23. Worst Week Ever? Luna/UST Collapse, Should You Buy or Sell, Stablecoin Regulation, & How to Maintain Sanity - Transcripts

Welcome to Alfalfa. A free flowing irreverence, digestible, somewhat degenerate crypto podcast for all powered by collective shift entrepreneurs and investors are Mon Asadi knicker Bonnie, Stephen Cesaro and eric Johanson dive deep into crypto Blockchain defi, N F T S, The Metaverse and Web three all while layering in the latest in tech money and politics, feeding you the alpha. You need to grow, make sure to check out collective shift dot IO for crypto insights and alerts and use code Alfalfa for 50% off your first month. A friendly but serious reminder. This is not financial advice and is for entertainment only. Do your own research also. Please subscribe to the show and tell your DJ and friends all about us. Now let us begin. Welcome to Alfalfa. Ladies and gentlemen welcome welcome. It has been a shift storm of a week and we're going to dive right into that and hopefully give you a little bit of sanity. There's been uh, you're watching the video on Youtube right now, Stephen just uh, might have hurt himself terribly, but he's still here.

luna terra

terra stable coin. Uh, lots to talk about tough, very tough for the markets, we're gonna start with that for our investing segment. Then we're gonna go into crypto regulation. Probably more specifically stable coin regulation as a result of what we just witnessed this last

uh week and

then we're gonna wrap it up with our life segment on mental health sanity in a bear market. I am sick. So I'm bringing about 30% of my energy. Just apologies in advance, everybody listening and speaking of the talent pino, Nicole Bonnie

is on vacation, Hynek

hope he's enjoying himself. Probably somewhere beautiful in the world. And a couple of quick announcements before we kick

off, leave

a review for us on apple podcasts. Specifically, if you go down into the Alfalfa show, scroll down, leave five stars in the comments section, leave a review for us and we'll read it out

on the next

episode. Love to hear from you. And given that

we're in a ship

storm, if you want some guidance and education for all things crypto, check out collective shift. The link is below in the description, it's all things

crypto, education

and guidance and investing advice and if you use our code you'll get a discount as well

and we've had a lot

of conversation going on in the discord um in particular Youtube guys have been dropping a ton of alfalfa in the discord and it's just been a really nice

ongoing conversation with the community. So

the link to that is also in the show notes below

and um, last but not

least, Stephen is looking for employment.

Um if

you have any

good job

opportunities to send his way, uh you can tweet at

him directly. What's your

twitter handle, Stephen

at stevens,

Cesaro,

good luck selling that Actually. It's in the show

notes as well. There's a link to it. Um and if you, if you tweet him something funny,

I'll read it out on

the next episode as well.

Any funny job

opportunities sending his way So boys, um

let's do the alfalfa

round and then I want to hear how you feel about everything going on. Um, steven, you wanna you wanna kick it off through

trades if any.

Yeah.

Yeah. I mean I think the most

critical thing for the vast majority of the

listeners is probably

that i

it took a lot of time

this week to start setting my

bids. Um

This is one of the nice things

about

taking profits

when you're in

the mania

phase is that you

actually in times like this, get to take

a step back

with some cash on hand and think about, okay, where do

I buy?

So I bought a

little bit of

Bitcoin that

like 28

K. Ish. Um I do

think it's going lower.

I've got bids said it

20

4K. You know,

Little little above 20

four K. 22 K,

18 K.

Um I think

there's a pretty good chance we

trade down

there in the next couple of months. Um

Either I stay either

I still think is a little

overheated compared

to Bitcoin. I definitely,

I tweeted about this

last week. Um that was kind of worried it had a lot

to to fall

versus Bitcoin and value, you know, so I got my

bids stacked a little

lower there. I I think this kind of

1700 ish

area is going to be an area that's probably

gonna be pretty well

defended, but I do think there is a good

chance it's, it's gonna

break. So I've got a lot of

bids kind of stacked around

The 1700 area and all the way down

to all

The way down to seven

100. and I've had

some uh some

goblin stink bids there. If we get one of our classic like scam

candles, you

know, during the full panic

like we saw last

night and

some of the other all coins

that used to be

like what if I did back in the day? Um So yeah, I mean, I'm trying

trying to keep a long term picture.

