Carnage In The Cryptoverse

Adam Taggart
By Adam Taggart on Tue, Jan 16, 2018 - 8:59pm

Wow -- an UGLY day for the cryptocurrency space.

Most likely triggered by the news in recent days of Chinese and South Korean regulators' plans to enforce much stricter restraints over crypto trading and mining, all of the major coins have experienced painful losses over the course of the day, with many down over 20% in the last 24 hours:

Two hours ago, Bitcoin (BTC) hit an intra-day low of $10,275 -- nearly 50% lower than it was four weeks ago.

Ripple, which Peak Prosperity has declared little more than a scam, traded briefly at $0.93 today -- a far, far cry from its high of $3.71 just a mere twelve days ago. 

Holders of Bitconnect (BCC) just learned today that BCC is shuttering part of its platform, causing folks to wonder if there will be a rationale for continuing to hold the coin. Confused/distraught/angry BCC owners are frantically casting about on the Internet for answers, but so far, few reliable ones are shortcoming.

All of this volatility and panic is little surprise to those of us in the Peak Prosperity community who have been following this space closely of late. 

As we wrote about just two weeks ago, the price of virtually every crypto coin was displaying evidence of extreme bubble mania. We warned folks not to jump in at these prices, predicting a serious correction was highly likely to happen in the near future.

At the same time, our resident crypto expert Mark Rees publicly shared that he had been unloading his holdings given how nuts prices had become in such a short period of time.

He's also on record predicting that 95% or more of the current coins will be gone (i.e., worth $0) in just a few years -- Ripple and Bitconnect appear to be vying hard to be among the first to prove him right.

Those who listened to us/Mark now have the opportunity to buy coins at huge discounts today vs just a week or two ago. Of course, the carnage may have a lot further to fall, so we're not calling a bottom or advising folks to jump in and buy wantonly at this time.

Our main advice to those who think there is long-term merit to the blockchain and related technologies (and we do), is to get educated.

Follow Mark, Davefairtex and the other knowledgeable voices on PeakProsperity.com. Read websites like Coinmarketrecap.com. And watch our growing webinar series on cryptocurrencies (Round 1, Round 2). 

There is certainly continued risk of hitting a capitulation point where the millions of accounts that were opened over the past two months to purchase crypto coins at their all-time high will start selling in desperation, trying to get some value back before their coins experience even further losses.

If we hit that point, prices could easily fall in half again from here...

166 Comments

skipr's picture
skipr
Status: Silver Member (Offline)
Joined: Jan 9 2016
Posts: 145
50% BTC, 50% Gold

The volatility and the deviation from the parabola was making me nervous so I moved half of my BTCs into gold on Vaultoro.com a few weeks ago.  The nice thing about that site is that I can exchange BTC for gold and vice versa.  I can also move my BTCs back into my Trezor wallet when not exchanging them.

I'm trying to decide about whether to continue working with this method or wait until BTC finally reverses significantly.

https://steemit.com/bitcoin/@belerophon/a-simple-method-to-trade-bitcoin...

AustinAuctioneer's picture
AustinAuctioneer
Status: Member (Offline)
Joined: Jan 6 2018
Posts: 7
Selling

Adam, when did Mark say that he unloaded most of his holdings?  Was that during the 2nd webinar?

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3105
Selling Back In Dec

AA -

Mark wrote that he was selling into the melt-up back on Dec 7:

I probably wouldn't get in now. It's gotten irrational with FOMO. I'm selling into this rally and waiting for a massive correction once the bit shorts come in with the futures trading about to begin.

As for "most", I recall Mark saying something like that, but I've talked with a number of Bitcoin holders over the past month and could possibly be mis-attributing. It's probably best we let him clarify.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Selling into the Rally.

I did sell a bunch.  Probably only around 20% though. This percentage was huge for me as I've never before taken that amount off the table. It was enough for a simple retirement which I took. The rest stays safely HODLed away for another day.  We have been taught to expect market carnage on regular occasions.  Crypto-veterans even secretly hope these deep corrections arrives to smooth out the hype.  We like to see the cocky gangsta Youtubers quieted - at least for a while. However, we must endure the inevitable "I told you so" from skeptical family and friends.

