The Hunt For Zombie Coins

zombie coins? I asked this question to Bloomberg Senior reports to Mike Reagan and Bloomberg Report to Mr Lena a gulf of Polo to discuss the motivations of these risk takas. Mike, Mr Lena, you're back. I got to talk to you again. Can't get rid of us for having us um such a pleasure. However, I do worry because when you're here, it means that chaotic things are happening that that we need to talk about. So today's chaotic thing or continuation really is what should we call them? Should we call

them zombie coins? Should we call them revenance? Mike tell Us about the quest for value coming to get you, Barbara. What's happening with zombie coins? Well, my favorite is Luna Classic. As listeners probably have heard by now, the whole terraform blockchain imploded in the spring. Luna, the sort of flagship toking on that block chain, was trading at about hundred nineteen dollars per token in April, will say, weeks ago. Yeah, as you know, Stacy, I love the abuse of the

decimal system in crypto. At its low, it was trading for zero decimal six zeros nine nine six seven. That's it's very low. So it's up nine two percent from it's low just last month. And at that price, one dollar bought you just over one million tokens of Lunar Classic. But to me, I'm fascinating with these uh super low priced coins um because like I said, I thought low you could buy one million of these tokens for that price,

and to me, I think that's no coincidence. I think when someone realized I can, all right, maybe this thing is worthless, but if I can buy a million of them for one dollar, I'm in. I mean, who doesn't want to be a paper millionaire or a non fiat millionaire. What kind of millionaire would that be? To millionaire? Yeah, an imaginary millionaire, I guess a lunatic millionaire. But but

someone else is buying them. And you know, so this is a token basically left for dead, but yet it lives on in this zombie life, as you pointed out, and you know, it's trading hundreds of millions of dollars in volume a day. It stalls a market cap of about half a billion dollars. So it you know, it's like the old Monty Python movie. You know, I'm not dead yet they where they say, bring out you're dead.

I'm not the other the other Monty Python friends. So I don't know what it says about investors psychology other than um people will jump in and buy these ridiculously low price coins. And we saw it with Shiba, you know, we saw it with doge coin. Um. When they get that low, there's a certain element of traders that are like, what the heck, I'll you know, here's my lottery ticket budget for for the week. I'm gonna buy some some

Luna Classic. And then the pump and chill Twitter campaign just goes berserk, and you'll if you search for l u n C dollar sign lu n C. You'll see

what I mean on Twitter, just NonStop promotion of this thing. Obviously, people that are trying to get it up to to break a zero, to to to lose another one of those zeros between the decimal point and the actual prices, break a zero real phrase with its yeah, it's someone invented it, I think recently to deal with these things, and it's broken to zeros, which is a pretty big deal.

Congratulations to the Lunatics. Coming up. Elon Musk's appearance on Saturday Night Live this week and didn't take a dose coin to the moon. In fact, the fifth most valuable cryptocurrency retreated after his comments on Weekend Update and that word hustle. You've written about a different set of zeros, people who were chasing thousand percent returns on things. Tell

us more about that corner of the markets. You know, this is really fascinating just to hear sort of Michael describ what's been going on with Luna, and I think before we get into what you just describedent yield return on some of these coins, I think we just need to back up and understand sort of like how this entire ecosystem came to prominence last year and Michael mentioned she but you know indoorge coin, which really I think

are the two coins that got this entire ecosystem started. Yeah, because those coins were you know, worth essentially nothing, and then um managed to get like a good following and a good hype around them to get their prices higher. And I think that sort of prompted the creation of all of these other you can call them zombie coins um ship coins another way that people a lot of

times will call them in the DeFi space. And those coins could be created by anyone who could copy the same white paper of another you know coin that ran the same way, get people to buy into it and sort of push the price up. And last year we talked to so many investors who talked about the potential

and the promise of this coin too. You know, if you bought in, say a million of them at zero point zero zero zero zero two dollars, if they were to you know, one in a million become the next big coin you could make a lot of money on. You would have a million dollars at least. And I think the appeal was you didn't really need to put that much money into it because it doesn't cost that much and so if you're losing a hundred dollars, that's

