeah, we may lose that correlation over time, and it’s possible to see at least a portion of the cryptocurrency ecosystem, so maybe not like all your ICOs, those might be looked at more like a tech stock, but the ones that are currency based or can be treated more like a commodity, like you could treat it like gold or silver or copper. If it’s truly considered a store of value, then that could be a safe haven asset class down the road.
It’s not that way today, but it might be in five years, and if stuff doesn’t hit the fan for five years, then that could be very interesting for crypto and for, I think, Bitcoin in particular, but really a lot of the … There’s a lot of interesting stuff that’s gonna happen, and I don’t think digital currencies, the blockchain, and all that stuff’s gonna go away. The technology is no less exciting today. It’s just that y’all are depressed, I’m depressed, everybody’s depressed because their portfolio values are down. Your Sumokoin is totally wrecked. You just gotta deal with those things, but I think the smart money is looking at the market very closely right now, and therefore I want to be looking very closely at the market right now. I want to stay involved.
The people that I know that don’t really have to work anymore if they don’t want to, some of them bought the top in the last bear market, but then they stuck around, and when Bitcoin was boring and it was doing all that accumulation at the bottom of the zone and it was when no one else was paying attention, that was when they were trading anything and everything they could to earn more Bitcoin and preparing themselves for the next big bull run.
My goal, at least, right now is to do the same; to prepare myself for the next big bull run. These are very different market cycles than traditional market cycles, even if there’s still a market, and I’m gonna stick around and learn, you know, and try to earn some more Bitcoin, and I think that’s a relatively smart thing to do right now.
Aaron Lammer: Jay, are you swayed?
Ledger Status: He’s still not gonna buy until $3k.
Jay Kang: Yeah, I’ll buy at $3k, I mean, yeah.
Aaron Lammer: If it does go to $3k, Jay is gonna be partying on us so hard, and he’s gonna have so many Bitcoins.
Ledger Status: I don’t know. I think if you say that though, there’s a chance that you then just convince yourself that $3,000 is expensive, too, you know?
Jay Kang: Yeah, maybe. Maybe. All right, so one thing you talk about quite a bit I think that we wanted to ask you about as well, which is, and look, this is a question that Aaron and I bandy about. It’s about sort of the health of alts, right? So, I think that we can broadly agree that some alts are … that they’re real projects, so like Monero or Zcash. These are things that have actual science and tech behind it, and they have a use case, and they’re interesting. Do you think that for the vast majority of shit coins, and we can define it as loosely as you want, like let’s say the line is something like Neo or even like Qtum or any of these sort of alt, [Stratis 00:43:05], that these alts that people were big on just a few months ago … Do you think that most of those are just dead at this point?
Ledger Status: No.
Aaron Lammer: Some of those are kind of prestige-y alts. Qtum? That’s like an Ashton Kutcher of alts level pick.
Jay Kang: I thought you were down on Ashton Kutcher. Ledger and I are the Ashton Kutcher bulls.
Aaron Lammer: You know, Qtum is like, yeah, you know. It’s not-
Jay Kang: All right, well let’s draw the line at Qtum is a shit coin.
Aaron Lammer: Okay fair. I will acknowledge that Qtum is completely wrecked right now.
Jay Kang: Yeah. Do you think that these things are ever gonna come back?
Ledger Status: Price-wise I think there are opportunities in pretty much any coin out there. Coins that are Vaporware can still trade and go up, even in a market like this.
Aaron Lammer: Ledger Status say buy altcoins.
Ledger Status: I’m not saying buy altcoins. I do think the best thing to do is to give whatever you’re looking to trade at least that good first smell test, and that is try to find out who’s their team? Who’s working on this? Who’s involved? Y’all mentioned Zcash, and one of the things you first know about Zcash is there’s all these PhDs that are involved in it, right? Y’all did the Zcash versus Monero kind of comparison show, and there are enough solid fundamental projects where there are real teams of people trying to build solutions using the blockchain with one thing or another. There are real people working on this stuff, and if you can find the one that has good teams … I just heard Nick Cote, he goes by Pizpie, he was on another podcast.