We've learned the pattern that the corrections usually only last a short season and our well-meaning friends go quietly angry again when the correction is over and the paradigm change continues.  They quietly begin to mentally kick themselves for not getting in when they had the chance (They admit much later). 

Ethereum had its own 70% correction last summer - I expect it will return much quicker. Bitcoin hasn't had a major correction since the 2014\15 period. A drop to $7k wouldn't be surprising although I'm not predicting that. Since it triggered the Bitconnect Ponzi collapsed as I expected, this is likely pushing it down past the normal 30% range. I would say overall, this was much needed and healthy. I've learned to pretty much hunker down and not make trades during volatile times. (The Red Weddings).

 

 

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Ethereum crashes..

ETH hasn't been this low since...

January 2018..

Or 2 weeks ago if you prefer.

Perspective is a wonderful thing...

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Market manipulation

I'm confident we have the folks from Wall St & the futures markets to thank for bringing the prices back to something within our grasp.

I'm carefully using small avg buys to accumulate to put towards solid projects, I still expect them to do very well over the coming months.

Only ever invest/speculate what you can afford to live without and think on a long term timeframe.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5754
Maybe....
New_Life wrote:

I'm confident we have the folks from Wall St & the futures markets to thank for bringing the prices back to something within our grasp.

I'm carefully using small avg buys to accumulate to put towards solid projects, I still expect them to do very well over the coming months.

Only ever invest/speculate what you can afford to live without and think on a long term timeframe.

Remember, the futures only.apply to Bitcoin...which doesn't explain the broad-based wipe out....

XRP and other junk coins were simply due for a wipe out....and here it is. As Mark wrote a while ago, now we get to find out how many junk exchanges were operating.

If when the next exchange(s) goes down I'd expect even more panic to the downside....after that we can see about picking up some coins on our hard wallets...but I'd be looking for a solid base....not a v bottom that vaults back up....

PaulJam's picture
PaulJam
Status: Bronze Member (Offline)
Joined: Dec 4 2016
Posts: 71
to be or not to be

Agh - I was waiting for a knock-your-fillings-out correction to get back in with confidence - to BTC around 8k or so.  I've instead made a few small tentative purchases.  I'm keeping out 3x my initial crypto investments for good, just so I can come out ahead if the whole enterprise goes kaput (which I'm not expecting to happen!)

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
BTC is King + scams & junk coins

Thanks Chris, personally I'm fully aware that it's just BTC on the Futures at present, and that the other recent uncertainty issued by Governments (jumped on by Mike Bell of JPM) is more likely to effect prices. However I understand & appreciate you clarifying that for PP members.

Everything is somewhat relative to BTC and it's rapid movement south effects confidence in the market as a whole. The exchange market makers are sure to be doing good business from this volatility, it's been fascinating to watch.

Also been quite satisfying seeing those offerings that deserve to fail, suffer the most. There's plenty of other scams out there like BitConnect, some still actively being promoted as an alternative to BCC for the unlucky souls that have already lost $ they can ill afford to be without, yes really.

Here's just one example, maybe the person is delusional and not knowingly promoting something she knows to be as dodgy as BitConnect, I'll let you decide...
https://twitter.com/RamgrlVA/status/953373713092743169

I feel the respected industry leaders should collaborate and have an active watch list of Scams shared with Fraud action groups and regulatory bodies so the unwitting poor folks maybe spared. I've seen folks in the US moan that their government were excluded them from participating in the BitConnectX ICO, not realising it was an exit vehicle for the afore mentioned BCC scam.

Here's another that is still being heavily promoted, make sure any friends & relatives of PP members give it and similar a wide berth. It's already been told to stop operations in the US, but still active in Europe & Australia.

USI-TECH. - Let's see when it folds.

Again, still think it's great you are digging into this space, we need great critical minds to interrogate and analyse how it progresses and sanity check what's going on

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5754
CryptoCrash continues

Disclaimer:  things may have turned around by the time I press "save" on this post....

...but as I type, Bitcoin is under $10k, ETH is approaching the sub-$800 mark, Ripple (XRP) is back under a buck...

...and the Crypto market cap in total is a shocking $435 billion, and was twice that on the date of our first cryptocurrency webinar.  

There are going to be stories coming out finally about people who made bad decisions, and used debt or leverage and got clocked.  That's going to change the tenor of the space for sure.

