The Brief for August 3, 2020

If bitcoin’s drop from $12,000 to $10,500 scared you, welcome to the bull market. You’ll get these 10% flash crashes pretty regularly, along with a few legit, terrifying, multi-week, 30-40% crashes, too. Did you know bitcoin crashes more often during bull markets than bear markets, on average?

This week’s brief has only two items, a news article and a podcast.

The market cap of Ampleforth's AMPL token has tanked by over 60%

• Bottom line: after a meteoric rise and insane hype on Telegram, YouTube, Twitter, and Quora, AMPL’s market cap crashed, essentially reducing the purchasing power of AMPL tokens relative to other cryptos by two-thirds—virtually overnight. Somebody cashed out, big time.

• My take: this means nothing for Ampleforth’s success or failure. Many legit alts will get hyped, explode, and then crash. AMPL’s marketcap is still 30x higher today than it was July 1. While that’s no consolation to people who bought the top, smart money and insiders made out like bandits—the value of their original investment remains 30x higher than just one month earlier.

• Why we care: chasing hype usually ends badly. We want to find projects before they explode, then ride the waves up and down—just like the insiders who backed AMPL from the start, waiting many months for the project to explode. We have lots of awesome projects with huge upsides, there’s no reason to chase after the one everybody’s shilling.

Check out the What Bitcoin Did podcast episode on Modern Monetary Theory with an economics professor. Many bitcoiners hate MMT and will tell you how terrible it is, but you might want to hear what the other side is saying. Think out of both sides of your head.

Peter McCormack’s treatment of MMT seems fair and the conversation is informative. Worth a listen.

Relax and enjoy the ride!