Thank you, Lord, for this day. May it be used for your glory!
Good morning and welcome back to another Thursday update! This week I’m not sure what I’m going to talk about. This is a journey just as much for you as it is for me.
Hmm…maybe I’ll talk about fear.
I think tomorrow I have a few crypto-related articles, but I’ll talk about the general sentiment right now in our economy. *At least from my uneducated economical understanding.
There is a lot of fear out there right now.
The government says they are raising rates this year so everyone is freaking out or “panic selling” as they say. This is not just in crypto, but in stock markets too.
I learned some new terminologies recently: growth stocks and value stocks.
I still don’t fully understand them because it seems like there isn’t a formal definition for them. More of a standard definition.
Growth stocks are stocks that are supposed to, well…grow. They are the ones that have a lot of potential for high returns, but they carry a lot more risk.
The fancy wallstreet people have certain metrics they judge these by. I don’t remember them and I don’t know what they judge.
Value stocks are the opposite. Ok, not the opposite per se. People don’t invest in stocks they think will fall. Well, I guess they do…that’s called shorting, but let’s not go there.
The idea is that value stocks are not as risky; they are the stocks that Warren Buffet loves the most. As long as they grow with or slightly more than inflation, then you're golden.
The sentiment is that as we enter this time of uncertainty with covid still on the rise and now interest rates are being increased, people (mainly Wallstreet) sell off these risky growth stocks, and accumulate more of these less risky value stocks.
So that is my main understanding in the normal stock markets; feel free to correct me if I have a misunderstanding there.
What does this have to do with crypto, though?
Well, crypto, and maybe I’ll just narrow it down to bitcoin, for now, is considered a risky asset.
I mean, it makes sense. Bitcoin has now dropped 50% from its all-time high just a few months ago. Then yesterday it rose 12% in one day!
Another one of my favoirte cryptos, Solana, has had some recent trouble too.
However, before the trouble set in Solana had an amazing 2021. At the beginning of the year, Solana (when I wish we’d heard of it) was floating around $2-3. At the end of the year, it was hitting highs of $265! That’s a 10,000% growth in a year! No wonder people don’t work anymore, haha!
Now Solana just went all the way back down to around $80, and then yesterday went into the $100s again.
On top of that, the Solana network has had a lot of congestion and people are having some failed transactions because of it.
Why?
Well, I’ve mentioned this before, but all these leveraged traders are ruining things, haha!
So people take out loans against their Solana, right? Well if Solana’s price goes down, then they either need to put in more capital to level things out or they risk having all their Solana liquidated. When their Solana is liquidated it lowers the price and causes another domino effect.
The issue was that so many people were in this boat that it clogged Solana’s network, and then a lot of people couldn’t get a transaction through to add money into their collateral. Because of the slowdown, their Solana was liquidated, along with a lot of others. Thus, a major price decrease took place.
This network slowdown causes investors to worry, (myself included) because we truly believe in the network power of Solana. The core team is working on it now and hopefully will have it fixed soon!
Oh, I should mention. I wrote this a week ago, so I’m curious how much will have changed by now.
Why do I say any of this?
Well, there is just a lot of fear in the world right now. Which is crazy to me. There was so much excitement in the financial world a few months ago. The S&P500 hit dozens of all-time highs last year, crypto was a lot of fun, and it was just a wild ride.
But we all should have known it was going to end eventually. That’s what these things do.
Yet, despite knowing this is normal, people are still afraid.
I see so many memes and articles about how bitcoin is going to die this time, that Tesla is going to crash like never before, that this time it’s going to be the worst recession since blah blah blah. A lot of these articles are basically just copy-pasted articles from the last time the economy had trouble.
It baffles me.
It goes back to last week’s article on Mammon. Money has such a crazy emotional grasp on people.
And I mean, I get it. I know there are people struggling, hoping someone or something can finally help them, and that their situation just keeps getting worse and worse.
It seems like the wall dividing the lower/middle class from the upper class just keeps getting bigger and bigger, and the only ones winning are on top.
I get it, but I don’t know it. I have been blessed enough to not struggle to the point where we don’t know if we’ll be able to pay rent, or if we will be able to eat on a given day. So I can’t fully relate, but I can only imagine the fear that induces.
I also know that we have a God who provides. And I know that can be hard to believe when it seems like He’s not. However, if you struggle with fear in any way, I urge you to trust in Him, day by day, because He does provide, He does care, and He will protect you.
The bottom line in this fearful state is that money is not the master. God is. I really like the words Moses says when he reflects on God’s provision of the manna:
“He humbled you by letting you go hungry; then he gave you manna to eat, which you and your ancestors had not known, so that you might learn that man does not live on bread alone but on every word that comes from the mouth of the Lord.” (Deuteronomy 8:2-3 CSB).
That sounds great until you are actually hungry. But know that the Lord is still there and that all you need to do is depend on Him.
This time will pass, mammon will do its thing. We can’t actually predict what bitcoin, Solana, Tesla, or anything the markets will actually do. So why spend so much time worrying about it, when you could spend time with the God of the universe instead?