But probably not without a dead-cat (hopium) rally.  A.k.a. a bull trap.  Too tough to trade for me...I like to be able to get in and out quickly from fast moving markets, and I really prefer to be able to short things as a hedge or main device.  

When your only option is to buy, or sell something you already bought, it's a trickier place to play.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5754
People utterly destroyed...

...and so it (finally) begins. 

The is really sad...I feel terrible for these people.  but unsophisticated people and unregulated exhanges...what could go wrong?

This:

 

(Source - ZH)

What happened?  People did not do their homework and got taken in by a scam.  

The heartbreaking stores are beginning to flood in...these from Bitconnect which was just an obvious scam...but certainly soon from other people who invested too much, too fast, and without really understanding what they were doing or how things worked.

skipr's picture
skipr
Status: Silver Member (Offline)
Joined: Jan 9 2016
Posts: 145
hardware wallets and silver

Hardware wallets rule!  I never leave anything in any exchange for more than a day.

It's back up above $10k again.  This BTC drop reminds me of the 75% drop in silver a few years ago.  Weren't derivatives involved with that too?  At these reduced prices, I'm exchanging some of the gold in my Vaultoro account for BTCs.

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Close Enough

Well I nearly got the top in Ripple! (courtesy of my brother-in-law).

By not handing him the £10,000 on 4th Jan as requested I saved him (or, more likely myself) around £6900 (at current price of $1 a coin compared with $3.22)

He's yet to thank me for sparing him the roller-coaster :(

All the best,

Luke

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Heartbreaking

I've been posting the suicide prevention hotline on the biggest youtuber bitconnect spokespeople. Many have disabled their comments.

It's:  https://suicidepreventionlifeline.org/

If anybody is interested or you know friends\family that fell for this scam. USI-Tech is probably not far behind.

 

 

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Anti Ponzi

Via one of the most respected guys in Crypto..

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Anti Ponzi

Via one of the most respected guys in Crypto..

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Blame Opportunity?

Thinking out loud here...

Does the popping of the digital currency bubble allow for a stock market correction through the statement, "Popping of Bitcoin bubble obliterates market liquidity." That way the centralised authorities can back away from their 'accommodative' economic policy whilst blaming the Chinese and those damn libertarians.

Just a thought...

 

 

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Total Self Delusion

It really is quite remarkable the level of cognitive dissonance even at this stage, these videos were uploaded in the last couple of hours. 

I wonder if the FED and G8 leaders experience the same thought processes.

 

AustinAuctioneer's picture
AustinAuctioneer
Status: Member (Offline)
Joined: Jan 6 2018
Posts: 7
Thanks for the clarification,

Thanks for the clarification, Mark.  That squares better with everything else I've heard you say.  

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Tether..... Tick Tock Tick Tock

https://twitter.com/arifharoonkarim/status/953722151680475136

https://twitter.com/tetherprinter/status/953711933181476864

More digging required on this, is it just like the Fed pushing a button?

 

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Tether..... Tick Tock Tick Tock

100 Million Tethers just created.

http://omnichest.info/lookuptx.aspx?txid=b182888725cff4486d4080cf04736ab...

https://twitter.com/arifharoonkarim/status/953722151680475136

https://twitter.com/tetherprinter/status/953711933181476864

More digging required on this, is it just like the Fed pushing a button?

 

DennisC's picture
DennisC
Status: Gold Member (Offline)
Joined: Mar 19 2011
Posts: 320
Wow!

...or yikes!  I'm hoping the folks that took out new HELOC's for their latest get rich quick ideas are doing OK and came out on the plus side.  Nothing like dealing with a bunch of screaming kids that are not going to get that new, in-ground pool like the neighbors installed last year or the disappointment on the beautiful, spousal-unit's face after waiting for a kitchen makeover for the last ten years.  Live long and prosper mis amigos and may the farce (or Schwartz) be with you.  Talk about quantum entanglement and "spooky stuff"!

mememonkey's picture
mememonkey
Status: Gold Member (Offline)
Joined: Nov 1 2009
Posts: 257
A bit of both

I don't know who the guy in the Patience video is.  He does appear to be deluding himself with false hope.