I I think

that these prices for

ether and Bitcoin are long term good levels. I think

sub 30 Bitcoin

uh and

Sub two K. It is

like a really good long term level, you know, So I am trying to focus on accumulating, that's

kind of the

name of the game. Now the, the yields are going to be dead. A lot of the active trading is going to be dead. It's time to kind of just sit back and be patient and I

think slowly

by uh this is the time you actually make money, you know, not the uh not the, not the mania phases. So I've been trying to fight all of

my uh not so great base

instincts, you know, that's been

very, very emotional even though this is not my first rodeo, uh, the last few days. Um,

so yeah, off of the week is uh, planning, planning the bis doing it ahead of time. Nice, Well played. Go ahead. Oh man. I feel like ship

you guys. I'm sick

too. I'm depressed

with this market.

I feel

awful.

I closed my shorts. That

was stupid.

Um hmm. I was

expecting a bounce at some point. There's a balance

has to happen. Um, but I think there's

like everyone's still

looking for the exit door so that

we're not gonna get a bounce until there's

like absolute panic

fear in the market and I think we're just not even there yet. Um,

yeah, I

Sold all my eat at like 30,

100. Um,

I always keep a long bag, you know, like, like the forever bag. I never sell that, but I'm kind of happy that I got out. But I'm just piste off myself that I closed all my shorts early. Um, so I'm not ready to buy yet. I'd be more inclined to just wait it out. I guess the, the limit orders are a good way to do that. And this is uh, to all the listeners, this is

telling of the kind of episode to expect today, but don't worry, we are going to have a group

therapy session and

the group therapy

session is going to end with some, some, honestly,

some, I

think we should share

some best

practices about how to survive

this, Like, honestly, even as friends, we just haven't talked

right um, in this last few days about any

of this. So I'm

very curious to end this conversation with

like supporting each other with how

we stay sane and healthy. And I'm sure there's a

lot of people out there

that

really, really

need to hear that right

now. Um because

I mean, you know,

not to start off on

an extremely sober

point, but like eric and I were talking before

the episode started and he was like, man, yeah,

it's, it's a real thing. I was reading on Reddit

that someone took their life and unfortunately that happens in far too many times in bear markets and in situations like this. And unfortunately money

just has such a

powerful hold over

people's

lives. Um Their whole

sense of identity is

structured around it. And what do you want to talk about? What happened a little bit

for people who Yeah,

well that was just more,

let me give my

alpha and then we'll, we'll

dive in. But I just wanted to

say that's kind of

the

uh so my, my alpha for the week, that was more

just a teaser for how

well close. But

uh look, my, my alpha for the

week is um I didn't mention this

in the last episode, but so I was

accumulating ape coin up until that you get labs land

sale,

I uh I think I text you guys

about this but I

accumulated about almost as much as I'd received an airdrop and then when we hit over $20 in a

coin, I started selling that off

and I sold almost

practically all of it down to how

much I needed for like

the land sale, which I didn't

even end up buying extra. So I'm very

happy with that trade. I basically

bought at about an average

of 10 to $12

sold at about an average of $22, uh so doubled that up, which was

nice

and and then ever

since then in the last

week

I've been taking all the other

random

ship coins that I've accumulated whether through airdrops or whatever, I've always

had like a stash

of random

shit which

Makes up about 10% of my portfolio, my crypto

portfolio and

I just started swapping that all for Bitcoin and keith and stables, mostly stables

not terra

thank god.

Um but mostly

U. S. D. C. And

that is just

there to get ready to buy and I have not bought much yet, I'm going to start de seeing in

over this next

God knows how long. Um But we'll be

talking about that in

the show and um you know just

going to be accumulating as

much as I humanly

can honestly

during this bear market I've learned the hard way that

that's the right thing to do. So that's

my that's my alpha. Um

So yeah let's kick off

with what really has been going on in the

market uh this

week. Um

Stephen do you want to kind of

give us a high level

and then we'll dive in.

Yeah I mean Yesterday or the you know the approximately 20

4-36

hours before that. I mean that was that was the craziest day I've ever seen Tara the Blockchain coin luna in the stable coin.

Ust

just completely imploded. I think it went from a

23 or 24

billion dollar market cap something like that. And it was trading at $116 or so a

few weeks ago

traded at

actually

Bought some this morning for a flip for for 88 cents.

