Waiting for the 500 Pound Piano to Drop (On My Head)

By | March 11, 2020

Bitcoin was born out of the financial crisis of 2008, when a group of libertarian coders wanted to build a currency that couldn’t be manipulated or inflated by a national government.

That means, of course, we don’t how it will react under a world financial crisis. But we are going to find out very soon.

So far, so good:

Bitcoin has dropped about 20% from its 2020 high but is still up more than 10% for the year.

Meanwhile, the S&P is down 11 percent for the year and NASDAQ is down 7.5 percent.

But those numbers don’t do justice to bizarre behavior of various asset classes during this downtown.

My “safest” investments have done the worst, while my “riskiest” investments have done the best.

I have been loading up on gold stocks all priced under $5 for the last six months. I am still up 40% on my biggest holding, K92 mining (KNT:TSXv).

I am down 15%-25% on a few other penny stocks which in a financial meltdown, is not fantastic but to be expected.

If you have traded penny stocks for any length of time, you get used to a bad day once a while.

Meanwhile, one of my “safe” stocks, like Brighthouse Financial (BHF:NASDAQ), has dropped from $39 to $27 (or 30 percent) since beginning of 2020.

Altcoins are supposed to drop 30% in one month, not multi-billion financial service companies with a very healthy balance sheet.

What Does the Future Hold?

It’s a no-brainer that more interest rates are coming, and but fast. By the end of March, we will be below 1% interest rates in the US.

The question that remains is whether the Fed will go to zero or even negative.

A lot depends on how the Coronavirus plays out in the next few weeks in North America. If it plays out like South Korea or Japan, then this should be nothing more than the usual once-a-decade financial crisis.

If parts of the US start to look like Northern Italy, then all bets are off. Because Italy is now a pandemic war zone, and it all happened very fast.

It’s a strange world when the price of Bitcoin is one of the last things you worry about when you wake up in the morning.