The Secret Broker: Don’t cry for me, Crypto Trader
The Secret Broker
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After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
Here we go.
This is the big one that some of you have been asking for.
An update on the current state of the crypto market and where it’s all heading, through the eyes of an equity broker.
I must first declare though, that I actually do now have my very own coin listed on an exchange.
In fact, I “hdol” 120,000 coins. Their ticker is 1ozg, as in “one ounce of gold”. Per coin.
To save you from having to reach for the calculator, that’s a value of $291,435,600 and as the gold price has shot up $48 in the last 24 hours. That’s an overnight gain for me of $5,760,000!
Not a bad night’s sleep, having actually got to it by counting my coins backwards from 120,000, (119,999 coins, 119,998 coins… snore) and waking up to find that on paper, I have just about made more money overnight than a real estate agent based in Toorak earns in a year.
Bit early in the morning to open the champagne and light up a Montecristo, which is more a sign of my age. Also, I know my doctor reads my articles, as he has pulled me up before (after 7.00am was perfectly acceptable but not before, is what I think I heard him say).
So, where are we up to in Crypto Land?
Well, an old client of mine rang me yesterday to tell me that his 20-year-old son has informed him that he has opened up a crypto account and what did I think?
I told him to sit his son down and get him to write down – on paper – the word ‘Crypto’. Then circle the first three letters, as that is how his trading will end. In tears.
Apparently, all his mates are trading away and the peer pressure had grown too much for him to ignore.
So, that’s the first sign of a tick closer to midnight for most of these kids. The next sign was another old client sending me a link to the background on one of the latest fads.
Under the guise of the ‘Museum of Forgeries’, a crypto auction house will sell 1000 coins for US$250 each, of which 999 will be linked to a ‘good forgery’ of a bit of Andy Warhol wall art and one coin will be linked to the actual real piece of signed artwork.
The artwork is worth US$20,000, so one winner will get something worth US$20,000 for an outlay of US$250. The other 999 will get something worth no more than a takeaway cappuccino, whilst the house collects a cool US$230,000.
That’s less than what I make in my sleep but not a bad return on a US$20,000 investment and this new fad seems to be a play on an old joke I heard about a donkey, 40 years ago. It goes like this:
Two Mexican farmers, Pedro and Miguel, need to raise some money to pay off the local Banditos, so they decide to sell their only liquid asset, which was their donkey Gringo.
As Gringo was old and not worth much, he wouldn’t quite fetch what they needed at the market, so they decided to raffle him off.
They go around the village and sell 200 raffle tickets at $1.00 each, which now gives them the amount they need plus it keep them in tequila and refried beans for another month or two.
The night before the draw, Pedro comes running up the hill to Miguel’s house and informs him breathlessly that Gringo has dropped dead and what are they gonna do?
Miguel thinks for a minute and then tells Pedro to go ahead with the draw tomorrow and when the winner comes to the farm to collect his win, explain to him what has happened and then apologise and give him his dollar coin back. Miguel then shuts his door.
So, my point is that none of this is new. But the fact that anyone, anywhere in the world, can come in and play these coin games, is new.
It’s like one giant game of Pass the Parcel, from Country to Country, Wallet to Wallet.
I think there are now over 10,000 different exchange listed coins like mine but if they get listed on some of the most popular exchanges, then their value rises as they get more exposure to the players.
One recent coin, ‘Squid Game’, which was named after the popular Netflix show of the same name, rose 310,000% to US$2,856 a coin. Then plunged to zero in just 5 minutes flat and all in the space of a single day. Crypto-savvy (and unfortunately crypto-stupid) folk might know that as a “rug pull”.
Not even the dodgiest of the dodgiest Perth-based ASX-listed companies could perform gymnastics like that in a day.
It normally takes them about four years before they reach zero.
The main bluechip coins seem to be OK, it’s just the other 9,980 coins that worry me. (Well, 9,979 coins if I don’t include my own coin.) All you have to do is remember that all you can lose is 100% of your money.
If you are happy with that risk, then go for your life.
After all these phone calls and reading all these stories, I am seriously tossing up between spending the US$50,000 to upgrade my coin to a better exposed exchange or raffling off 1000 of my coins at the current gold price.
By using the crypto donkey model, 999 could be attached to a nice non-forged image of a shiny gold bar and then the remaining coin could be attached to a real gold bar, worth US$1792 or 0.0293770491803 of a Bitcoin.
Who knows, I may even throw in a pair of pretend donkey ears for each coin buyer to wear on their head whilst waiting to see if they had the winning coin.
Feel free to contact him with your best stock tips and ideas.