And in the span of one

day traded from

like 60

$65 or something all the way down

to like 60

cents. Absolutely wild. And you

know we're talking about a

Top 10 Protocol just turning

into dust

overnight. Just Over over 10 billion, maybe maybe 20 billion

when you factor

in some of the U. S. T. Losses plus

um

plus the luna

price.

Just just complete destruction. I've I've I've never seen anything like

it really.

Um Yeah. Speaking of have

we ever had and sorry

throughout this conversation I might

do come some of those

questions

that we talked about but have we ever had

Like a top 10

coin like that? I can't recall

anything like this.

No the

In 2017 we had a bit connect

but like

when you chart bit connect

versus luna it's

like almost doesn't even register. I think I think I

think Hoffman actually

posted

chart

of it side by side and it

was just paled in

comparison like it was nothing. I feel

like it was, it was like 500 million or so. Maybe

maybe I don't even know if it hit a billion.

Don't don't quote me on that

but I just fraction of fraction of Tara and and

Taro is so much

Worse too because while bit connect in 2017 was its own

kind of like memorable

Ponzi scheme.

It just sort of existed on its

own right.

Tara

and UST were integrated with

a ton of different

protocols. Um they had spread throughout ethereum and a variety of other block chains. Salon a ivax phantom um

that look that

that coin was everywhere. Um we probably still haven't even seen the

full effects of the

impact yet. I'm worried about firms like Celsius and and neck so and whether or not they were juicing some yield on the back end through anchor. Um worried about

protocols using it for

like a treasury yield. Anything else that we don't even know like has happened yet. I think

there's still

some unknowns there and

it's a

it's definitely a little bit a little bit

scary.

Um

so

what do you think are the biggest ramifications

after an

implosion of this magnitude? I think like you're,

you're right that this is going to have like

crazy

domino effects. Um, the biggest of

which is probably like

regulations coming

quicker and more

heavy handed

then. Uh, yeah, and,

and the perception

of the public,

perhaps the novice

investor

or the one

that has been

awaiting an entry point,

You know, these are the

people texting me and being like, dude,

what the funk are you

involved in? Even like that

looks like the biggest

Ponzi in the world? Like

what are you doing? Like does this prove

a lot of people's point, Warren

buffetts, the warren Buffett

and charlie munger of the

world just coming to say,

is

this the told you so

moment? How bad? And then this is more

just a question. I know

it sounds rhetorical, but it's not, it's like how bad is this really for

crypto as a whole, what

are really the ripple effects? I guess obviously

impossible to know,

but if we had to,

I guess

I can say for sure that from the outside

looking in for the novice

investor, for the person who has a little bag of

crypto, they're looking at this and they're just more terrified than ever before. They're like, why, why would I put any significant

amount of money into this, which

Goes back to rule number one

put in what you can

afford to lose and sadly, that that that is still the

case, this is not

a secure

asset

class in particular, some of the stuff with

stable coins which

will which will be talking about but yeah how how bearish

is this

for long term ecosystem market

sentiment so long

term I

think this is this is bullish

because

you know in much the same

way that forest fires kind of call the overgrowth and a and a forest

and they have this kind of natural

mechanism and stabilizing

the ecosystem

like so

too is is this

like this is a similar thing

because you're you're taking

projects or ideas

that are

fundamentally sort of

like misaligned or bad

for the the

ecosystem as a

whole, right? And they they they

they take up capital,

they take up people's

time, they take up people's

energy, energy

time money that could be directed elsewhere to

more productive things uh and

they refocus

them in the

correct spot.

That is a very good analogy. Is that your analogy? I'm gonna have to like trademark that for you. That's very good. That's

good. So you think that the money is going to eventually

flow

to the most anti

fragile

protocols like Bitcoin and ether is like a natural

consolidation. Look,

I I think the

market for a long

time has

needed a reminder

of why crypto exists

in the first

place.

