I started this blog out of boredom. I read a lot of news and have a lot of thoughts that I usually just share with my dad and some friends. Like many, I spent a lot of the pandemic online. While I saw a lot of people my age starting pages on Instagram and TikTok, I stumbled upon Substack and figured I’d do the same. I’d imagine if I had large swaths of capital, I’d either (1)worry about the markets and (2)throw money at whatever I could since that’s what everyone was doing. While I didn’t have the cash, I could at least talk about it — for now.
Daddy Powell
Yesterday, the Federal Reserve had their big meeting where they unveiled their latest decision on rates — and the update was no update. Policymakers maintained their course toward interest rate cuts in 2024 despite encountering some turbulence in their path to achieving low and steady inflation.
For a refresher, the Fed has three primary goals: maximum employment, stable prices, and moderate long-term interest rates. Among their available tools, interest rates influence borrowing and spending behaviors, thereby affecting overall economic activity, inflation and employment levels. If you want more, I wrote a more detailed breakdown here.
During his speech, Fed Chair Jerome Powell reiterated the central bank's commitment to gradual rate reductions, signaling cautious optimism amid recent upticks in monthly inflation:
The economy has made considerable progress toward our dual-mandate objectives. Inflation has eased substantially, while the labor market has remained strong. And that is very good news. But inflation is still too high. Ongoing progress in bringing it down is not assured, and the path forward is uncertain. — Jerome Powell, Full Speech
So rates are the same, inflation is the same, jobs are fine, and all is well in this economy. Obviously, not everyone feels this way. There is a clear disconnect between the public’s sentiment toward the economy and the official outlook. Some blame social media algorithms, others blame the news. When things are much of the same, it seems something has gotta give. My question is, what the fuck is going on with crypto?
Meme Mania
The obscene euphoria we saw back in 2021 (remember when football players were buying crypto?) is somehow back. We’ve already discussed how Bitcoin was hitting all-time highs, which I could make some sense of, but now it seems we’ve returned to the meme coin mania.
Say hello to Solana. The blockchain is currently experiencing a surge in activity due to a craze for meme coins, tokens built around whimsical themes such as dogs, sloths, and the concept of memes themselves:
Meme coins are not new to Solana, but they're having a moment. Dogwifhat, the breakout star of Solana's meme coin explosion, skyrocketed to a market cap above $3 billion at its peak last week, boasting a high of almost $1 billion in daily trading volume according to CoinGecko. It is, literally, just a digital token associated with an image of a dog wearing a hat.
Bonk, an irreverently-named Solana meme coin mainstay, boasted an all-time-high market cap of over $2.5 billion earlier in March. — Solana Strained by Meme Coin Mania, But Co-Founder Yakovenko Welcomes the Test, CoinDesk
I used to think this kinda behavior was just a byproduct of low-interest rates. Easy money means risky behavior — but I guess not. Even in a relatively high-rate environment, the lingering effects of previous easy money, coupled with the search for higher yields and speculative opportunities, seem to have fueled interest in meme coins. I can only think to describe it as a speculative playground for investors looking to capitalize on quick gains and the novelty factor.
Here’s what I’m thinking: investors are bored and there’s still a lot of cash sitting on the sidelines. Since there are way more retail investors in the arena than there were in the past, the general public is just not interested in the old stuff like bonds and treasuries. So they’re throwing their money at the market, currently hitting all-time highs btw, and at crypto. Plus, the constant news of randoms becoming millionaires overnight from these memes just creates more FOMO. This behavior is also indicative of the negative sentiment the public holds. If the economy is doing so great, why would so many people risk losing it all for a shot at financial freedom?
While I can’t say where this is headed, we all know where it ends. Invest responsibly and YOLO I guess.
Thank you
They say comparison is the thief of joy. And when a lot of your time is spent online, it’s hard not to notice these random meme accounts posting millions. Just spend some time on r/wallstreetbets and try not to punch the air a bit. Every day I see videos of people trying to explain why the market reacts in certain ways but in reality no one knows. If the market had gone down significantly, I’d bet all my money that we’d be inundated with creators explaining that the Fed keeping things as they are was bad. I have a hunch something’s amuck. As always, if you have any questions, want more explanations, or strongly disagree, comment below, follow me on Twitter (X), follow me on Instagram, or shoot me an email.
Disclaimer: These views are my own, and do not necessarily reflect the views of any organization with which I am affiliated with.