Jay Kang: Oh wow! Pizpie’s endorsement.
Ledger Status: He was talking about how he thinks that crypto is gonna be the next big, I think he called it like a brain sync or something like that, so you know how Wall Street recruited all the Ivy League computer science majors, and his point was that the cryptocurrency projects are gonna be the next industry to do that.
Aaron Lammer: Can you imagine what the seniors at graduating Stanford class, like crypto shit must be like?
Ledger Status: I’m sure it’s incredible.
Jay Kang: I don’t know.
Aaron Lammer: Those kids must be fucking going buck wild getting paid.
Ledger Status: Yeah and that’s … but they’re gonna create stuff, and some of that stuff is gonna be awesome.
Jay Kang: I don’t know. I feel like the way that the world is going right now, the majority of very smart spectrum-y guys in computer science PhD programs are probably gonna all start YouTube channels and rant about political correctness ‘cause-
Aaron Lammer: Yeah, I think those dudes want to get fucking rich.
Ledger Status: Yeah.
Aaron Lammer: Like you could just make so much money as like a blockchain engineer right now. Where is all this-
Jay Kang: But where? Where? Okay, I do have a question about that. Where can you make money?
Aaron Lammer: Just work for anyone of these companies who just ICO’ed.
Ledger Status: There are projects-
Aaron Lammer: They have $30 million and no project?
Ledger Status: But there are projects-
Jay Kang: Yeah, I don’t think they’re paying for engineers though.
Ledger Status: Yeah, they are. They are.
Aaron Lammer: They are. They are. They are.
Ledger Status: Let’s use an example. Let’s use an example, and this is not an endorsement, but I looked it up after the show, so EOS got featured by John Oliver, I think y’all talked about that, on March 11th, and for what it’s worth, I think I’ve heard that they have something like 40 engineers working on this product, and right now, it doesn’t exist, but they definitely had people working on it, and by the way, when it was on John Oliver’s show, since then it’s up like 30% relative to Bitcoin, so even though he definitely poked some holes in that project-
Aaron Lammer: Hey, it’s good to be on TV.
Ledger Status: It’s good to be on TV.
Aaron Lammer: As Ripple will tell you, at least for a while, it’s good if you’re on TV.
Ledger Status: And I’ve heard of several other projects, like one … I own a little bit of this, but it’s not, again, it’s not an endorsement, so like WAN, they’ve got dozens of engineers-
Jay Kang: WAN.
Ledger Status: I guess y’all have never heard of that.
Aaron Lammer: Literally, you could’ve just made that up, and WAN could be totally fake, and we would never catch you. I have never heard of WAN.
Jay Kang: Is it WAN or is it Juan? Is it like the name Juan, like Juancoin, or is it-
Ledger Status: It’s W-A-N. So, it’s recently on Binance, and by the way, if I’m trading something right now, which I am. I’m actively trading. I’m even doing the most ridiculous trading challenge where we couldn’t have started it at a worse time, so it’s this 100x Trading challenge that I’m doing with my buddy, @Beastlorion is what he goes by on Twitter, where we’re trying to 100x a small amount of Bitcoin just by trading it over six months, and we’re doing it now in a bear market, and right now I’ve made several trades, and I’m like-
Aaron Lammer: So now it’s who can lose money the fastest?
Ledger Status: Yeah, I just got back above break even, and I’m doing some good trading. But anyways, so for me, I go where there’s volume because if you go try to go to some of these exchanges, like Poloniex and Bittrex right now, they just have such low volume, you can make purchases of altcoins that are totally in the tank, and then just wait like three months or six months or however long it takes until “alts are back” if you will, and then you sell it, and you make your 2x, 3x whatever amount of extra Bitcoin.
