The Kenosha Kid

Fair cop, I’m just saying: people have already gotten the bright idea of looping the mortgage world into this. Only a matter of time.

Too late: https://www.bloomberg.com/news/articles/2022-04-27/buying-real-estate-with-crypto-new-mortgages-are-backed-by-coins

This can’t be hammered on enough. There’s an endless stream of Madoff-style pettifoggery about yield farming and distributed consensus and blah blah blah but it’s all a distraction and this is a bog-standard pyramid scheme: if you bought in early, you can only cash out by adding more and more layers of fools at the bottom level. When we run out of fools the music stops and the pyramid collapses.

And the music always stops eventually.

At this point I’m convinced that the inevitable cryptocurrency bubble pop is going to be a 2008-scale disaster if not 1929-scale. If the pyramid has grown to the point where we need to start raiding people’s retirement savings to keep the top tiers able to slowly cash out, that means it’s everywhere, and that inevitably some clever sods deep inside the LFI trading desks have figured out ways to amplify their bets 20 or 30X via obscure leveraging instruments.

Which large institutional investors have huge off-books exposure to BTC and ETH spontaneously unwinding? We’re absolutely gonna find out the hard way.