Bitcoin crashes (again), death to bitcoin

Friday, 10 August 2018
London, UK
By Sam Volkering

  • 2009 in repeat
  • This is real stress
  • UK, Australia, it’s happening everywhere

I want you to take note of the subheadings in the headline structure above. IF you read Port Phillip Insider last week, you’ll note that these are exactly the same.

Check it out if you think I’m fibbing. I’ll give you a minute…

See, exactly the same. The interesting thing is last week I was writing about property. This week I’m writing about bitcoin and cryptocurrency. And yet, the exact same subheadings apply.

I find that interesting. Maybe it’s not. But I think it might be.

You see over the last few days crypto markets have crashed…again. And as you’d expect, the calls of the ‘death of bitcoin’ are ringing loud and proud around the mainstream media.

It is nothing short of intense scrutiny over something they simply don’t understand. And every ‘expert’ and his dog is out with something to say on a topic they know very little about.

The headlines I’ve seen…oh the headlines…are nothing short of astounding.

I’ll get to them in a moment. But first, the markets.

Markets

Overnight the Dow Jones Industrial Average closed down 74.52 points, or 0.29%.

The S&P 500 lost 4.12 points, or 0.14%.

In Europe, the Euro Stoxx 50 index finished up 0.53 points, or 0.015%.

Meanwhile, the FTSE 100 fell 0.45%, and Germany’s DAX gained 42.57 points, or 0.34%.

In Asian markets, Japan’s Nikkei 225 is down 312.18 points, or 1.38%. China’s CSI 300 is down 0.22%.

In Australia, the S&P/ASX 200 is down 16.10 points, or 0.26%.

On the commodities markets, West Texas Intermediate crude oil is US$66.68 per barrel. Brent crude is US$71.95 per barrel.

Turning to gold, the yellow metal is trading for US$1,207.53 (AU$1,649.32) per troy ounce. Silver is US$15.35 (AU$20.97) per troy ounce.

One bitcoin is worth US$6,466.45.

The Aussie dollar is worth 74.26 US cents.

The headlines

This one from the Express.co.uk,

‘Bitcoin price: Leading tech analyst says it could soon be ‘GAME OVER’ for bitcoin’

And this from CNBC,

‘Yale economist: Here’s how likely it is that bitcoin will become worthless’

Good old Bloomberg,

‘Crypto Technicals Flash Pain Ahead, Eye Bitcoin at $4,000’

Then there’s Nine Finance,

‘Bitcoin’s price plunge: Cryptocurrency loses $12 billion overnight’

I could go on. But I think you see what I see. And there’s kind of a reason for this spate of hate.

It’s thanks to this chart:



chart image

Source: Coindesk
Click to enlarge

Things were just tracking along nicely on 6 and 7 August. And then, BOOM!

Bitcoin plummets in a few hours down past US$7,000. Then past US$6,500. Then past US$6,250.

When would it end? When would the bleeding stop? Should I stay or should I go? Is it time to sell? Is the party over? Is this the death of bitcoin?

No. No it is not the death of bitcoin. This is the same old stink coming from the same old sources. It’s the same old game and the same old inability to really understand anything.

Take that headline about bitcoin technicals and the price. There are a number of crucial elements that are horrifically wrong there.

1. If you’re talking about bitcoin technicals, you’re talking about code. You’re talking about application development. You’re talking about side chains. Maybe lightning networks. You’re talking smart contracts on the bitcoin blockchain.

2. Price. The very problem with talking bitcoin price ‘technicals’ is they don’t exist. This isn’t a stock. It isn’t property. It isn’t cash. It isn’t anything that you know of in the conventional wealth sense. It’s math based. It’s a network. It doesn’t have the same patterns as stocks do.

Of course every chartist will say that’s not true. You can run EMAs and Bollingers and moving averages and this that and the other over the charts. You can draw lines on the price movements and pretend to know what’s coming next all you want. But it’s made up.

I don’t profess to be a chartist. I’m certainly not a stocks chartist. But I do know there’s sufficient information in the market to enable charting and trading in that sense to work — in stock markets.

But it just doesn’t work with bitcoin, as it’s not stock. And the price value metrics they use on their charts are based on currency that is the very thing that bitcoin is trying to destroy.

Let me put it simply. Chart-trading bitcoin is a mug’s game. And you’re a mug if you think you’re good at it.

Now I’m also not professing to be the king of bitcoin value estimates. In fact, I really don’t even like referring to bitcoin in fiat currency values. But if I didn’t then you might struggle to correlate some of the actual mechanics behind bitcoin to the real world.

For now it’s the simplest and most convenient way to relate bitcoin value in the real world. But that will change.

Nonetheless, I’ve been around long enough to have seen all this before. We saw bitcoin values go wild in 2009. We saw it in 2010, 2011, 2012, 2013, we saw a multi year fall from 2014 to 2016. We saw the wild swings in 2017 and we’re seeing it in 2018.

But in the nine year of bitcoin’s existence there has always been one constant. And that’s progress. Every time the mainstream calls for the end of bitcoin, they are wrong.

Every time they say it’s worthless, they are wrong. They will continue to say these things this year, next year, the year after, five years from now, 10 years from now.

They’ll call another crash. They’ll call another ‘death’. They will rinse and repeat and go again. And every single time they do, they will be wrong.

If you thought bitcoin FOMO was intense, you’re now getting to a point where you’re witnessing bitcoin ENVY. (That’s not an acronym, I’m yelling now…)

You can choose to listen to the mainstream’s view on crypto if you want. You can believe them and everyone else who thinks it’s a scam, a ponzi scheme and worthless.

Frankly I don’t care if that’s what you think.

But if you can clearly see they are consistently wrong every time about it then hear this. If you invest some wealth into bitcoin now you should count that wealth as gone.

Not gone as in worthless. Gone from the ‘conventional’ financial system. If you can see the long game here, then you’ll find you won’t need to ever bring that wealth back to the conventional financial system.

You can use it to create new wealth in the alternative financial system. You can add to it. You can give yourself a chance that, over time, even with the wild ups and downs, it may be worth more — more than you could have ever thought was possible.

It won’t be about how many dollars bitcoin is worth. Not then. The world will be thinking how many bitcoins dollars are worth. It’s not the same thing. This is a world where bitcoin is a global reserve of monetary exchange.

This world is coming fast. It means bitcoin is alive and well. It means this ‘crash’ is just another day in the crypto world. It means if you see this as another reason to switch off and tow the mainstream line, you may come to regret your decision forever.

But again, that choice it entirely yours.

Regards,
Sam