Has cryptocurrency’s 15 minutes of fame expired?
At its height in November 2021, the cryptocurrency market was estimated to be valued at $3 trillion, but six months later the market had dropped to $1.51 trillion.1 In May 2022, cryptocurrency overall lost nearly $800 billion in market value over the span of one month.2
While many Americans have heard of cryptocurrency, only about 16% of investors have invested in it; of those who have invested in cryptocurrency, 43% are males between the ages of 18-29.3 It is a critical time for the next generation of investors, who are potentially more inclined to play a riskier game than past generations. It’s key that they understand the risks since peak crypto and price spikes can include the allure of owning a glistening fleet of super cars. Investors are being enticed more than ever by peer and celebrity influencers with the belief that a crypto-utopia with no analog economy can be created by a machine that is not naturally greedy or prone to moral hazards.4
Viewers tuning in to 2022’s Super Bowl LVI likely noticed that many of the infamous Super Bowl commercials endorsed then-surging cryptocurrency. From NFL and NBA MVP’s to Oscar-winning actors, viewers were enticed to not miss out on the latest trend. Endorsements like “I’m in,” “advice from your future self,” and “fortune favors the brave” were woven through the messaging in these advertisements.
History often repeats itself: in 2000, during Superbowl XXXIV, investors tuning in to the game may remember the surge of advertisements from dot-com companies – 14 to be exact.5 But just months later, Americans witnessed the collapse of the dot-com market.6 Twenty-two years later from that incident, a still relevant question to ask is: who should investors trust with their financial futures?
Is there merit to the cryptocurrency hype?
In theory, cryptocurrency is a way of making and receiving payments and investments electronically with no intermediary7. Electronic cash transfers are nothing new. Today, ask how many cash apps someone has on their phone and they’re likely to name a few – Venmo, Paypal, Zelle, etc. The difference between these apps and cryptocurrency is there is always an intermediary who is under a legal obligation to block known illegal activity7. In the world of cryptocurrency, there is no intermediary, no regulator of right or wrong, no watchtower looking for other potential hazards or fraud, nor legal recourse between party disputes, theft, or hacks.
At Matson Money, we are a bold stand for the Fiduciary Standard – in all circumstances, we put the needs of our investors above all other considerations. Cryptocurrency – in all its forms – is a direct contradiction to that commitment and can be destructive behavior. At the forefront of our promise to investors is our dedication to helping investors to be prudent and disciplined with their life’s savings. This means empowering investors through coaching and education to create a long-term investing strategy using Nobel-prize-winning academics.
Dangerous technologies can destroy dreams.
Cryptocurrency, at its best, is gambling with a wide entrance but narrow exit. Unlike the stock market and bond market where there is a positive-sum game, cryptocurrency markets begin with a zero-sum and require others to participate for there to be an opportunity to come out above what an investor puts in. This is the basis of gambling – an entity that can have no more winners than losers and similar to a department store sale shopping frenzy – everyone can enter quickly but a rush to get out can lead to collateral damage. 5
“Cryptocurrency is worse than gold because there is nothing there,” Mark Matson says. “Literally nothing there. I know it sounds extreme but it’s a life-or-death situation. You should never gamble with your future or your hard-earned money.”
Instead, Matson Money coaches advisors and investors to be steadfast in the education and execution of academic investing principles. We are committed that families own and operate from academic investing principles and empirically tested investing science.
“Predicting the future is a difficult thing,” Matson said. “As a matter of fact, it’s impossible. It’s so easy to speculate and gamble but there are some things in life that shouldn’t be a game.”
We can’t guarantee that fortune will favor the brave, but we do have an aggressive and bold battle plan intended to help protect investors and their families from speculating and gambling with their money. Matson Money is committed to helping shield investors from the exploitation of the financial industry.
How many American Dreams could have been saved by avoiding the cryptocurrency hype?
Whether we have seen the end of cryptocurrency or not, there will always be another trend, the latest and greatest endorsed by celebrities or influencers. But investors have the choice to buy into the craze or create a long-term investment strategy based on empirically tested investing science. We want to empower you to choose the latter.
To discover your true purpose greater than money and learn about empirically tested investing science that can help you create a disciplined investment strategy, join us for the American Dream Experience Gold, a virtual event, this July 21-22, and the evening of July 26. Register today.
This content is based on the views of Matson Money, Inc. The concepts discussed herein are for educational purposes only. This content includes the opinions, beliefs, or viewpoints of Matson Money and should not be relied upon for entering into any transaction, advisory relationship, or making any investment decision. Other financial organizations may analyze investments and take a different approach to investing than that of Matson Money. All investing involves risks and costs. No investment strategy (including asset allocation and diversification strategies) can ensure peace of mind, guarantee profit, or protect against loss. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
(1) Lang, Hannah. Explainer: Does the cryptocurrency crash pose a threat to the financial system? Reuters. May 10, 2022. Retrieved 9 June 2022 from https://www.reuters.com/business/finance/does-cryptocurrency-crash-pose-threat-financial-system-2022-05-11/
(2) Yue, Frances. Crypto crash will have limited impact on U.S. household wealth and labor supply: Goldman Sachs. Market Watch. May 19, 2022. Retrieved 9 June 2022 from https://www.marketwatch.com/story/crypto-crash-will-have-limited-impact-on-u-s-household-wealth-and-labor-supply-goldman-sachs-11652996573?link=MW_latest_news
(3) Perrin, Andrew. 16% of Americans Say They Have Ever Invested in, Traded or Used Cryptocurrency. Pew Research Center. November 11, 2021. Retrieved 9 June 2022 from https://www.pewresearch.org/fact-tank/2021/11/11/16-of-americans-say-they-have-ever-invested-in-traded-or-used-cryptocurrency/)
(4) Alghieri Disparte, Dante. Beware Of Crypto Risks – 10 Risks To Watch. Forbes. July 21, 2018. Retrieved 10 June 2022 from https://www.forbes.com/sites/dantedisparte/2018/07/21/beware-of-crypto-risks-10-risks-to-watch/?sh=737438ce5f17
(5) Mellor, Sophie. Crypto Companies Spent Millions on Super Bowl Ads. So Did Pets.com. Fortune. February 14, 2022. Retrieved 9 June 2022 from https://fortune.com/2022/02/14/crypto-companies-super-bowl-ads-coinbase-ftx-bitcoin-ether/
(6) Hayes, Adam. Dotcom Bubble. Investopedia. June 25, 2019. Retrieved 23 June 2022 from https://www.investopedia.com/terms/d/dotcom-bubble.asp.