Celebrity Bitcoin Ads Echo Subprime Mortgage Crisis

If you’ve lost a lot of money on cryptocurrencies in the past few months, I wonder what you think of the wealthy celebrities (mostly in the US) who encouraged you to enter.

Reese Witherspoon marketed crypto, as did Gwyneth Paltrow, Larry David (his ad has the advantage of being just a little bit funny), Paris Hilton (not funny), Matt Damon (funny but not meant to be funny), and Kim Kardashian. – among many others the others. But the bit of marketing I’ve found most irritating so far comes from Gisele Bundchen and Tom Brady (I rate it as not funny at all on all counts).

In an ad for FTX, Brady is seen calling various people (let’s call everyone, he says) and encouraging them to enter the crypto markets in some way. Are you in it, he asks them. I’m in it, they say. I bet they wish they weren’t. There has been a small bounce this week, but not one that helps to mitigate bitcoin’s 70% plunge from its November highs of last year.

You might be wondering why this is the most irritating ad. The answer is that the majority of people Brady calls don’t seem like he can afford to lose money like he can (one of the lucky recipients of his advice is his plumber) and all of that to me reminds a little too much of the subprime crisis. Think of the end when every low-income person in the United States was persuaded that they could both stick to the man and make a quick buck by buying a stack of shoddy apartments and turning them over.

Celebrity bitcoin ads marked the same part of the cycle – and again, the least able to take the hit. Most of the bankers and fund managers who facilitated the subprime bubble were fine. The owners of the apartments were not. Giselle and Brady are fine. Those with undiversified portfolios specializing in crypto are too often not doing well.

Take the losses

The only advantage (and I am stretching here) is that there is some gain in crystallizing the losses in order to compare them to future gains over the next four years. If you do, remember that you must not redeem said asset within 30 days (although if you must you can buy another cryptocurrency – they seem to be moving together) and that you must inform HMRC of the loss to qualify.

You will wonder where the future gains I mention will come from. It makes sense; there’s a lot of bad news right now (see this week’s magazine for why a recession is close to a certainty, for the central bank shortcomings that are supposed to prevent it, and for details on the staggering levels of public debt in the world).

But maybe it’s not all bad. Matthew Lynn argues that there are long-term benefits to a recession. There’s also some good news for those nearing retirement: annuity rates have gone up a bit, so if you want to trade what’s left of your savings for guaranteed long-term income, you’ll get more for your money now than you made last year. Those far from retirement should also be encouraged: with global stock markets down around 20%, they too are getting more for their money. Finally, see the story of Vitalik Buterin, the crypto guru who believes that anyone truly interested in crypto for the long term should also “welcome a bear market.” He will not, I assume, crystallize his losses for tax purposes.