It’s a sad day indeed, but one we should always anticipate. The crypto markets are in turmoil, and it looks like the crypto-verse is collapsing.
Voyager (affiliate link), my favorite centralized exchange in crypto, is no longer accepting withdrawals, deposits, or trades. They are essentially waiting for markets to start rebounding. You can read the article here on Seeking Alpha.
How did we get here? Greed. During the pandemic, the Federal Reserve pumped a lot of money into the economy in various ways.
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This excess liquidity needed a home, so many unsavvy people over-leveraged themselves. They spent large quantities of money on speculative projects like cars, Pokemon cards, and wine.
They also bought a lot of cryptos. Buying crypto by itself is risky, but they added the extra component of leverage. Leverage is your friend during good times and your enemy during the bad.
How does leverage work? Let’s say we bought $10,000 of Bitcoin in 2018. In 2020, that number will become $100,000. I can then take a trust-less loan against my Bitcoin assets to the tune of $50,000 (or more).
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My loan is good as long as Bitcoin continues to increase in price. But what happens when Bitcoin decreases in value? I can use my loan to buy even more risky altcoins.
If my Bitcoin position decreases to $60,000, I would need to inject another $40,000 to keep my loan open. If not, the institution will liquidate my position—they call this a margin call.
A margin call for all. In general, the crypto market is going through a massive margin call. We are slowly learning that these crypto institutions interlink to one another.
When one company fails, it slowly brings down other companies—we call this collateral damage. But this isn’t the first time this has happened.
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This happened during the Great Depression in the 1930s and the Savings and Loan crisis in the 1980s. The S&L crisis wiped out many banks and institutions (over 3,200) in less than ten years.
We also saw how banks connected to one another during the 2008 Great Recession. When Bear Stearns failed, the government had to get involved in saving A.I.G. insurance and other counterparties.
There is nothing new under the sun. These things happened before, and they will happen again. They occur most in fledgling new markets and businesses. Most people have “weak hands” and will flee to safety as quickly as possible.
The best thing to do is remain calm and look at the grand scheme of your life and investments. First, are you safe and in good health? If so, you are doing better than most people—so enjoy.
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Next, evaluate the overall status of your holdings. Look at the good and the bad, and make an assessment moving forward.
My holdings. Currently, real estate holdings are my bread and butter. Renting rooms continues to print me money. The rents at my other two properties will also increase later this year to help combat inflation.
Having a steady paycheck from my job is also a blessing. As much as I don’t want to go to work, getting a decent-sized salary every two weeks is hugely satisfying.
My dividend stocks’ prices (not value) are down; however, there have been no dividend cuts. In fact, many of my companies are still raising dividends. Thus, I continue to increase my dividend income while averaging down on great deals.
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My book business and website are doing great. I am getting much more free search traffic from Google, and my book sales are picking up monthly. I earned $101 from Amazon sales in June 2022 (last month). Things look great going into the holiday season.
My Crypto holdings. I have $10,700 wrapped up in Voyager at the moment. I’ll be honest; if I lose it all, I won’t lose any sleep over it.
It’s not that I don’t care about my money; I always valued crypto as speculation. I never made it more than 5% of my overall holding, as I have preached.
Do I believe that I will lose all of my holdings in Voyager? No. Do I think the interest rates on coins will return soon? No. It will take another bull market in crypto to bring back those juicy rewards.
Do I still believe in Voyager? Absolutely. In fact, I doubled down and bought 200 common shares for $0.38 each. I now have 289 shares at an average price of $3.25.
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If the price of Voyager stocks goes to $20 each, I would have $5,780. This is a pure speculation play, and I can treat it accordingly.
Do I still believe in Crypto? Of course. Many pundits and retail investors (us) say crypto has no value, which is what they should think. They have not read the books to understand the actual value of Cryptocurrencies, DeFi, and the Metaverse.
That’s why I love talking about cryptocurrencies. The crypto-verse will change the lives of billions of people outside of America. Sometimes we pigeonhole ourselves into seeing the world through the eyes of someone who lives in a first-world country.
How will crypto, DeFi, and the Metaverse change the world? Imagine living in a place like Bali, where you don’t have access to incredible, high-paying jobs.
You then decide to attend an American college via the Metaverse. You earn a degree for free because a company pays for your education.
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You then work for the company through the Metaverse, and they pay you via USDC stablecoins. You can then convert your USDC to the native Bali currency, the Indonesian rupiah.
You can use your USDC to invest in small chunks of the American economy through real estate tokens. These allow you to buy potions of physical real estate and keep your money growing along with the American economy.
Do you believe in the future? Do you believe this is the future of the crypto world? If not, you probably haven’t invested in crypto already anyways. I am a believer.
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The genie is already out of the bottle, and you can’t put it away. I want to send $1,000 in USDC to my friends in Finland, and I don’t want to go through a bank.
Conclusion. Yes, the crypto markets need regulation—letting them operate like the wild, wild west isn’t suitable for anyone.
Many people lost money and want to pursue litigation against companies in the crypto-verse. However, I don’t believe this is correct.
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If you joined a company to receive 15% yields, you joined for greed and quick profits—there is no such thing. You have to perform your due diligence at all times.
I wrote this article so we can never forget how good times and bad times happen in pairs. When the crypto markets are hot again, I will refer back to this article and say, “Don’t get too excited.”
Always keep your wits about you. If it is speculation, treat it accordingly. The things that made people rich 100 years ago are still valid—real estate, dividends, business. One day crypto will join the ranks of these fantastic investment opportunities. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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