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The AFL & NRL are exposing footie fans to potential crypto losses

Peter Switzer
18 February 2022

While the world and its stock markets are on the edge of their seats wondering what card the world’s biggest poker politics player Vladimir Putin plays, the local footie world has followed its counterparts overseas to embrace cryptocurrencies! This not only suggests that cryptocurrencies are here to stay as a plaything of risk-taking speculators, it also points to the likely fast growth of this new age ‘investing’ option. 

News.com.au has told us how big crypto businesses are in footie here and overseas. Overnight we learnt that the cryptocurrency operator Swyftx will have the naming rights for the ref’s bunker at NRL games and will have lots of signage around the grounds introducing it to footie fans. This follows the Sydney Swans signing a crypto business Independent Reserve and the AFL is in bed with Crypto.com for $25 million!

But the arrival of these new funders of footies coincides with a very risky time for any high-risk assets because there are a lot of threats out there for higher risk assets such as tech stocks and cryptocurrencies. I might be optimistic that the short-term volatility will eventually be conquered by the economic boom that will follow the end of Omicron, no new business-restricting strains of the virus and the reopening of economies as we try to re-engage with normalcy but I’m cautious on high-risk assets, especially right now.

And one of the world’s most astute investors reinforces my current caution. Charlie Munger is the investing buddy of the world’s most revered investor — Warren Buffett of Berkshire Hathaway.

When this 98-year old speaks, old and young investors listen. And this week Munger did a Q&A for Yahoo Finance and LA’s Daily Journal where he ripped into cryptocurrencies. This headline from CNBC summed up his views: 'Charlie Munger calls inflation the No. 1 danger apart from nuclear war, pans crypto and trading apps.'

Very high, virus-created inflation is a threat to stocks if it leads to too many interest rate rises. Nuclear war and any war would hurt the stock market, though small scale wars often don’t harm stocks for long, though a nuclear one would be crash-making.

But let’s rule these out and focus on Munger’s take on cryptocurrencies and trading apps. “Munger has long criticized bitcoin for its extreme volatility and a lack of regulation. On Wednesday, he even said crypto is a ‘venereal disease.’” CNBC’s Yun Li wrote. “We’ve already got a digital currency, that’s called a bank account,” Munger added.

Meanwhile, he fears the implication of trading apps in the hands of inexperienced market players. “Certainly, the great short squeeze in GameStop was wretched excess,” Munger said. “We have a stock market which some people use like a gambling parlour.”

Munger is referring especially to younger share buyers who are coming to stocks as speculating traders or punters rather than long-term investors in quality businesses. It has led to ‘pump and dump’ urgers who create exaggerated headlines about companies/stocks and as soon as the amateur traders buy into the story sending the share price higher, they sell.

That’s why the likes of Munger want more regulation. But politicians only react when the losses from bad financial market behaviour can result in vote losses.

How come it took until 2017 for a government, such as Turnbull's team to set up a Royal Commission into the bad behaviour of banks and other financial players? Deregulation of the financial system started in the early 1980s, which makes me worry that a lot of crazy stuff going on in the crypto-world and with young punters with trading apps could end up in big losses and debts for the inexperienced.

Like online betting, I think cryptocurrencies are here to stay but the introduction of crypto to the wide audience of footie fans will not only create more acceptance for the likes of Bitcoin, Ethereum and wait for it, the 10,000 cryptocurrencies out there! And that will mean there will be a lot more inexperienced crypto-gamblers out there, which has to be something that someone like me has to warn about before the kick-off of the footie season.

In 2013, the NRL walked away from a reported $50 million sponsorship deal with Tom Waterhouse’s betting company because of a public outcry over its impact on young football followers. I suspect it will take some time but when the stock market crashes and cryptocurrencies get smashed, the NRL and ARL will have some poorer footie fans, who should never have been on the crypto-playing field.

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