If you want to make shorter term trades, you gotta go where there’s some volume, so that’s like Ethereum, Litecoin, the big stuff that’s on something like Coinbase or Bitfinex, something with very few trading pairs, or the other place is Binance, and on Binance every day there is a dozen or two dozen coins that just have an extraordinary amount of volume from traders all over the world, and you can trade them on low timeframes and trade them just like you normally would and try to earn some more Bitcoin, but you have to apply trading strategies and stuff, and that’s been my strategy.
Aaron Lammer: One addendum to that story, Jay, is that Juancoin with a J is still available, and I think it’s a kind of dynamite concept.
Jay Kang: Oh, you mean like we could make Juancoin.
Ledger Status: You could get Juancoin on Cryptopia for sure.
Jay Kang: [Juancoin.io 00:49:18].
Ledger Status: Yeah.
Jay Kang: All right, well, I have one more question for you, which is we’ve gone up and down and then down and then super up and then down … What do you think is going to be sort of the point where all this breaks out again and we see what we’re seeing before? I mean, you obviously think that could still happen or else you would’ve, because you’re a smart guy and you, like me and Aaron both, have kids and bills that you would’ve flipped your money to something a little bit more stable. What needs to happen for us to kickstart this thing all the way back up?
Ledger Status: I think one possible thing is an ETF, and the CFTC actually requested whatever appropriate authorities consider some of the ETF proposals.
Jay Kang: Okay, but they’re already ETFs, right? Like Grayscale.
Ledger Status: No, no, no. Those aren’t ETFs. Those give exposure to institutional investors, but an ETF makes it available so that you can buy something in your Fidelity account or whatever, so that’s like bringing retirement account money into this whole thing, and that’s the only way most people trade anything, and if you tell somebody, “Hey, pick between small caps, mid caps, crypto.” What? It’s like, “A crypto ETF? I can put 5% of my 401k money in that?” A lot of people are gonna say yes to that because a lot of people have heard about this stuff but haven’t really made the move.
But if one gets approved, that’ll be just an enormous fundamental factor playing into it all.
Jay Kang: I do agree with you on that. I think that if there was a stable representative and fundamentally sound ETF product that was available for people to trade, and it wasn’t like the Robin Hood crypto thing where there’s a billion people in line and that nobody can really access it, I do think that that would be a game changer, but isn’t that also bad for crypto in the sense that it kind of gets us further away from the philosophical fundamentals of it?
Ledger Status: It depends on what people own, and it’s still a gateway into people figuring out the real components of crypto.
Jay Kang: Do you really think that people who buy a Bitcoin ETF are then gonna buy Bitcoin and start thinking about anarcho-capitalism and stuff like that?
Aaron Lammer: Who cares?
Ledger Status: Maybe, but it’ll affect the price, that’s for sure.
Jay Kang: No, what do you mean, who cares? I mean, if Bitcoin has a real sort of world-wide adoption, if people get excited about it, if it is used for cataclysmic events, then the idea of it matters. If you’re arguing that the idea of it doesn’t matter at all and that you’re just doing it for the price, you should invest in something else, you know? Something a bit more stable.
Aaron Lammer: Don’t you think the very awareness of Bitcoin as an investment vehicle raises awareness globally of Bitcoin as an idea?
Jay Kang: I don’t know.
Aaron Lammer: I feel like it’s like even on Fidelity, it’s still a great advertisement for it. It’s like having your movie on Netflix or something.
Jay Kang: Yeah, but it also might just lead to everybody-
Aaron Lammer: Spreading your brand!
Jay Kang: It might just lead to a consolidation of Bitcoin into Fidelity ETFs. That’s all I’m saying.
Aaron Lammer: It’s true.
Ledger Status: Well, here’s something that makes me bullish no matter what, and that’s that authorities are definitely paying attention to this ecosystem, and to me, that’s a big deal because they see the potential because they see it as a threat. Like if you look at some of the governments or whatnot.
