Hold on to Your Cryptos - Gregory Johnson #5616

What isn't going on, Carrie? It's good to be with you as well. I mean, listen, your opening says it all about the one that started it all with Bitcoin. And we talked about this a couple months back. I think we are in for a few more months of this crypto winter, as they like to call it, with volatility, ups and downs continuing. And fortunately or unfortunately, a lot of that behavior is going to depend upon what's going on with the traditional financial world, and in particular, our friends at the Federal Reserve and all of the up and down business that we've been experiencing as of late, mostly up as it applies to interest rates, trying to deal with this bear of inflation. And so that's going to be a broken record story, I'm afraid, for the foreseeable future. But I'm not sure that it deters any of the optimism that we have, and it certainly doesn't deter any of the excitement that we have about what should be the timeline investors should be thinking about, whether it's with Bitcoin, Ethereum, or some of the more desirable altcoins that are out there in the community. So, but you nailed it, boy, it's all right.

Well, I think that would leave us in a place where for most folks—now remember this, Carrie—the vast majority of American wealth has no exposure whatsoever into the digital asset and crypto industry. It's part of the reason we started Informed, the company, a couple of years ago, was because we knew people, it was going to take some time to get this adoption. I think where it leaves the industry and it leaves the market is it leaves everybody with an opportunity to get in at relatively attractive pricing, in my humble opinion, as we look out over the longest term. I think the big story that we do need to talk about, though, is Ethereum. As you and I both know, Ethereum is the second largest crypto by market cap, but it's the largest in terms of network usage and integration. And it recently underwent something that if you were paying attention even in the normal news channels or listening to your broadcast, you've heard of the merge. And this merge is what they call this radical retooling of how the blockchain Ethereum was going to generate new tokens, how it was going to govern itself, how it was going to administer itself. It easily, if we weren't dealing with COVID, we weren't dealing with Powell's inflationary strategy, if we weren't dealing with war in Europe, this would be one of the biggest stories in 2022. The transformation of this blockchain was massive and it has profound implications. Short term, the cheeky answer would be the implications have been the price of Ethereum hasn't benefited from this. But for the average person listening or viewing today, Ethereum moved from this so-called crypto mining way of running their system to something called proof of stake. And so on a number of levels, it's a massive experiment in the industry. It's a laboratory for what might happen in the future for all these other exciting projects that may choose a similar path. And for the environmentalists who were concerned about crypto's impact on climate change and the environment, the move basically took away 90 to 95% of the electricity used to operate this very, very large network. And this is something we're watching very, very closely.

Well, I think that view, I think we could take to just the whole investment industry as a whole. I'll be candid with you, from my perspective, I think the opportunity for large institutional players to be able to game the system has never been greater. And by extension, though, I think it would be fair to say that it's never been easier for the average Joe on the street to be more well-informed, whether it's listening to your program that's always bringing insights to bear, or whether or not it's the access to the internet and information that people have. I do think people have a chance to sort things out versus when they did when I was a CFP practitioner in the 90s. There was no other information available to give you an idea. People now have so much at their disposal, Carrie, that that's the best way I would respond to that. That is the Rubicon.

I do know, and you teed up one of my soapboxes, or two of them actually, that I'll try and not stand on. But I couldn't agree with you more. One of the reasons we founded the company was because of all of the nonsense, all the irrational exuberance that's been out there, Carrie, polluting the waters. We found doing due diligence for over a year just how many seniors were involved in crypto at excessive levels. Just because somebody's a senior or retiree doesn't mean that they shouldn't have maybe an exposure to crypto, but not some of the nonsense that we were seeing bought in, sight unseen, right?

Right. Yeah. By the way, did you catch that article that Matt Damon lost like 10 million dollars because there was a—he, I guess he was like the heavy thumb and he made a typo on his transfer and now they were trying to get it back. I don't know if they got it back or not. Well, fortune favors the brave, and evidently those that know how to operate their keyboards. Viewers might get the pun there. But you know, I'm from Massachusetts. We like our Massachusetts actors. We like Tom Brady up in Massachusetts. But the reality is the kind of commercials that those two celebrities have been a part of, I think represent what's wrong in general with the investing and celebrity culture. And it has profound impacts, not just evidently to Matt's bank accounts, but to a lot of people who took 'fortune favors the brave' very literally and got in over their heads. So I think that might be a little bit of the world's karma or poetic justice coming in, Carrie. I don't know.

Well, first of all, as I mentioned in the opening, I do think in general—I can't speak to any individual cryptos when I make this statement—in general, if you have not gotten involved yet, this might be one of the best times for you to make your first entry with a very small allocation. Certainly, if you were thinking about it a year ago, you're certainly glad you waited. And I do think for all those folks that did get on board, especially with Bitcoin and Ethereum, if they hold on and they had the longest time horizon in mind, they're going to be okay too. But this is a window of opportunity, number one. Number two, what's going to drive the next bull run, ironically, is regulation. Regulation from the U.S. in particular. The industry has been complaining about regulatory clarity, and boy, have they gotten it this summer. I like to refer to it as the endless summer, pun intended, of crypto regulation. And we are seeing an incredible spike, not a moment too soon, in the regulators getting involved with trying to provide and sort out who's going to manage and oversee what. And I think when that happens, you're going to see the broader wealth management industry enter. And when that happens, you're going to see all boats rise with that tide of entry. So for folks that are early adopters that are a part of the 16 to 18 percent of the investing population that are in crypto, they will benefit from that increased structure from a regulatory perspective. So that is definitely something to keep in mind. And then the third tip that we give everybody, and I'm going to say it ad nauseam, is if you are involved in digital assets and you're investing in them, you can't have a long-term view. You have to have the longest-term view.

Looking forward to it, Carrie. Have a great afternoon. Stay safe.