2021: The Year Things Got Weird

By | January 2, 2022

The wife and I went out for a walk yesterday and said hello to Harold, one of our neighbours, who was shoveling the sidewalk.

After the usual chit-chat about the kids, he asked THE question.

“Hey, how is that crypto working for you?” he asked me. “Are you still into bitcoin mining?”

“No, not really,” I said. “Right now I’m buying virtual real estate in Kansas City.”

“Oh. Okay,” he said.

Awkward pause.

And that’s how the year went. It got weird.

But it did start off in a normal fashion.

I had money in stocks. Gold stocks, silver stocks, pharmaceutical stocks. I even had money in some energy stocks, although the last time I made money in oil and gas, Obama was president.

I also had money in crypto. I never put a lot of money in crypto, you understand. I made a fair bit off bitcoin and Ethereum in 2017 and but I took a lot out in early 2018.

However, in mid-2018 I put some money back into bitcoin. Not a lot, less than 10% if of my net worth not including real estate.

Just enough skin in the game so I could write a story once a week or every ten days for this blog.

The rest of 2018 wasn’t that great, to be honest. 2019 was a bit better. I learned to hedge, get yield off the bitcoin.

Meanwhile, the rest of my investments, excluding real estate, stagnated. As usual.

Then we hit year 2020 and it got fabulous.

Just before January, Keith, my business partner, told me that Nathan (one of the smartest guys we know in the investment business) told him that bitcoin was going to $50K.

“Yeah sure, whatever,” I said. “If that happens, I quit.”

In February of 2020, I quit working for Keith. The wife was not happy, noting that Keith was the only boss I had in my entire working life who could stand having me as an employee for more than three years (I’m 53).

In first-quarter 2021, I switched most of my crypto holdings from bitcoin to Ethereum, convinced that a major upgrade was imminent.

Of course, Ethereum 2.0 got pushed back to March 2022, and that’s if we are lucky.

But it boomed anyways, more than doubling from when I bought it, even while bitcoin stayed stuck around $50K for most of the year.

It’s better to be lucky than smart.

Meanwhile, everything else sucked.

The investment case for silver was compelling. I bought a lot of silver stocks. I lost money.

I had gold stocks from the year before. With the Fed printing trillions of dollars, gold was a lock to go to $3K and maybe even $5k.

I was just slumming in crypto waiting to cash those sweet, sweet gold stocks and make a killing.

I sold all of them in November for tax losses.

Energy? I got out in early 2021 and never looked back. Pharmaceuticals? I might have broken even.

I lost a little bit in cannabis, made a tiny bit in small-cap tech.

In April the crypto markets slumped 40% but my hedging strategy saved me and the summer slowdown beckoned. It looked to be a good time to get out of the office.

And then it started getting weird.

In the summer of 2021, I made a killing playing the blockchain game Cryptoblades on the Binance Smart Chain network and breeding Axies for the Axie Infinity game.

The weirdness continued.

Uniswap rolled out version three of its trading pools. By providing liquidity on the Axie-Ethereum trading pair, I was collecting 2-4% a day return on my investment.

The summer was very profitable, with August seeing a nice rebound in crypto.

In October, I went to Coinagenda in Las Vegas and got invited to an exclusive party guarded by some rather large bouncers.

In the middle of the floor, then was a guy maybe 21 wearing a Chicago Blackhawks T-shirt, surrounded by suits.

He knew nobody there. But he had just made a fortune selling NFTs. His Twitter account had more than 100K followers.

By then I embraced the weirdness.

I put $50k in an NFT deal based out of Bermuda.

I started buying virtual real estate in Upland.

I invested money in Ohm forks like Time Wonderland and told my newsletter subscribers that it looked like a Ponzi scheme to me but I put in $15K anyways.

It was only the weird stuff that was working.

Gold, silver, copper, oil, retail, tech, cannabis, everything that was real did nothing all year.

But when it came to NFT, DAOs, and the Metaverse, it was all amazing. Bring it on baby.

In December it was time for the glorious climax. Bitcoin was going to boom past $100K, and Ethereum was going to $10k at the same time.

The charts said so. The pundits agreed. Nirvana awaited the faithful.

Then Nathan dropped the bomb to Keith, who was kind enough to forward me the Powerpoint.

There was a new COVID variant coming out of South Africa. Omicron.

The Powerpoint had a very easy-to-understand summary:

Run for the hills. We’re screwed.

For about four days, I was in denial. Then the markets started to drop when they should have been soaring.

Panic is not always bad. I sold all my crypto-stocks, half my bitcoin and Ethereum, and got out of the goofy stuff.

Then my wife and I spent a week’s vacation hiking in Arizona while the world went to hell, again.

On the last day of 2021, I look out from the office window to a street filled with snow after a week of record low temperatures.

The province has literally run out of testing kits. The “good” news today is now if you get COVID, you only have to spend five days in quarantine rather than seven.

The traditional public markets are dead. Bitcoin and Ethereum have had a had lousy month.

Everybody is grumpy.

But virtual real estate in Upland is selling out as fast as the developers mint it on the blockchain.  Time Wonderland is still paying 65,000% annual interest on its staked token.

I’ve been writing about crypto for four and a half years now, and it’s still all very weird to me.

And this has been the weirdest year yet.