a loss. I think a lot of these investors said, you know, I'm happy to sort of take um and so that created an entire ecosystem of a lot of other things happening. And going back to the thousand percent returns that we've written about, is, you know, these these coins needed to give a reason to investors to stay

in and not just buy in and then dump. So a lot of times what they would do is they would offer you know, a percentage return to any of the coin owners if those coin owners were willing to lend out their their coin for other several activities in the DeFi space, and they would promise returns of one to two to three percent per day. That added up

to be you know, numbers like percent annually. And so that was a way to incentivize coin um investors to stay into these projects long term because a lot of these people didn't want these coins to be a one off, but the market was so saturated um and that was just a way for them to jump in. I can't I I want to ask you a question about what you said, though, how long was long term? Long term in crypto lingo is like, you know, a year maximum.

I mean, you know, I think coins like doge coin or Sima that have had the longevity that they've had are considered like decades in the crypto world. These coins would come into prominence for for weeks and then would would get you know, rug pulled if they were scams, or would just lose the hype that you needed to maintain in order to make that coin you know, have longevity. Um. Obviously it's a different market right now. You know, crypto markets getting a beating and a lot of that defy space.

Where last year in a bear market where everyone had time to trade because they were you know at home. Um, the you know, it was, it was, it was thriving. And this year it's just it's just not the same the same returns. There's definitely not the same energy. It's really hard to get people to buy into projects now, um, and so those those returns that they were promised um last year are just not you know possible anymore. Right,

what's twenty on a dollar? That was coincidentally, I think that was my first credit card grade that communitis We'll be right back with more from Bloomberg Reports ms Relina and Bloomberg Senior editor Mike Nan. I remember around last year when people were buying into Dog and Sheba, you had some anecdotes about, you know, folks that you knew that were kind of like Does and Sheba millionaires effectively,

how are they doing these days? That's so good. They don't talk about it as as much as they used to, but you know, to me, Um and Misty has probably interviewed a lot of people like this. You know, it's interesting when we we hear so much from sort of the high minded crypto people who want to change the financial system and and you know, disrupt this and disrupt that, and then on the other side of here from all the traditional financial people saying it's a big ponzi. You know,

it's a scam avoided all. I feel like those two are sort of the tales of the Bell curve. And in the middle you've got these guys like my friends. Um. You know, I hate to use the word degen or degenerate, but let's you know, that's that I think that is the industry official term for Yeah, it's just people who are like I don't know if this is the future of finance or if it's a PONDI or not. All I know is this queen was up a thousand percent

last week. I want in, But I think there's also a lot of people who treated it as who went in, you know, clear eyed, and knew this could all disappear overnight. Um. You know, the key is never to to invest too more than you can afford to lose in any in any type of situation, and especially this you know so um yeah, they're not. They're not wearing their bitcoin necklaces like they used to, and the gold chains. I think the laser eyes are gone from the you know, your

profile pictures don't look at it. Well, missy you talked about the energy, right, like say, more about like that vibe or lack of vibe. Yeah, so I think I'll definitely agree with with Michael here. It depends what kind of investor you are, and there's different kinds of crypto investors. If you are one of the crypto investors that jumped in in November when bitcoin was an all time high, um, because you had FOMO, then odds are right now you're

probably facing several losses. But I think there's still some crypto investors who see this as an asset class that despite its volatile, its volatility isn't going to go anywhere. Cryptos here, and we're gonna keep trying to find places

to make money um. And I think a good example is one of the people we spoke to who said that, even though you know, thousand percent yields are not available anymore, a stable coin like USDC will give you maybe a nine percent yield, which is not great compared to what it used to be, but they argue it's better than banks will give you. I mean, it's aggressively better than what packs will give you. It's suspiciously better, and they're happy to take that risk despite the collapse that we've

seen the past a few months. But all in all, you know, I feel like last year we just saw so much of the hype everywhere, and I think that, um, this was a good reality check for a lot of people.