However the guy in the Progress video is a known and prolific (and quite obvious)  con artist.  Craig Grant has a very visible and documented history engaging in a variety of scams including fake Russian wives, and utilizing Nigerian scammers to market scams with pictures of his wife/girlfriend (also a scammer) there are documented suicides from some of those victims.    He was one the main guys mktg/ pumping this MLM cyber ponzi and is still actively deceiving people.  

I think he may have missed his calling working for the FED

https://steemit.com/crypto/@cryptofinancial/bad-people-in-crypto

 

His video pitch here reminds me a bit of Suze Orman pimping for the banks with her FDIC "Your money is 100% safe" pitch during the 2008 crisis' 'invisible' bank run to calm depositors down.

She later admitted that she was aware the whole system was on the verge of collapse

Do your research,  trust yourselves.

 

 

mememonkey

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
9000 floor

Looks like 9000 was the floor for this phase of the sell-off from $19k.  I thought it might be round number 10k.

It also appears as though the politicians have now figured out they have the power to jawbone bitcoin down.  I wonder if we'll be seeing more of that going forward.

I'm just not sure that bitcoin has disappointed enough people just yet.  If this is a "major top" it means that bitcoin probably requires another year to really crush the spirits of the people who bought in at $19k expecting to triple their money in 3 weeks.  I'm not sure we're there yet.  Google trends shows "buy bitcoin" is now back to Nov 12 levels.  That's BTC = 5800.

So is this a major top, or just a blip?  It feels to me as though this was a major top.  Shoeshine boys got sucked in.  That will take a while to work off.  That's my sense anyway.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
You Are Here

Here's some support for why I say it is important to sort out "was this a major top" or just a correction in an uptrend.  Corrections in uptrends should be bought.  A major blow-off top should be avoided until the selling pressure dies down.  Same thing happened to gold and silver in 1980.  People bought the dip the whole way down the right side of the peak, and boy did they get hosed for it.

Our last major top in bitcoin was back in 2013.  Here's what that looked like, and how long it took for the selling pressure to die down after this major top.

I've helpfully included a "You Are Here" after the first 50% drop following the top at 1200.

I remember this so clearly because I predicted (at that time) the thing would probably retrace to 200, at which point it would be a good buy.  But of course by the time it retraced, I (and everyone else) had lost interest, and so I did not buy.

If you look back at the postings at the site at that time, there was a lot of fuss about bitcoin right near the top, and it promptly died down once prices started to fall.

It still feels like there's a lot of fuss here at the site.  You tell me what sort of signal that might be.  :)

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Strange dynamics at play here that weren't in 2013.

friend of mine worked for GS for 14 years and because to be ostracized as the ‘bitcoin boy’  for continuing to talk about it.  Nobody wanted to listen to his passion.  Fast forward a few years and his phone is constantly reining from people that haven’t invested yet from Goldman. They get paid their bonus at the end of the week. 

Many people he talked to plan on buying crypto. It is an underground rebellious act. How much will really end up in Crypto. Enough to lift enough to make us forget about the wild ride last week.much will really end up in Crypto. Enough to lift enough to make us forget about the wild ride last week.

As 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Strange dynamics at play here that weren't in 2013.

friend of mine worked for GS for 14 years and because to be ostracized as the ‘bitcoin boy’  for continuing to talk about it.  Nobody wanted to listen to his passion.  Fast forward a few years and his phone is constantly reining from people that haven’t invested yet from Goldman. They get paid their bonus at the end of the week. 

Many people he talked to plan on buying crypto. It is an underground rebellious act. How much will really end up in Crypto. Enough to lift enough to make us forget about the wild ride last week.much will really end up in Crypto. Enough to lift enough to make us forget about the wild ride last week.

As 

Afridev's picture
Afridev
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 144
Funny text

https://imgur.com/mJfCrVv

Though I doubt it will 'correct' itself that quickly...

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Thousands of people REKT.

Totally agree Chris, very sad to see people pour in their entire savings into such scams.

Decided to take some action on USI-TECH today, I noticed they are still very actively running recruitment seminars across the UK, that fact did not sit comfortably with me. 

Couldn't just shrug my shoulders and move on to the next webpage.

I filed a suspect fraud report to the UK POLICE ACTION FRAUD division, hopefully they will investigate.  I also intend contacting UK Money Savings bloggers so they can get the word out.

