If This Is The Cryptocurrency Lehman Moment, I Want To Know Who’s Going To Jail

Boy, oh boy. It’s really getting ugly now.

Earlier this morning, we noted that according to an online purveyor of gold coins (always a reliable source), folks were scrambling around on Tuesday to figure out how to convert their rapidly depreciating make-believe internet money into carefully-polished, shiny paperweights.

While we’re no fans of gold (which has value only because there’s a finite supply of it and because humanity has a childlike fascination with shiny yellow things), but it’s obviously preferable as a store of value to cryptocurrencies for all manner of reasons, not the least of which is that governments are overtly trying to stamp out speculation in digital “gold” whereas with real gold, the government conspiracy exists only in the minds of batshit bloggers.

 

That, regular readers will recall, is our main issue with Bitcoin and other crypto assets. We would not want to invest in something that governments are hell bent on doing away with. That’s a bad idea, because no matter what crypto proponents tell you, there is absolutely nothing you can do about it if regulators decide enough is enough.

When you throw in the fact that the speculative mania recently served to make Bitcoin the most egregious bubble in history, you’ve got a recipe for disaster and thanks to the supply/demand dynamics in Bitcoin, there’s nothing that anyone can do to put the brakes on if people stop wanting it all of the sudden.

Well this morning, the selloff that technically began in December after Bitcoin fell from its peak at ~$20,000 and accelerated meaningfully over the past several days, got materially worse, with prices falling as low as $9,370:

Bitcoin

Don’t delude yourself. That is a fucking disaster. It’s down 35% in two days.

Here’s some perspective for anyone who might have been stupid enough to get themselves into this at the peak in December. Here’s what you did:

Bubbles

And what’s worse is that according to anecdotal evidence, there’s about a 20% chance you bought at the peak using your credit card because:

i) the spike in the following Google Trends chart matches up almost precisely with last month’s high:

Credit

ii) the study the following chart is from was literally published the day after the December peak:

Bitcoin2

“We have very fast-moving weather systems in the crypto world,” Charles Hayter, the chief executive of research firm CryptoCompare told WSJ for a feature piece published Wednesday morning. “One moment it’s absolute exuberance, and then it’s pure fear and panic, running for the exits. It’s quite interesting.”

Yeah, it’s “quite interesting.”

And you know what? Fuck anyone who is out there implicitly encouraging unsophisticated investors to stick around in this because the people pushing that line know damn well (or at least they should) where this is probably headed. Here are two more quotes from the Journal article:

  • Fawad Razaqzada, from Forex.com: “Suggestions that this is the start of the demise of cryptos is very premature.”
  • Cedric Jeanson, CEO and founder at BitSpread: “This is nothing that we haven’t seen in other traditional markets.”

Bullshit and more bullshit. 

These things are going to zero. At best, Bitcoin will survive as some kind of novelty that people may hold for posterity once it dives to $250. As for the rest of this bullshit, it’s worthless. Period. And in the end, the market will reflect that.

Once that time comes, all of the people pushing this global pyramid scheme (because that what it is) on the masses will have a lot of “splainin'” to do and we’re looking forward to hearing how they go about that.

Splainin

Of course that’s assuming they actually stick around to offer an explanation. In all likelihood, most of them will cash out ahead of time and disappear into the fucking Swiss Alps with your money.

So think on that.

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3 thoughts on “If This Is The Cryptocurrency Lehman Moment, I Want To Know Who’s Going To Jail

  1. It is worth going over some tether related things if we’re talking about the price going to 0 anytime soon. Its clear that unless exchanges who route their liquidity through tether are forced to stop using tether, the price will not go to zero. If new tethers can continue to be printed, tether and therefore bitfinex will have significant enough price control that they can continue to seed bull trends like in the past. In the case this continues, it is only a question of how much tether they can continue to print. Currently there are roughly 1.75 billion tethers in circulation: https://wallet.tether.to/transparency.

    You can see which accounts hold the most tether on tether’s own site: https://wallet.tether.to/richlist. Note the exchanges.

    If you believe tethers are fake, an interesting theory re: bitfinex is that they covered their tether-based liquidity with short positions on btc futures during this uhhhh downturn.

  2. Pingback: If This Is The Cryptocurrency Lehman Moment, I Want To Know Who’s Going To Jail | Blockchain Wiki

  3. A paper recently theorized one individual likely drove the price of BTC from $150 to $1,000 in earlier days. Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman have written a “Price Manipulation in the Bitcoin Ecosystem” and appeared in the recent issue of the Journal of Monetary Economics.

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