I’m not mad at David Portnoy. It’s impossible to be mad at David Portnoy, the founder of Barstool Sports, semi-professional pizza reviewer and perhaps the world’s most well-known day trader. Yesterday, Portnoy held a “press conference” where he announced he would champion a single altcoin, SafeMoon. It was a move perfectly emblematic of the times: irresponsible, ironic and self-aware.
In the video, which has been viewed 2 million times on Twitter, Portnoy laid out six options representing “the new breed of s***coins” to choose one to diversify his crypto portfolio into. He says he put $40,000 into SafeMoon and will hold the cryptocurrency for the long term. It’s a synthesis of two investment trends that developed over the past year: the outsized role influencers can play in markets and the embrace of meme assets (coins and stocks alike).
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SafeMoon is a cryptocurrency designed (as the name implies) to pump – and maybe not much else, critics say. It disincentivizes selling by charging a 10% fee on each sale, a portion of which is distributed to holders as a sort of dividend. And by one metric – attention – it’s certainly taken off. But its mechanics, name and the fact that 50% of the total supply is held by creators has set off warning bells.
We’re living through one of the greatest market rallies in history. Propelled by stimulus checks, cheap money and a wave of young investors coming into the market, distortions have taken hold. It’s a period where memes and personality often matter more than due diligence, and where projects that announce themselves as scams are more than welcome.
“Why? I don’t know f***ing why, it could be a Ponzi scheme,” Portnoy said yesterday, explaining his investment decision. “I like the word ‘moon,’ because that’s where I want to go.” He urged his 2.5 million Twitter followers not to take his words as investment advice and to do their own research.
The video is significant not just for its blatant appeal to greed – something of a signature for Portnoy – but for how clearly it defines this moment where single investors can have outsized impacts on markets. Portnoy calls out Elon Musk for “pulling levers” to affect the price of bitcoin and dogecoin. But in the same category are Roaring Kitty, the amateur stock analyst who catalyzed the GameStop rally, and Ark Invest’s Cathie Wood.
It’s a role Portnoy has played before. During the height of the coronavirus pandemic, he led a pack of mostly millennials and Gen Z investors – the “Davey Day Trader” army – who would plow money into momentum trades. It’s also not his first rodeo with crypto.
In a follow-up presser this morning, Portnoy clarified he liked SafeMoon because it already had a number of backers, it’s difficult to buy and it provides the chance to be early on something. It’s also funny. (Cyndi Lauper’s 1983 hit “Girls Just Want to Have Fun” played in the background.)
Indeed, SafeMoon has garnered a number of advocates hoping the crypto will do what the name implies – safely go to the moon. It’s shilled endlessly on Twitter. Fortune reported there could be 2 million SafeMoon holders.
But there are also legitimate concerns that it’s a scam – or at least supports scammy behavior. SafeMoon CEO John Karony has warned publicly that “the core team will never ask for your wallet,” apparently in response to scammers.
Crypto analyst and investor Lark Davis compared SafeMoon to known Ponzi scheme BitConnect last month. “Remember, just because you make money off of a [P]onzi does not change the fact that it is a [P]onzi,” he tweeted.
“Everybody knows it’s a joke, but nobody cares because as long as they get into the joke early enough and sell before the peak they’re happy. That’s the game,” Bloomberg’s Joe Weisenthal wrote in his morning newsletter.
SafeMoon rallied some 25% after the announcement, but has since dropped slightly.