Now I do respect

that tarot was

kind of trying to do something crypto, you know that kind

of was adjacent

to the crypto ethos, they were trying to build

a stable

coin that was

truly decentralized

and also truly

scalable, which is the thing we haven't really been able to

do it, is this like

big

multi trillion

dollar problem, but

we also have this problem in in defi and crypto as a

whole, where we are getting really good at these kind of

Ponzi nomics

schemes where we're able to warp

all these incentives to

kind of bootstrap incredible growth in the short run, but growth that's sort of inevitably um

ends in

complete annihilation

and at a pace

that's like very, very rapid, right? I think, I don't know if our mom was a part of iron Finance, but I was and you were and I've I've You know, I've done like 20

five variations

of these things, you know, all the way back to the original un collateralized

stable coin, which I think was

basis cash,

you know, um

I've played these

games trying to make money right? But

like luna was

dangerous because it was kind

of the first one that

was like really dressing

itself

in something that was super legitimate. Um Yeah, and like I I feel bad because I don't know,

we we've joked about

it on this pod before and we've always

called it a Ponzi

and we'd probably do it in a way where

like people don't really understand what

we're talking about because

we live in this crypto

world, right? Where you sort of acknowledged,

it's just like

um dark humorous stick kind of acknowledgement of like the reality

of what's happening

around you, right? Which is that

a lot of this stuff,

it was like a big casino, it was a lot of, a lot of Ponzi games and if you were good at

those games and understood

them, you, you could make money, right? But if you were a kind

of just newbie

wandering in, it's

just so easy to get

uh, completely

wrecked. I

mean, I, I mean I, I even

lost a

good chunk of money in, in the luna

blow up

because um um I, I

well partially because I just didn't get

out in time because I'm stupid

happened. It happened so fast. Like it happened.

Yeah, happened

fast. I knew it was going to explode and I just wanted to go to dinner with the reality of my

situation. So

Just to give context to this like 30 days,

even

14 days ago, just price price of luna

terra,

$80, not even five days ago and it's at a dollar today. So that that's the level of just to give people that don't have that context, we're talking to have, it has completely lost its value. That was, you gotta have

empathy, empathy for

the investors, but not only them. Like

how about the builders

that were like building on the terror

ecosystem and like now

everything they've worked

on is now just like,

like terra

terra and

what does he want? The

founder of terra

did was very

kind of anti it was, it

was very the opposite of the Bitcoin

ethos, right?

Ethereum

kind of like went a little bit outside the Bitcoin ethos and said we're gonna move a little bit faster,

we're gonna try a few more

things. We need to do stuff that's more

robust, but it still did it in a bit of a,

you know, kind of decentralized fashion. Like Tara was basically

like

this crypto stuff is too

slow, it's too

decentralized. It's too inefficient.

We're going to

have this like

charismatic founder

who does like an Elon

musk tweet style

and tries to

pump the price of his coin and rally community and the idea

that community equals network equals value,

right? And I'm gonna

bootstrap

the adoption of us

tea and we're

gonna, you know, we're gonna, we're gonna

run this like it's

basically

like a centralized

company to a

degree um, was

very sort of anti

the original

ethos of, of, of

Bitcoin.

Bitcoin miners are

certainly all

of, you know, some of

them are probably laughing

I mean, but they're,

they're, they're feeling validated I think at the, at the very least

today, um

because that type of mentality

that kind of

new or that that

old trad fi

world mentality has just like

completely exploded.

Um, and as bad as like ethereum and Bitcoin did today, like when you looked at the the charts

today was one

of the worst bloodbaths I've ever seen. But at one point like you know you saw, You saw Tara down luna down like 68%, you saw a chain like even avalanche, which

people are kind of,

you know saying is this ethereum killer 37% down right? Meanwhile keith was down like three or 4%. Bitcoin was down three or 4% at the time. Right? So to get back to my long term thing, there there is two today I think for the first time in a long while

we saw the

market realized that there is a real

divide

between Btc and ETh and everything else. We saw a ton of capital flow, you know, from the L ones in the east and from from the whole lethal oneworld

into into

Bitcoin and ultimately a lot of capital left the ecosystem as a whole because we did have a very

down day, but

like there was a massive rotation from one sector um which was

really the big sector

for the last bull run right into kind of the old

school um safe

havens uh Bitcoin and ether there was this recognition, recognition of the market that uh decentralization

does

matter. Um Safety in the time of those one in nine

100 days when

the ship does hit the

fan is way

More important than the other 899 days when everything is going smoothly.

And this is

especially true of stable coins right? I said I watched joe

give a lot of ship to

to ruin. And the founders

of maker who created die right?