I think that it's a lot harder to get that sort of momentum um And I think a lot of the people who were the sort of facilitators and instigators of that hype throughout the last year have really cooled down and I'm talking about you know, popular Twitter accounts, popular Instagram accounts, popular discord channels where a lot of these conversations were taking place. Just as a as a final question, because you've both reported, I think on the the ups and downs and and the shenanigans, what do

you think is coming next? Like when whenever you know, financial markets go through cycles, right, there's like in every in every bust or the seeds of the next boom. Is there anything that you're seeing Are you're like, ha, that's going in an interesting direction? Contry anybody else? Well, I think Timissy's point about these suspiciously high yields, I think there's you know, and I'm I'm not necessarily basing

this on any reporting. It's just what I would guess is going to happen next, is that now there's going to be a small skeptical I pointed at everything you know, is this yield they're promising sustainable? And we might get to the point like, you know, what's what's the going

treasury yield at like three and a quarter? You know, if you can get three and a half out of crypt though, that might look more attractive than trying to get twenty percent and and beating the system, like, is there a way is there legitimately a sustainable way to be traditional finance yields in a safe or at least

not ridiculously unsafe manner in crypto? And I think that's where you know people are gonna focus next, is like how much of this was all sort of snake oil salesman, and how much you know, what is the real potential for yield farming and rewards from staking in crypto that's sustainable and not so so risky that people are gonna just stay away a mile away from it, a return

to boring, which is good for guys like UM. I think that there's definitely a lot of parallels to what's happening now with what happened in the dot com bubble. I mean, we just hear this over and over and over again when I talked to a lot of these investors that throw money into crypto. I think although the losses have been have been sort of you know, big um, I think they're excited to see what comes out alive

on the other side. And I think we've all been waiting for this moment because it's just such an oversaturated market. So it's nice to see what projects can actually survive, what coins are actually going to be there for the long haul, if if, if I may so, I think that's an eye something to keep an eye on. UM. Separately, I think the M and A industry, crypto industry is becoming increasingly autions. Yeah, mergers and that cruis Asians industry

within crypto is becoming increasingly interesting. Obviously, you know, we had some news out about robin Hood potentially being acquired by by f t X. I think, you know, it kind of feels like we're in the same place we were when sort of Facebook was buying everything, you know ten years ago. Is the Facebook of the cycle? You know? UM and I think that, you know, that was a

crazy announcement. It obviously hasn't been officially announced yet, but if that were to happen, you're seeing some of you know, the biggest crypto exchanges getting access to the U S stock market UM crowd in a way that I think is going to be very interesting to to keep an eye out. I'm going to predict fewer Super Bowl ads to go out on a limb that's actually not as man. But what about what about celeb endorsements? Because I don't know which was the Ronaldo Ronaldo come it was Binance?

Was Binance? Right? That's crazy? So yeah, we'll see, We definitely will and we'll have you back to talk about more chaos in the future. Thank you, Mrs Leina, and thank you Mike. You can find more of Mike Regin's reporting on the Bloomberg Terminal on Bloomberg dot com or follow him on Twitter. He's at reaganonymous. And you can find Missy or miss Relina on the Bloomberg Terminal on Bloomberg dot com, and of course she's also on Twitter.

Her handle is at miss Relina. That's m I S Y R L E n E. Since the founding document that led to the invention of bitcoin, first to Pay It in two thousand and eight, Bitcoin's true believers have adopted a philosophy that resembles one for all and all for one, or so, the theory goes in bitcoin, everyone's equal.

But does that theory match the reality of the ecosystem? Tomorrow, Data scientist Alissa Blackburn and Dr Eris Lieberman Aiden, an associate professor at Baila College of Medicine, join me to discuss their research into who controlled bitcoin in those very earliest days. I'm Stacy Marie Ishmael, and this is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts.

Email your questions, comments, or suggestions for the show to Crypto at Bloomberg dot net, and you'll find us on Twitter at Crypto. The supervising producer of Bloomberg Crypto is Vicky Vergalina. Our producer is Mohammed Farrup. Desta wonder At is our engineer. Original music by Leo Sidron