I think that crypto is here to stay. I think there is enough innovation in the technology, and it’s possible that Bitcoin doesn’t win, but cryptocurrency as an asset class will exist.
So, I did a doodle, and I was just trying to answer your question, so best case scenario, I’m saying we retest all time highs by like September. That’s a technical reason based on some trend line stuff.
Aaron Lammer: I think we’ve basically set up Ledger Status’s next appearance on this show. It’ll be sometime between now and September, and we will be calling back this clip.
Ledger Status: That’s if we save like $5k plus. If we go as far down, like $3k or less, and we make like a big bull like we did last time, I think it could take until like the end of 2019 to break all time highs. Either way, whenever we break the all time high, it’s gonna melt your face because we’re not gonna stop at $20,000.
So if you can think about how many Bitcoin you have exposure to now, I don’t care if it’s .1 or 101 or whatever, think about that, think about the price right now, and I’m saying book it. As long as you’re doing some smart trading, that before 2020, you’ll have a lot more money. To me, that’s appealing, and I want to be here to see it happen, and that’s what I’m banking on, so I’m staying in the game.
Aaron Lammer: I’m just enjoying the image of Jay having his face melted off by Bitcoin.
Ledger Status: Well, see, what’s gonna happen is if it goes to $3k, Jay is gonna be like, “Nah, it’s just dead. It’s just dead.”
Jay Kang: Like, there will be a FOMO point for me.
Aaron Lammer: Yeah. Jay will get FOMO quickly. [crosstalk 00:54:44].
Jay Kang: You’ve seen bear Jay, but FOMO Jay is just as powerful. Just as powerful.
Aaron Lammer: Jay is gonna get wrapped in by some kind of crazy prediction market where he starts calling world news events or something, and he’s gonna end up with some Bitcoin, and it’s just gonna be right back in the game.
Ledger Status: If you’ll give me the chance for one parting thought, I would just say-
Jay Kang: Yeah.
Aaron Lammer: Please.
Ledger Status: I’ll just say you don’t go straight to any price. That’s too quick, you know? These things take time to develop. What we’ll have throughout all of this is volatility because there’s lower liquidity in the crypto market than there is in traditional markets, and there’s greater volatility, meaning larger price swings that you can advantage of, and you can lose money doing that, but you can also make money, and that’s what gives great opportunity. No matter which way the price goes, if you trade and you play your cards right, you’re willing to be a bull or a bear on the trades, so like you can make money as it goes down, too, you know? You can short things. Then you can still do well even if it goes down, if it goes sideways, if it chops because we will maintain a degree of volatility.
So, I would just tell people to not get too discouraged, but also if you’re in with more than you can afford to lose, and that’s where I think a lot of people got and why they’re freaking out so much, then you’re just in trouble. I don’t have great solutions. That’s why people always say don’t put in more than you can afford to lose.
There will be sunny days again in crypto. I assure you.
Aaron Lammer: Yeah, I would [crosstalk 00:56:16].
Jay Kang: I believe you. I believe you.
Aaron Lammer: I believe in it, too, if for no other reason is that I feel like people just want more. People want to get back into it, you know? People want to a basketball season to start again.
Ledger Status: Yeah. Now, what we know here, we now have clear and evident signals of when it’s time to sell because we saw everything at the end of 2017, right?
Aaron Lammer: Yeah.
Jay Kang: Yeah.
Ledger Status: So, whether it’s Floyd Mayweather endorsing a cryptocurrency or whatever else, we now have some really clear signals of when to get out, so we’ve learned some valuable lessons here over the past few months.
Aaron Lammer: All right. Well, let’s talk again soon.
Ledger Status: It’s good to be in with you guys. Thanks for having me.
Jay Kang: Thanks, Ledger.
Aaron Lammer: All right, later guys.
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The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.