On Wednesday, it looked like Bitcoin might be headed into a death spiral.
After plunging below $10,000 (down 50% from the December peak), things got materially worse midway through morning trading in the U.S., when Bitcoin very nearly dipped below $9,000, depending on where you’re getting your prices.
January futures expired Wednesday and as the evening wore on stateside, Bitcoin staged a bit of a comeback, eventually climbing as high as ~$11,800 on Coinbase.
Here’s another look at yesterday just to underscore how insanely volatile this truly is:
And look, for anyone who bought the dip, congrats, but no one should delude themselves here. This is an absolute shitshow since the December highs:
For now, things seem to have “stabilized”.
Or, put differently: “I’m not dead yet!”
H, You are just too generous. In the best case BitCoin is re-entering one of its stagnant market stages – as it has several times. In the worst case it is indeed terminal.
I’m not a huge fan of technicals on long term charts, but I don’t think I could find a more perfect image to show this still has tons of room to drop. That extreme volatility is panic as reality sets in that XBT exists purely for blockchain proof-of-concept, provides no service and no discernible benefit.
The whole idea is good. Take a decentralized program (blockchain), which requires lots of individuals to run the network. These people need an incentive and receive cryptos. But Bitcoin does nothing else. It runs the network to transfer other bitcoin, but execution is extremely slow, transactions costs high, and electricity consumption unsustainable. None of this makes transferring money any easier at all.
Compare to Ripple for example. They offer a comprehensive suite of financial services that truly provide benefits. You still need to offer an incentive to run the network (Ripple), but in this case, it offers a plausible alternative to outdated technology.
Ethereum is a smart-contract platform that can be built upon. This has numerous purposes already existing and new ones we haven’t even thought of.
What does bitcoin do? Nothing. It exists for the sake of itself. Nothing more. Even anonymity, which it doesn’t do that effectively anymore, is a nonsense argument because no one mainstream or government needs anonymity that bad.
Bitcoin was a good proof of concept. Cryptos are likely the future. But XBT certainly is not.
A brief analysis using Google Trends shows interest in searches for “BitCoin,” “BitCoin Price,” compared to Iota, Litecoin, etc. show that interest peaked between mid-late Dec. and have rapidly declined since. However, if you compare specific cryptocurrency brand searches to the general topic of cryptocurrency and more general to cryptography – those topics still show flat to increasing interest. This would seem to support that any current deviation from the recent cryptocurrency brand collapses are indeed dead cat bounces.
This leaves two possible scenarios for BitCoin and to a lesser degree other cryptocurrency brands:
1. Stagnation: They are going into a market stagnation period as they have done several times in past 2009, 2011, 2012 -2014, etc. After these periods of stagnation – values generally increased. The question to be answered now is if this past stair-stepping will continue after some period of flat or declining valuations, or if there are market factors that will make it different?
2. Extinction: The situation now is remarkably different than the past periods of stagnation:
Regulation – Different in that the national treasuries of several developed nations are putting pressure on private cryptocurrencies by closing their exchanges and making the conversion of the cryptocurrency into their national currencies illegal – and prosecuting those that do.
Brand Competition: The number of private cryptocurrencies have increased 1000 fold with continuing new cryptocurrencies to divide market share and reduce trades of individual brands.
National Treasury Competition: This however is not the worst of the competition. Currently, those same developed nations that are regulating private cryptocurrencies out of existence, are creating their own cryptocurrencies and other cryptological/blockchain based financial devices that will make beleaguered private cryptocurrencies functionally, economically, and legally superfluous. legally.
All of these factors come together to create extreme negative pressure on cryptocurrency brands – especially BitCoin simply because it has been the most overvalued and has further to fall.
None of the above either surprising, or illogical – given that the 3000 year history the outcome for all private currencies (digital or not) has been without exception – extinction. Basic economics continue to support this outcome for all private brand cryptocurrencies.
I also wanted to add to my above reply comment:
Cryptocurrency and blockchain technologies will continue to evolve in other cryptological financial devices once adopted by national treasuries and other state sponsored/legitimized/regulated users – ones that don’t threaten national currency bases, central banks and or global economies.
P.S. H, your page “Comments” section design really needs an edit function for those of us that aren’t the most capable writers.