January has not been kind to the markets. Stocks tumbled in January. After hitting a record high on January 3, the S&P 500 has just barely avoided closing in correction territory (defined as a 10 percent or larger drop from its most recent high) several times. The Nasdaq has fared far worse, falling into correction territory and continuing to slide from there.
The Federal Reserve has made no secret of its plans to raise interest rates multiple times this year. Inflation continues to be a concern, as does the seemingly perennial chip shortage, and Russia possibly starting a big war with Ukraine sure isn’t doing anything to assuage people’s concerns about the future either.
Despite some cryptocurrency cheerleaders constantly touting decentralized electronic assets as a means of weathering market swings caused by the whims of global events, cryptocurrencies have been far from immune. On the contrary: Since reaching all-time highs early in November, cryptocurrencies have cratered. Falling prices erased $1.35 trillion in value in the global cryptocurrency market in just under three months — at the all-time high, that would have represented almost half of the total cryptocurrency market.
Even for the most famous of all cryptocurrencies, bitcoin, the price swings have been wild. One unit of bitcoin was going for under $33,000 on the morning of January 24, before the price sprang back up to about $37,000 by the afternoon of January 25.
Investors, from the big banks to the solo day traders, are somewhat used to market volatility. Many investors are hoping for a quick comeback. But people who are buying things, in reality, for their own use, don’t expect their currency of choice to fluctuate wildly in value from one day to the next. The ongoing market volatility continues to demonstrate the uselessness of cryptocurrency as actual currency.
Probably the funniest recent example of this is Melania Trump’s ill-conceived hat auction. The former first lady started the year by auctioning off a designer hat (autographed, of course) that she wore to a state function for the low, low starting price of $250,000. In addition to the hat, the auction lot included a watercolor of Mrs. Trump in the hat, and an NFT of the watercolor image.
What a fun way to cash in on your husband’s cult of personality! The Trump name might not have been hers to begin with, but grifts like this show Melania has slipped into it like a comfy old pair of shoes. Some small print on the auction’s website said that a portion of the proceeds would “provide foster care children with access to computer science and technology education,” but the website was silent on how, exactly, and about what the portion would be. Given what we know about Trump family charities, I wouldn’t hold my breath on any of those poor foster children becoming the next Elon Musk.
Anyway, along with a malfunctioning clock and an indeterminate ending time, one of the problems with this hat auction was that it only accepted bids in the cryptocurrency Solana (abbreviated as “SOL” — an acronym which also somewhat appropriately stands for “shit out of luck”). Solana fell by about 40 percent over the course of just a single week in January, which, of course, led to the starting bid in Melania Trump’s hat auction falling in value by around $100,000. The Solana blockchain also succumbed to an outage on January 21 and January 22. This did not do any favors for the SOL price.
Early on January 25, the website for Melania’s hat auction read “Auction Ended” for around five hours, with the winning bid at 1,800 SOL (this had remained the highest bid for days). At that point, the value of the winning bid was $160,218. However, bidding soon reopened for some reason. When it did, the highest bid remained 1,800 SOL, but the value of that winning bid was up to $177,750 in short order.
I would like to meet the person who went to the trouble of converting hundreds of thousands of real dollars into a cryptocurrency that few have ever heard of just to bid an ever-fluctuating amount of money on Melania Trump’s hat and two pictures of Melania Trump’s hat. “Why?” strikes me as a particularly good way to start that conversation.
At any rate, the saga of Melania Trump’s cryptocurrency hat auction sure injected a little levity into an otherwise joyless market rout. Hopefully next month our portfolios will recover a little, and hopefully whoever winds up with Melania Trump’s hat doesn’t suffer a crushing bout of February buyer’s remorse.
Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at firstname.lastname@example.org.
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