Welcome to my Not financial advice – August 2022 post!

Hi everyone!

My predictions last month all seemed to come true… but I think that was pretty easy, and I expect it’ll still be easy to predict the economy going down for the rest of the year… I did say to accept that the US is in a recession, but the US will absolutely not admit it, just yet.

It’s been an absolutely fascinating time in the markets this last month. I’ve got a good friend who is a day trader and I was telling her how I’ve been noticing a upwards spike in the markets on the day of the FOMC meeting… and she told me that yes, that’s a thing, but you can’t always predict which way it’s going to go.

I totally accept that, and it doesn’t matter to me since I’m not a trader, but it does look like a lot more people are getting in on the act now…

Traders are now buying up the day before in order to get in on the FOMC action.

Crypto got the same boost, which is not surprising since many investors that dabble in stocks (particularly high-risk, high-reward tech stocks) also invest in cryptocurrencies.

The thing is, the FOMC did increase interest rates again, by 75 Basis points (0.75%)… so you would think that as borrowing money is that bit more expensive that the market will cool it’s jets. However, another good friend told me that in the FOMC Q&A session that the US Fed is mostly finished with steep rate hikes and increases of 50 and 25 Basis points (interest rate increases of 0.50% and 0.25%) over the next two quarters. With 50 days to go to the next meeting, the market is undecided, but leaning towards a 25 Basis point increase next…

There is a chance the market is celebrating the US Fed easing off on it’s quantitative easing measures… but I don’t expect this to last too long. I expect the markets to continue to fall for essentially the rest of this year.

With inflation still high, I just can’t see lots of money heading into crypto and stocks:

Especially since the US will be seeing it’s highest interest rates for a really long time…

Here is a forecast that I think is probably pretty spot on…

I do expect inflation to come down though… I mentioned last month that the US Fed has to kill inflation dead to ensure that workers don’t demand raises, which would increase the cost of items, which would increase living costs, etc etc… and even though demand usually comes down by itself as people buy less when prices are high, with the US Fed forcing higher interest rates, inflation is coming to come right down…

I imagine inflation will come down due to; high prices (people choosing not to buy), supply chain issues getting resolved, Walmart/Target/Home Depot selling stock to save on warehouse space, CHIPS act and innovation solving problems at a faster rate than ever before.

Russia’s invasion of Ukraine also has an impact on inflation and once Russia has a regime change (the only safe solution for the Russian people, the Ukraine people and the world in my opinion) we’ll see grain and energy hit the markets again… although, excitingly, the first shipment of Ukraine grain to get through the Russian blockade hit Istanbul last night, which is huge… hopefully it’s a sign of positive change.

I expect both the crypto market and the stock market to slowly erode over the next few months… meaning portfolios won’t look great, but you might be able to buy some risk assets cheaper than you can now. The best process is to buy a little with each pay period, so that you generally get good prices as everything trends down.

In the long term, crypto still looks like an incredible deal with amazing upside potential, but yeah, I think in the short term there is still lots of red candles to come.

I don’t know when the market bottom will be… but I imagine it’ll likely be after the US Fed announces it’s finished with increasing interest rates. That’ll depend on the inflation rate, which is usually a slow, lagging indicator. Gas prices have been decreasing, crude oil is decreasing, bonds are decreasing… it’s all coming down.

HIVE

One of the things I’m super bullish on is the Hive blockchain.

It’s by far the best example I have of Web3 working well… and I tell people about it all the time.

I’ve been interacting with this blockchain for about 5 years… and whenever there was a price change in the token you’d see so many posts and tweets and everyone just going bonkers.

On Monday I logged on and saw the price was double what I remembered it being… and there was not a peep from the community as far as I could tell. @Acidyo was telling people to always have liquid HIVE tokens available to sell and buy more back later… which turned out to be incredible advice because it looks like Hive might have been the target of a short pump and dump…

It does amaze me that Hive holds it’s price pretty well… considering that new Hive tokens are printed every day… but as long as the network keeps growing those new tokens will be gobbled up by the community. Since Hive users produce so much content daily, I think it’s only a matter of time before it becomes THE location for things like makeup tutorials or homesteading or whatever. People are getting fed up with Instagram… and Tik Tok is a tick tocking timebomb of creators getting shafted and potential authoritarianism/spying.

I do think Hive users have to get better at promoting their work on Twitter and Pinterest and we all need to be a lot better at SEO for search engines for our posts. As more random people find Hive blockchain posts useful, they’ll notice the rewards and comments people get, and it’ll pique their interest – especially compared to what people get paid for their content on traditional social media now.

If I could peek a few years into the future, Hive is definitely something I’d look at, it really is a part of my long-term retirement plan (especially since you can earn from your content, and from curating others content).

Splinterlands

Some absolutely huge changes have happened to Splinterlands in the last month.

Firstly, the SPS airdrop finished just over a week ago on the 26th of July. I’m going to miss that free SPS so much… and it was an absolutely incredible move by the Splinterlands company. It encouraged so many people to purchase digital assets and really created thousands of loyal and excited players.

Interestingly the price of SPS almost immediately after the airdrop finished… and I’m really not sure why… unless it was a coincidence because almost all of crypto has risen since the FOMC on the 27th.

Still… it is nice to have it rising in price. Obviously the supply is dropping right off now that it’s only available through tournament wins and liquidity pools, but it’s not like the max supply of SPS tokens is that different from mid-late July to today, but still, the market seems to be reacting.

The really big change though, is the introduction of the liquidity pools for both DEC and SPS:

This is just massive.

Especially since the Splinderlands company has decided to reward winning games with SPS instead of DEC in an effort to get it back to it’s peg of 1000 DEC = $1. It’s only about 60% of the way to its peg at the moment…

DEC has had quite the wild ride over the last year…

It’s currently only 4% of the price it was at it’s high… and to be honest, I can’t imagine it’ll ever get back there.

The liquidity pools within Splinterlands are such a game changer. There has been rewards for participating in the liquidity pools on and off for a long, long time, but it’s never been as clear and as easy as it is now.

Players can now easily figure out how to participate, and determine where the best rewards are. The liquidity pools are really important for players and speculators to easily get the token in the quantities they need. There’s nothing worse than shifting the price of a token yourself because the liquidity is so shallow.

I’ve personally got some DEC floating around (since I was keeping it purely for the SPS airdrop) but I need to figure out a way to contribute to the SPS liquidity pools to start earning SPS again.

The best rewards, today, are the SPS-WETH liquidity pool with an APR of 267%:

Unfortunately I also see that one as being the most dangerous from an impermeant loss risk as well. Impermeant loss is when you split your tokens between two, say SPS and ETH, and one of them goes bonkers, say ETH, and you end up worse off than if you just held ETH. (Impermeant loss really only gets locked in if you remove your tokens when the prices are different, if you ride it out you’re fine).

You will get SPS in the form of the APR, which you can then stake… but it might not offset any impermeant loss. It’s a tricky one. The safest is the DEC-DAI liquidity pool since DAI seems (so far) to be a pretty solid algorithmic stable coin… but do you want to earn DEC or SPS? I think I’d rather earn SPS at this point.

The APR values will change as more people and more tokens contribute to the liquidity pools… so that’s a factor to consider too.

Splinterlands is all sorts of incredible when it comes to all the various decisions you have to make. I’m definitely glad I got involved back when I did.

Are you going to play with the liquidity pools? If so, which ones? Let me know in the comments!

Thanks for reading!