How long do you sit on your Stable Coin stash?
That is the current question and Hodlr dilemma.
Answer?: When that 'Stable coin' is no longer stable. (not liquid= slow to convert to US $ )
THE HODLR HERD IS NERVOUS
Witness Circle and USDC, since March 12th 2023 they have lost US$ 5 billion in Market Cap,
Most of that Market Cap value imo has likely 'fled' to #Tether #USTD , the lesser of two privately centralized evils ?
Now the Whales continue to ponder their next wave of speculative bets in the cryptosphere, to be powered for sure by their quant order systems, in order to create their next upward move of "crypto star' market cap value in the form of "speculative" wealth.
For those new to the cryptosphere, the above is how speculation (like gambling at the casino craps tables) is powered in the cryptosphere.
DEFAULT HERD BEHAVIOR? HODL IN STABLE COINS? Really?
Nowadays it seems most HODLRs , like the Whales have had no choice but to transfer a lot of their holdings to stable coins,
largely because the cryptosphere baffles most of them. (the lack of steady returns has escaped them beyond receiving staking rewards for staking in high volume transaction "crypto worlds", rewards received in tokens that for the small crypto investor, always need conversion to fiat when its time to pay the 'main street' bills.
So why to did the Whales move quickly to #TETHER after the SVB fiasco to collapse the value of USDC $5 Billion ?
My view for their rapid move is because Whales have paid analysts who have dissected Circle's investments propping up their 1:1 reserves of USDC to US $ and have realized some of those investments were, let's say questionable.
The bigger Question then in 'Stable Coin Land' is:
What is the 'quality' of the so called 'hard stores of value' investments propping up various stable coin reserve guarantees of One US Dollar will be returned for 1 Stable coin?
Stated another way,
Do all of these stable coins really hold US$ equivalents to back up their payout float?
A deeper investor question which I struggle with daily is:
Should investors want to convert/exit their stable coin unspent values to fiat or other cryptos, or is their liquidity, not so liquid locked into 30, 60, 90 day stock equity contract positions or, short term debt interesting paper?
The REAL stable coin question is How FAST or slow (less liquid) is the stable coin actually able to handle a BIG swarm of investor conversions at the same time?
IF the management company behind the stable coin is not able to convert their investments back into US $ quick enough to meet the surge (or run) of investors wanting to convert stable coins to US dollars, then like Circle, these stable coin management companies managing these 'centrally controlled' stable coins can expect their stable coin market cap to wane/decline rapidly due to their being less swarm demand or willingness to purchase versus more or Bigger Swarm demand to sell the stable coin, because the store of value is needed to be placed or sent elsewhere by the investor to settle other transactions and investors WORRY when these Stablecoins are SLOW to convert back to US $ when the wallet requests come in to do so.
Does that SLOWNESS to convert to US $ = less trustworthy? you be the judge.
ie- Right now (the past 10 days or so) Circle is perceived by well researched WHALE investors to have had a slow response (be unable to easily) convert their #USDC transactions to US $ on demand.
Result?
A US $5 Billion EXODUS is the form of 'calls' to convert Stablecoins to US Dollars, by largely WHALES (to #Tether #USDT ? likely..,)
Ouch.
AND now Circle want a bail out from the US government (really the US Tax payer, either directly or through more erosion of their buying power)
That lack of 'FAST' liquidity is exactly what feeds the investor FEAR of "will I see my own hard store of value erode before my very eyes if I keep my US $ store of Value in that stable coin?"
Personally Circle's request for a US $ Govt handout from the Tax Payer is misplaced, poor form and really looks bad on them. It will not end well.
A STABLE COIN STAMPEDE TO US dollars?
Well inflation tends to zap the 'trailing' HODLR investor her like a collective set of electronic cattle prods invisibly, when sitting on fiat valued stores of value, often, ZAPs measured as daily buying power erosion accumulating into a thousand little zaps, everywhere, to trigger the HODLR herd to stampede else where.
