Happy Wednesday, Wise Owl Nation!

It's been a while since I felt compelled to write about crypto.

My stance has stayed the same and the strategy we Whowlians have been using is still rock solid.

So why am I writing about it again?

Well, some Ponzi scheme shenanigans have been going on with a blockchain we don't mess with that has led to the crypto market freaking out and causing mass sell-offs. You didn't sell your precious ETH, did you? I sure hope not.

While you sell, the rich are buying.

We want to build wealth ourselves, not pass off more wealth to the already wealthy!

So let's look at what has been going down and why we should stay focused on our strategy.

Let's get into it.

P.s. I just called this collective "Whowlians" on a whim. In my head, it is pronounced: "Hoo-lians." Like the sound an Owl makes mixed with the word Hooligans. I kind of like it. Thoughts? 😬

You can find all past issues (including this one) here. 

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🦉💰 Wealthy Owl Thought(s) of The Week: Crypto Things

Alright friends, I am going to try really hard to keep everything I write here today in as non-technical jargon as I can.

What is going on in these wild Crypto Streets?

Two things happened on Cinco De Mayo this year.

First, my sister got married and that was beautiful. 🥰

Second, a massive selloff began to happen in crypto and that was ugly. Very Ugly. 🤒

It was ugly because one of the most popular newish blockchains LUNA had some really bad stuff happen to it.

The Terra blockchain built a stablecoin called UST on its Blockchain that was algorithmically pegged to the US dollar. UST also happened to be the largest stablecoin by market cap, sitting at (before May 5th) around $18B in circulating assets.

Welp. That "stable"coin is supposed to stay pegged to the US Dollar at a 1:1 ratio. Due to lots of issues with the way this whole blockchain maintained this peg it could not handle a market downswing.

Well, guess what!? We had a market downswing due to the Fed raising interest rates. The Fed did this to kill demand in equities markets as well as to try to curb inflation. Which I find so ironic considering they have been forcing interest rates to stay low for over ten years.

When interest rates go up, banks can offer more APY among other things, so money flows out of stocks and bonds and back into banks. It's a guaranteed % return after all.

How does this relate to the Terra Blockchain and UST? When the market crashed this blockchain struggled to keep its stable coin properly backed. So it de-pegged from the US dollar. UST de-pegged as low as $0.60 to the dollar, and has not yet come close to recovering.

This means that UST experienced 40% inflation or a loss of 40% of its value in a matter of 24 hours. People freaked out as people tend to do, and a market-wide sell-off occurred. Market sentiment has a total loss of confidence in the UST stablecoin.

A lot of people that believed in the Terra blockchain, the LUNA coin that drives it, and the UST stablecoin they built on top of it are going to lose a lot of money. A LOT of money.

One day we are going to learn that algorithmic stablecoins don't work.

How does this affect you?

Aside from our net worth going down on paper, this doesn't affect us.

Remember, you didn't lose any ETH, that ETH is just temporarily worth fewer Freedom Dollars.

And what do we do when ETH is worth fewer freedom dollars?

We buy more ETH.

Events like this give you a cheaper entry into what I consider to be a safe (in crypto terms) and secure way to build wealth in crypto.

Our strategy and why it is awesome

As I have written about many times, our strategy is simple.

Buy ETH.

Do not sell ETH.

Stake your ETH where you are comfortable staking to earn more ETH.

Buy. Stake. Repeat.

My personal goal with this basic strategy is that one day my staking returns will cover my monthly expenses. This is my "retire from employment" plan.

One very important point I want to make about this current crypto crash compared to the massive crash of 2018 is that this time around, no one is questioning Ethereum.

Back in 2018, many people were genuinely concerned about what the use case for Ethereum was. We've come a long way in four years and ETH is now considered by many to be the safest long-term crypto investment.

A lesson I've learned over the years is that global markets are incredibly complex, with an infinite number of variables to consider, and most people will never be able to outperform a benchmark asset like ETH.

What I get tired of screaming about is that while ETH is a benchmark asset, it is still wildly undervalued. The smartest people I know consider ETH to be akin to buying stock in the Internet.

