“Ponzi, Ponzi, Ponzi. It’s early. If it is a Ponzi, get in on the ground floor.”
Naturally, safe moon (which is from the family of off-off Broadway cryptocurrencies known as “sh.tcoins”) rose 20 per cent in the space of a few hours. It’s up 290 per cent in the last 30 days and has a market capitalisation of $US4.4 billion ($5.7 billion).
This is classic Portnoy shtick. For those who don’t know him, the Boston 40-something is the personification of the ultra-blokey “bro” culture that dominates pockets of the internet with stupid, crass and blokey jokes and memes.
Barstool started out as a gambling tip sheet that Portnoy gave out in subway stations and morphed into an online platform focused on sports and internet culture.
It built up a large audience thanks in no small part due to Portnoy’s willingness to be outrageous – even if that meant frequently crossing the line into misogyny and sexism.
While Portnoy revels in his status as an outsider, listed gambling group Penn National Gaming bought a 36 per cent stake in Barstool in January 2020 in a deal that valued the group at $US450 million ($579 million).
When COVID-19 led to sports around the world being cancelled, Portnoy pivoted to day trading, helping to inspire last year’s surge in retail investing with his frequent Twitter videos and trading ideas.
But he was never far from his gambling roots. Portnoy’s catchphrase was “stocks only go up” and he frequently bought by grabbing Scrabble tiles from a bag and buying companies whose names started with the letters that emerged.
When sports gambling comes to day trading
There’s a method to this madness, of course. Portnoy’s career is proof that in the crowded, noisy world filled with tiny attention spans, only the most outlandish will stand out.
He’s also been able to consistently tap the psyche of the “bro” on the internet, pivoting to the next big thing – sports betting, day trading, crypto – to show that it’s all a dumb game. A dude picking letters at random can take it to the “suits” with their fancy models for valuing stocks.
Portnoy’s safe moon can be seen as a bet straight out of this playbook. But like all good jokes, it contains a few kernels of uncomfortable truth about the world of crypto.
Portnoy has been jousting with Telsa founder Elon Musk in recent weeks over the way Musk’s pronouncements on two more well-known cryptocurrencies, bitcoin and dogecoin, have pushed the price around.
“I see what Elon does, he’s pulling levers. One day doge is good, one day doge is bad, one day bitcoin is good, one day bitcoin’s bad,” Portnoy says in his video, adding that his endorsement of safe moon is about becoming the “leader” of his own cryptocurrency.
It’s all a joke. Or is it?
While it’s obvious to say that cryptocurrencies have no underlying fundamentals – that is, no profit streams or interest payments that help anchor the value of assets such as equities and bonds – Portnoy’s safe moon gag underscores just how speculative crypto is.
Perhaps one day crypto will, as Wall Street icon Stanley Druckenmiller argued last week, have a role to play as an inflation hedge and/or a decentralised reserve currency.
But when even the biggest and best-established coins can be pushed around by a billionaire who seems to have nothing better to do, these lofty goals look a long way off.
Similarly, there will be many who argue Portnoy’s joke about potential crypto Ponzi schemes neatly bells the cat.
Down in the bowels of the crypto world where sh.tcoins exist, there’s a Wild West feel that is frightening. It’s hard not to believe that many of these coins are being created very quickly, with no purpose other than pushing their price up so the first few in the door make money.
But the comparison isn’t quite right. Yes, the last investors to buy these sh.tcoins will be the ultimate losers when the music stops – just like in a Ponzi scheme.
But where Ponzi scheme promoters tend to keep this fact a secret, the sh.tcoin phenomenon seems based on the very idea of getting in, pumping the price and then getting out.
That is, everyone knows it’s a Ponzi scheme – and is prepared to invest anyway because the big potential returns on offer make it worth it.
The skill for investors is picking the crypto coin that’s going to get hot and then jumping to the next one at the right time.
It’s the ultimate manifestation of the markets as a casino. But don’t doubt that there are plenty of players willing to chase big wins.
The Link LonkMay 18, 2021 at 08:58AM
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Dave Portnoy's dumb joke says plenty about cryptocurrencies: Chanticleer - The Australian Financial Review
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