But Stampede to the US Dollar? Really?
Yes Hodlrs need to pay bills, I get that, how ever, if there is long term capital beyond the daily bills getting paid, the US dollar in my opinion in the last place I would invest, especially if it means placing money in a Regional Bank, now the target of the BIG Bank roll-up just getting started in the USA and well underway now in Europe (UBS & Swiss National Bank agrees to buy/Nationalize Credit Suisse).
So the answer is to place your US $ money in a Big Bank account ?
Imo not really.
Or investors can wait for CBDCs after Big Bank and Government consolidation of the Regional or Poorly Managed Big Banks? not. lol!
Imo its likely better to get ahead of the converging chaos and, if you must stay in the FIAT system for what ever reason, invest/buy into 30 day US govt T-Bills keep rolling that value to the next T-Bill round, just like the Whales do it. At least you get some short term guaranteed interest and it keeps the whole fiat system from totally collapsing.
Otherwise though, imo there are other more worthy places for small investors like me to place their 'store of value' than the fiat system.
Especially given the coming collapse and replacement of the current worldwide FIAT system with what the central bankers hope will be a a successful CBDC roll-out (not), yet another fiasco in the making.
GETTING AHEAD OF THE RAPIDLY CONVERGING CHAOS: First, Just say no to CBDCs..
Here are a few worthy investment concepts which I consider useful and sane, so take them for what they are worth, given a few 'numbered' facts:
1. Consumer Price Indexes are a bald faced lie, because they are missing your two biggest monthly payments, your overvalued house and your interest free, high priced car which got stuffed on a lease anyway of 5 years or more to get the zero interest sticker price. (debt sales in disguise)
A. Grow a Garden, raise some egg laying chickens, if you live in suburbia or the country, help and share with your neighbours, especially the elderly, the self in-firmed due to sickness and those unable to work to to physical or mental incapacity.
2. Crazy World FIAT Money Supply Growth has eroded your BUYING power the last 3 years by at least 50%
B. Convert what fiat you have into Silver coins and start buying dry goods on the open market you need person to person or with small shops.
C. Don't buy real estate with the rest of your fiat , instead do what the smart Whales are doing and park your FIAT in T-Bills and wait for the real estte market to really crash
3. Stablecoins 'under the hood' are proven to be not that 'liquid' and thus, are not really able to service quick 'mass herd' requests for conversions to US $. (so why stay there 'hodling in fear'..,)
D. Move your Stablecoins to some US$ to service your monthly regular existence needs (not wants) and the rest into Bitcoin, coins with really good ERC20 staking and transaction per second performance and to inter-chains which can quickly service service both UTXO and ERC XXXX type settlements with decent staking rewards that stay ahead of real 'main st.' inflation (imo its more like 8% or even more, when you included car and mortgage payments, the latter having interest rate increases that do not appear to be ending anytime soon)
E. Re-invest in cryptos with good business models. They are few and far between and worthy of your support. The guys at Brave Browser still get my vote with #BAT purchased ad placement of permissioned vetted Advertising in their browser to allow you to earn BAT for viewing the adds you subscribe to, it works and is honest. Look for more of the same and those crypto projects which actually support tokens backed by hard assets and are not centrally controlled.
The Stablecoin Stampede has started.
Will you follow the Whales?
It's a simple question.
Yes, each investor big or small has their own approach and set of answers...
That said, imo it's time to action your own approach.
Stay safe, be kind and do what's right for you and those close to you.
TK over and out.
PS- "Circle senior policy specialist Tarleton Watkins said.
“Although it is rare to have cascading bank failures, like in the financial crisis of 2008, this event with SVB put Circle through a very serious stress test, and we have come through it.
“This shows the resiliency of our business model and operational model. It also provides an excellent learning lesson and prepares us for the next steps as to where regulation should go.”
TK- if USDC is so resilient why are they asking the crooks at the FED to back them? one can only wonder... ;)
