Crypto Faithful Fight ‘Bear Market Blues’ in Puerto Rico

(Bloomberg) — Ignore the stripper poles. Don’t be distracted by the light-up floor. Tune out the reggaeton.

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This is actually a story about crypto — crypto as dreamers imagined it could be, before so much went so wrong.

“If you got bear-market blues, give me a round of applause.”

That’s 43-year-old Pedro Rivera, in a striped ensemble and lavender-tinted sunglasses, shouting into a mic.

It’s 9 p.m. at the cavernous 7eight7 nightclub in Puerto Rico’s capital: “Where party animals, hedonists and dreamers come together,” the website promises.

Tonight’s not-so-big attraction: Crypto Mondays, a networking party that passes for a bit of group therapy, too, these days.

Before joke coins shot to the moon, NFTs of bored apes sold for millions and FTX founder Sam Bankman-Fried built and blew billions in the Bahamas, there was Puerto Rico. Entrepreneurs flocked to San Juan as early as 2016, lured by low taxes, broad beaches and hopes of creating a crypto paradise.

That’s still a work in progress. The crypto universe has operated in crisis mode since May, when the collapse of the supposed stablecoin TerraUSD helped trigger a broader selloff.

The implosion of FTX, once the world’s second-largest crypto exchange, further rattled investors last month. Bankman-Fried, 30, faces criminal charges and civil actions in the US, a dramatic downfall for a former billionaire who once graced the covers of Fortune and Forbes.

Crypto prices have plummeted along with Bankman-Fried’s reputation. Bitcoin is now worth about $17,000, far from its November 2021 peak of $68,000.

Smaller Crowds

As a result, many of Puerto Rico’s cryptopians are poorer now, though possibly wiser. Some sport merch with the word “Broke,” spelled with a Bitcoin-styled “B.”

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And yet believers are going to believe. Puerto Rico Blockchain Week kicked off for a second time in early December, the week before Bankman-Fried’s Dec. 12 arrest in the Bahamas.

The crowds at Blockchain Week’s conferences and panel discussions were lighter than last year. But, despite everything, their enthusiasm remained.

Inside 7eight7, crypto loyalists hoot as Rivera lowers his mic. He moved to Puerto Rico almost five years ago from Miami and founded Crypto Mondays San Juan in 2018. Rivera, who’s of Puerto Rican descent, hosts the weekly events with his brother Isaac, who joined him on the island two years ago.

About 40 men — and they’re almost all men — have turned up tonight. This time last year, Isaac Rivera says, 500 came out for Crypto Monday during Blockchain Week.

Don’t believe the headlines, Isaac, 48, says. Puerto Rico’s cryptopians will bounce back.

“They’ll be back out once the market picks back up, you know what I mean?” he says.

Alexander Pearson, 37, leans over the bar. He moved here to trade crypto in 2021, after living with his family in North Carolina during the worst of the pandemic.

Pearson says the crypto winter — marked by plunging token prices — has been hard.

“I was feeling pretty down,” he says. Then he shakes it off. “While I took a big haircut, I’m alive and swimming.”

Pearson, a lead analyst at crypto-trading education company Cracking Cryptocurrency, characterizes the crypto community here as an “intellectual orgy.” He sees himself staying in Puerto Rico for three years at least. Lately, he’s been talking up a post-FTX idea: an algorithmic trading platform.

He’s wearing a black T-shirt that says “End Ponzinomics,” as he scans the crowd at 7eight7.

“The real business happens at the after-parties,” he says, dragging on a vape pen and exhaling a plume from his nose.

‘True Believers’

Elsewhere, people wait for the bus at the Fairmont El San Juan Hotel, on Isla Verde Beach, where crypto conference CoinAgenda is underway. Some revelers wear Hawaiian shirts; others have top hats with feathers, a la Burning Man.

Where to? San Juan’s Beverly Hills neighborhood and the home of Michael Terpin, a crypto impresario who moved here from Las Vegas in 2016, during the initial wave of crypto adventurers. Terpin is the chief executive officer of Transform Ventures, a blockchain incubator.

Behind the gates, guests party like it’s 2021. Sample the gravlax, the grilled octopus, the filet mignon tartar. Try this white-bean soup with truffle, frothed like a cappuccino.

Everyone seems to know one another, or at least to have heard of one another.

Isaac Rivera sits by the pool. These people, he says, are “the true believers of the future and what’s coming down the line.”

“As my brother likes to say — bear markets bear fruit, and bull markets produce bullsh*t,” Rivera says, citing Pedro’s market wisdom.

Still, everyone agrees the crowd is leaner. Half the tables in the Fairmont ballroom were empty.

Terpin is fine with that. “Quality over quantity,” he says.

Sitting at La Casa de Roberta’s restaurant in San Juan, Jack Purdy, who moved to Puerto Rico earlier this year, expresses a similar sentiment.

Bear markets purge “bad actors” and crypto tourists chasing the hype, he says. Purdy works at Messari, a crypto market intelligence firm, as director of sales for protocol services and recently bought a home in Los Paseos, San Juan — a 15-minute drive from the beach.

Over at the Wicked Lily restaurant on Condado beach, Han Kao, 43, ponders the crypto life over a cold Medalla. He arrived from Santa Monica, California, in 2021, opened an investment firm called Sanctor Capital and bought a home in Dorado.

“On a surface level, it looks like everything is falling apart,” Kao says, to the sounds of the waves and Bruno Mars. Not true, he says, not true. “DeFi”— decentralized finance — “is here to stay.”

Back in the Fairmont, Luke Stokes sounds upbeat, too. He’s been here for four years, working with crypto wallets and protocols — and he says he’s not going anywhere. The ups and downs of crypto don’t worry him.

“For the people who’ve been through that cycle so many times that it’s like, eh, it’ll come back,” he says.

–With assistance from Jim Wyss and Peter Eichenbaum.

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