Here Come The RobinHoody’s

The RobinHood phenomena is a fascinating study in behavioral economics. The participants are practitioners, a few versed in trading but mostly versed in gaming and sports betting. They started by beating the dead horse called HERTZ skimming profits off dead cat bounces. Some gotta win, some gotta loose. They moved onto other vehicles and finally landed on GameStop a $4 stock currently trading for $155. The latest is DOGECOIN which is a crypto currency that has no purpose. BTC you can argue is pristine collateral. You can own it, lend it, and mortgage it. ETH is a unit of commerce. You can build a contract upon it, and once executed a precisely defined transfer of value occurs instantly, transparently and permanently. NFT’s allow you to tokenize things so you can own a stake. Let’s say India tokenizes the Taj Mahal. I could buy a token which would give me ownership in the Taj. I could trade and sell my stake or even leverage it using it as collateral. I could create a portfolio of tokens, correlated, non correlated etc. There are stable coins which are crypto’s that are pegged to something else often the dollar. Stable coins allow banking functions. They typically pay interest and can be used as payment. Stable coins offer portfolios of rate harvesting, like the old coots who used to switch their money between banks which offer the highest interest rate. That was back in the days when banks paid interest on deposits.

What does DOGECOIN do? People say it doesn’t do anything but I’ve been thinking about this and DOGE is a way to invest in pure volatility that is unregulated by the SEC. You can’t short DOGE. You can buy it and sell it, so there is nothing complicated about the transaction. You can’t hedge with options for example. It allows exponential growth. In FEB DOGE was worth 0.7 cents at it’s recent peak on April 19 it was worth 39.5 cents. The act of short term buying and selling and profit and loss is very much like playing a video game. There is major biochemistry involved. The reward and risk aversion circuits become the controlling variables, cortical processes need not apply. DOGE is an cross between a casino, sports betting and a video game played with real money.

I’m glad it exists. Personally I think it moves this kind of speculator out of BTC and ETH with some resultant loss in volatility in those assets.

Leave a Reply

Your email address will not be published. Required fields are marked *