The Merge hasn't happened yet. There is no official date for the Merge to happen, as the core Ethereum developers are all working tirelessly to test this massive upgrade. They are getting close. You can follow their readiness checklist here on github.

As I have written over and over again, this merge is a big deal.

As a brief reminder what the merge happening means:

• Move away from Miners to Staking
• Staking reduces the energy consumption by over 95%
• The supply of new ETH will drop by 90%
• EIP-1559 will continue burning a part of all gas fees, reducing the overall supply of ETH

What happens when the liquid supply of a high-demand asset or product drops precipitously? The price goes up. A lot.

There will be a time in the not-so-distant future when I won't be able to tell you that a guaranteed price jump is coming.

This newsletter is about becoming wiser, healthier, and wealthier.

So for fucks sake buy a little ETH if you haven't already.

There might not be a better time to do it.

Despite the entire market freaking out and selling everything, the buy/sell ratio for ETH on Coinbase is still wildly in favor of buying ETH.

And Coinbase users are usually the least technical when it comes to crypto.

Go to your Coinbase app right now and look if you don't believe me.

I took that screenshot last night before I went to bed.

In Conclusion

A lot is happening in the world right now.

There is still a war going on in Europe.

China is pursuing a Covid-0 policy.

Inflation in the US is the highest since the 1980s.

Equities are falling off a cliff.

Interest Rates are rising.

Algorithmic Stablecoins are still being built and continuing to fail (lol).

And yet, when it comes to the investing pillar of wealth building, Ethereum continues to be the greatest opportunity that is publicly available, and SO MANY PEOPLE ARE STILL NOT TAKING ACTION.

All of this is my opinion of course, but I've been screaming at you all since ETH was $200 a coin. At some point, I'm not sure what else I can do.

Now I conclude this week's Wise Owl Wednesday.

Be well, friends.

Have a great week!

This concludes our issue this week, I hope it gave you some perspective or injected a little motivation into your life!

If it helped, let me know! I read every newsletter response I receive, and I absolutely love hearing from all of you. This newsletter is for you, so I need your help to make it as great as possible.

If you'd like to show me some love for writing all this free stuff, you can always buy me a coffee.

More Resources

I will be adding to this section over time as we find resources that will help you all.

• Check out the Wise Owl Store
• All Wise Healthy Wealthy Articles on Medium
• Start your own Sendfox Newsletter
• Free products to help you level up

Crypto Resources

The Bankless Podcast: This is a link to the bankless podcast on Spotify. Start from the very beginning and learn why I am so positive about the power of Crypto and Ethereum in particular. You can find the podcast easily on the internet, but I am linking to episode 1 on Spotify for your convenience.

Buy your first ETH or BTC:

• On Coinbase - this is the easiest starting place for the newest beginners
• On Gemini - Another great option founded by the Winklevoss brothers. They are based out of New York.
• On Kraken - Kraken has a bit of a harder user interface, but they already have ETH staking enabled with the push of a single button.

Earn interest on your crypto

• BlockFi - Currently, you can earn 4% interest on BTC, 5% interest on ETH, and a whopping 8.5% on stable coins like USDC. Use the referral code b09f24fd to support the newsletter. BlockFi is currently not accepting new customers from the USA for its Crypto Savings Account. Non-US customers are still welcome.

Other tools:

• Argent Wallet - This is the best mobile wallet for Ethereum, Defi, and all things on the Ethereum network, including staking. They even have plans to implement Layer 2 to remove network fees.
• Ethhub - this is a weekly newsletter that lists out all the interesting news, articles, and tweets that have happened in Crypto that week. It's free and awesome.
• Ethdashboard - A simple dashboard to look at various metrics in the ethereum space. I mainly use this as a quick tool to check ETH gas fees.
• Cointracker - this is one of the better tools for tracking all of your various crypto across all of the various wallets, exchanges, etc. You can also use them to do your crypto taxes each year.
• Metamask - this is a crypto wallet that you can access from your browser and allows you to easily interact with blockchain apps online.