The ethereum

backed well originally ethereum backed stable coin because it was kind of slow and didn't

grow a lot

right? But luna's gone. Ust is gone,

it is still a

dollar, die has already survived the covid crash. You know, so a lot of things are kind of coming

full circle

right now. It's like days like this and yesterday that really

make you realize

while we're here, why we're here. Um but but you and

I and eric were

just kind of reinforcing these existing beliefs we've

had and I've gotten away

from some of them and I'm sure you have as well. It's very easy to get caught up in the

mania and you, you kind of drift

from your first principles.

But there's a whole lot

of other people out there who are just learning these things from the first

time.

They don't understand

why

luna

wasn't going to go to like 100 trillion

dollars and what they don't

understand why

eat is so expensive

to you. They

don't understand why Bitcoin doesn't quote unquote,

do anything right?

And now they're sort of learning there there there, it's like kind of like their first, their first annihilation, you know and they're they're learning those lessons, it's like this circle of life where every time you're in the market right? Every cycle you kind

of go through and you

learn like it seems like everybody learns the same lessons over and over again, right? Um So if this is your first time here, you know, congratulations. You, you've learned why we call things shit coins. You know,

you've learned why

Btc is is

what it is, what you've

learned, why eat what it is, what it is. Or maybe if you don't realize

it. Exactly,

you learned that the market

certainly does because those two coins are

substantially substantially less wrecked, right? Just

to put some stuff like

I I think there are some

l ones like like harmony or or

phantom like there are there

are L ones that are down like 90% 95%

already. And even if

I was you know, down

60% in

that time span and that might not sound like a lot, but that that's like the equivalent of like losing half of your money like two more times right after you after you already went down. So it is today. Today. This is fucked. It's insane.

It's just like an

absolute absolute carnage. There's there's no other way to remember when people were saying that we won't ever have a bear market in crypto ever again. I mean all those people were idiots. Obviously, I don't know who believed

believed that. I mean there was

some talk of the quote unquote supercycle thing and

I don't know if,

I'm, I don't know if I'm

willing to write off the supercycle,

but like super cycle, like if we bounce here on Bitcoin and everything slowly just kind of bleeds for three or 4 or five months and Bitcoin and just kind of holds this line while everything else bleeds out. It's kind of a supercycle for Bitcoin, trades down like 50, and then resumes

back up. That's

Pretty good. That's a lot better than -90. What was the previous high? Because isn't that a level people look at that. It doesn't go lower than the previous

time. I think we hit,

We hit 69K. Right?

Obviously.

Yeah, yeah. But what about the, from the last cycle previous high was that like 20K. We went from 20

to 30

Three ish, you know, so that was interesting. I think we drove down like 93, last cycle.

Right? And so

Drawing down quote unquote only 60 would be a big victory. A couple

highlights, a couple highlights

their one. I,

I think, uh,

I love

the forest fire

analogy.

I think that's important. I think I'll probably have that clipped,

nicely done. Stephen.

Uh, the 2nd 1 is, I think the perspective

that you shared

is really important

around, you know, taking these, uh, losses, these

l's as the sumers

would say taking the els

on the chin and understanding

that these

are ultimately, um, these are ultimately

the time and the

steps necessary to create wisdom as an investor, like that's,

you have to look at it that

way. And I know a lot of people

that were

Luna Rich by a lot. I mean like at least, you know, four or

five people

like very close to me that have had a lot of luna and they're

devastated

and

like,

like most of their net worth at this

point within crypto

came from luna and if you wake

up one day

and that is completely

gone, I

mean, think about the different ways people

played this, like so many

people probably like, I'm just gonna wait it out, it's gonna be okay. I trust jo kwon,

you know,

blah blah blah,

another couple of days goes

by from 30

it's at a dollar

and now you have nothing. When you could have gotten out with something.

There's all these different psychological situations

that can really

funk a person up and it's

terrible. And if anyone's

listening that is in that

situation, my

heart goes out to you. It's absolutely terrible that said, we're playing a long term game here

and there's

cleanup happening and I think this cleanup is ultimately healthy and you end up learning

patterns,

even just myself, I've learned so many patterns in N.

F. T. Trading.

And if there's one simple pattern that we've talked about so many times between us on this pot and one that I'll just mention right now you have to watch out for this euphoria every time the euphoria is happening we end up chasing it. That's obviously what we call fomo. And these are the

times where you as a

human being become

so emotional that

you can't help

yourself but to shovel

cash and take out a

loan just to get involved in that

thing that everyone is telling you

is gonna make you rich.

