El Salvador's Bitcoin Bet, Cristiano Ronaldo Sets Another Record and Gronk Gets Personal
Welcome to "This Week In The Market" where I break down the news of the week into easy to read pieces, and tell you how they can make you some money! This week, we have the first adoption of Bitcoin, Ronaldo shattering merchandise records and Rob Gronkowski making a new, key partnership. Let's go!
El Salvador Gambles on Bitcoin
The Headline: Following last month's historic vote, El Salvador becomes the first independent nation to recognize and accept Bitcoin as legal tender in the country. After the government purchased $26 million worth of the cryptocurrency, the market cratered to the tune of 12%. Protests also sparked across the country in response to the adoption.
The BFD: This has echos of the "Bitcoin pizza" moment where, in 2010, a Florida man paid for two pizzas with 10,000 bitcoin. In today's terms, that pizza is worth about $470 million. Classic Florida Man behavior.
In any case, El Salvador adopting the cryptocurrency as real currency could genuinely have far reaching implications for the future of the cryptocurrency market, and of the tokens themselves. Bitcoin is not exactly the best-in-class at making actual purchases, leading to many comparing it to a store of value and gold being the closest asset in relation. This is because the transaction speed of Bitcoin is sllloooooowwwwww. Like, really slow. Think about a credit card at a store. You swipe the card, it's approved in seconds and you leave with your item. Bitcoin can take up to 10 minutes to confirm a transaction. Not great. This is why crypto-enthusiasts back Ethereum as the token and network of choice for actual transaction volume.
There's also questions surrounding the actual reason El Salvador's leadership decided to do this. Nayib Bukele, the President of El Salvador, is actually quite young and progressive. The 40 year old also has a shockingly high approval rating of over 90%, which gives him considerable weight to be able to enact something like this. His arguments, according to The Morning Brew, are that many Salvadorans are under-banked, an issue which Bitcoin solves almost immediately. It can also solve the issue of fees in sending currency back and forth, called "remittances," and which make up almost a quarter of El Salvador's GDP. There are questions, however, around if this is a public relations stunt to cover up for some of the more *ahem* "authoritarian" policies he's been enacting recently.
How Can This Make Me Rich?: El Salvador's experiment could go a few ways: they could claim first mover advantage and crypto adoption becomes widespread; it could falter with bugs and issues at roll-out; or it could explode in their face. In any case, buying the underlying currency puts you in a low risk, high reward situation. Let El Salvador take the risk while you own the underlying asset for maximum returns or minimal losses.
Cristiano Ronaldo Sets Another Record Off the Field
Global soccer fans went through the ringer in the last few weeks. The soccer equivalent of the trade deadline occurred on the last day of August, and the days leading up to that saw one of the most dramatic transfers of all time: the homecoming of Cristiano Ronaldo to Manchester United. After demanding his release from Italian giants Juventus, it looked like Ronaldo was headed to the rival half of Manchester at reigning champions Manchester City, before pulling a dramatic about-face and re-signing for his old club in United.
Why do I mention this? Because apparently the best way to move merchandise is to tug at the heart strings. Ronaldo donning his old number 7 shirt generated an almost unbelievable $45.16 million in sales in the 24 hours after his number was confirmed. This obliterated the old records of players on new teams, with the previous holders being Lionel Messi to PSG earlier this summer, Tom Brady to the Tampa Bay Buccaneers and LeBron James to the Lakers.
Soccer Bible reports that the team itself keeps about 7% of total shirt sales, with the other 93% going back to the manufacturer, in this case Adidas. That means Manchester United generated a little over $3 million in Ronaldo shirts alone, which will reportedly pay for about 6 weeks of Ronaldo's wages. News of the Ronaldo transfer and the shirt sale volume have sent Manchester United's share price on a roller-coaster, culminating in a 10% spike when Ronaldo's transfer was confirmed by the club.
Stock of the Week
NFL superstar tight end Rob Gronkowski, famous for his endorsement and strategic partnership deals, signed another one this week, getting a little more personal.
Telemedicine company Hims and Hers Health added Gronk to their ever-expanding list of celebrity partnerships, joining the roster of Jennifer Lopez, Alex Rodriguez and Miley Cyrus. Gronk is the new face of the company's social content focused around removing the stigma of talking about men's health, particularly sexual and mental health. Hims has been in the business of sexual health and hair loss for a few years now, but they are expanding their robust telemedicine platform to now cover mental health consultation. News of the partnership, along with a transition in CFO, sent shares of Hims soaring more than 5% on the day, and around 7% for the week. For a more in-depth view of the company and their business model, check out my deep dive below.
What do you think about the stories this week? Do you think Bitcoin will succeed in El Salvador? Let me know in the comments below!