The reality is though, the room left for that to go up at

that point of entry into

The market is very little, it's like another 5% because you're

catching the

tail end of that the euphoria is already there. The smart investor in that moment is selling that's what they're doing. They're selling. And the smart investor in this moment is accumulating and so what I think we'll be talking about a lot on this podcast depending on how long this all last is what we're accumulating and

how and to what degree.

But these are the lessons we learned the hard way and

like you said

Stephen like I'm a pretty

risk averse investor

and every time any

of these ship coins has come

up I'm always apprehensive. I'm like I'm just buying

more Bitcoin beneath.

And and the reason that I've always leaned a little bit more heavily towards Bitcoin because it's less volatile and in moments like this which you talked about in the discord hurts a little less feels a little better. Do I get the same level of return? Maybe maybe not probably not over the next five years. But if you can't stomach the volatility like you definitely don't want to be in ship coins

because you can lose it

all and

you definitely don't want to be to

eat heavy. But overall

long term you're okay with those two

for now and we don't really have, I don't know if we really have a a solid third asset

within

the crypto space that we could count on at all to

be

a long term back

holding item. And you'd

probably have to say it's like a board a pipe. Like that would be the next best thing. You know that's the only thing that isn't absolutely right now

crypto

punk, crypto punk aboard a P. And maybe a couple other N. F. T. S. But really

ultimately you're

just solving another

coin based stock probably

long term.

So

I wanted to kind of highlight

some of uh stevens points and had a couple of my own there. But eric I'm curious

about,

you know you're saying this sucks to watch and

um you

obviously have a strong background in all this year. Yeah. How are you thinking about terra?

And we've

been uh standing a lot of empathy towards like

terra investors but like you know Bitcoin

and ether down 60% to and that

doesn't feel good. Um

And if you're gonna be a long term holder beneath you're probably just not selling right? I I sold and I don't, I don't like selling teeth because I want to accumulate as much as possible basically. I try to remind myself that the biggest nightmare scenario is I sell beef and then it just takes off, you know, like it goes by me and then I don't have beef or Bitcoin right? Either of those assets, like so then when you try to play that trading game like I've been doing, I'm like, you know, I'm kind of like profitable on it now because if the price is lower than when I sold and like I kind of want to be um pragmatic about getting back in, you know, like take take a w when I can, which is like, you know the price is lower now, I can buy back in. Um And basically to your point like don't be so emotional that like the sky is falling markets collapsing, like just get out forever. I'm

I'm

really thinking about

trying to protect

myself against the biggest nightmare which is missing this sort of like generational industry growth opportunity,

Let

me ask you and then we can

wrap this segment.

Um Number one question people

are asking us

and just in

general, am I selling like

this ship is falling

apart, it's all burning to the ground do I sell? And some people are asking do I buy,

is now the time to buy, Is this my entry

point? Um, do I sell some stock? Do I take the cash that's sitting on the sidelines?

And by right now, what do you, what do you

think? You're obviously speaking

as a professional trader investor, you, you're, you're

selling because

you're trying to make

up the difference. You're trying to enter east back

in at a cheaper price.

But what would you say to a friend man, it's

so hard because nobody knows what the price

action is going to do

in the future. Like my crystal

ball is just as good as anybody

else's. I think,

um,

you know, steven and I were chatting on texts saying that we were around in 4000 and one, like when we saw like a very similar euphoria in the dot com boom dot com bubble.

And

Uh, you know, that one

wrecked a lot of people

including me and steven and one thing that I recall from that era was that the NASDAQ, it took 16 years for the NASDAQ to, to recapture the highs from the dot com bubble burst 16

years. So like

this thing can, can go on for a long time. Uh, you know, and I think the similarities between this crypto boom and the dot com boom, You know, we can draw so many similarities, but I don't, I don't imagine it will take 16 years uh, for like teeth to regain its previous highs or Bitcoin. but it's something that I'm thinking about that like we're probably in the early innings still of this market drawdown. Mm hmm.

Yeah. For me the

person that's asking

do I sell right now

whose initial

intent and

goal was

to

accumulate a large amount of crypto

and