You may find this video interesting, USI-TECH claim they are using revolutionary closed loop technology to create low cost electricity, ie almost free energy to power their mining operations, see 31:30mins in for their "incredible technology".  Sounds unbelievable!!!  ;-)

Again, I'm sure some of the promoters are as deluded as the people they hope to sell and obtain referral fees from.  Hopefully we'll stop this before it suckers in a ton more decent human beings.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
blow off top or correction in uptrend

Mark -

Are we still in an uptrend?  Its the critical question.  There are really just two possibilities that I see:

1) we're still in an uptrend.  BTFD.  Things are 50% cheaper than they were at max hype just one month ago.

2) We've seen a multi-year blow off top.  Its best to wait until all those disappointed shoe shine boys have all sold out before jumping in.

Mark thinks we're still in an uptrend, or else he wouldn't be saying this sort of thing.

Ultimately for the uptrend to continue, there must be more buying pressure from "Goldman Bonus Boys" than selling pressure from shoeshine boys who have just now figured out that borrowing money to play bitcoin might not have been the sure path to riches they had expected.

 

Afridev's picture
Afridev
Status: Silver Member (Offline)
Joined: Oct 11 2013
Posts: 144
Some thoughts

Completely new to anything that is 'investing' (well, OK, speculation). Prices are going up again, but good to have a view of potential dynamics. Can it help to look at some of the issues that may drive prices?

My thoughts:

Positive to price rise:

  • Not that many people are in the market, how many now, a couple of %? Have we passed the early adapters (quick startpage search puts this at around 14%). I think we're still far from this.
  • It seems there is a line to get in (some key exchanges closed to new entrants, tax returns, more awareness)
  • Institutional investors coming in; I read somewhere that these are planning to get in in the near future
  • There seems to be more and more people realising that the current financial/ political system is floundering, and cryptocurrencies are a way out of these. So is this a flight from paper into crypto instead of a bubble in cryptos?
  • Perception that this will be big (ultimately)
  • Many HODLers giving a base (though I'm not sure that many HODLing actually does anything to price changes)

Negative to price rise:

  • Prices don't seem to reflect real current value of the blockchains to society (but of potential promises); usefulness overall is still limited. Real value almost impossible to assess
  • Generally negative coverage in media
  • Powerful opponents: government, banks, 'trusted' 3rd parties, regulation almost certainly to come sooner than later
  • Banks have an interest in pushing down prices and trust before getting in
  • Not that straightforward to 'get in'; takes time to convert fiat->crypto; need to jump through (occasionally closed) hoops to change crypto->crypto
  • Perception of many that this is a bubble, with media reinforcing this message
  • Rotten apples in the cryptoverse
  • Volatility in the market; very dynamic sphere

It seems that this is a bubble, is it not early for it to pop yet though?

Am I missing things, did I make wrong assumptions? Any thoughts?

Watching all this in slightly baffled amazement/ bemusement (though feeling for the ones who are getting burnt...).

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Annnnnd we're back

Who knows if it will last, possibly and exaggerated bull fake, but then again everything is exaggerated in the crypto world.

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Pretty good assesment...but

Hodlers, that are experienced - leave money on the sidelines knowing we regularly get the carnage days and they pounce when they go 'on sale' - thereby increasing their 'stash'. This changes sentiment on a dime.

In my private paid group we did a poll. 80% in our group planned to pounce on the lows. 15% were set to remain calm and hold on to everything. The rest were looking to switch from one Digital Asset to another.  Nobody was selling.

They go from the new - panic week hands - to the HODLers.  The next carnage - the newbies from the previous 'correction' learn from the HODLers and become HODLers themselves.  The base of HODLers grows stronger with each plunge.  The confidence grows and the negative media attention just acts as a tool to strengthen their resolve. 

 

 

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
My gut feeling...

People are still in a mindful frenzy. Hating themselves for missing the opportunity of a lifetime. As this so-called bubble has proven over-and-over to be the most resilient investments we've ever witnessed on several occasions.

They, like my friends and family, were often 'taught' to expect the carnage days - and that history has always proven it bounces back (Much) stronger than before. The experienced ones keep money on the side to pounce BTFD. This is exaggerated in crypto as the lotto-like increases give positive reinforcement to the expected bias. Many of the cryptos are skyrocketing well over 50% increases today and it's still early. 

Irrational exuberance returns. The anti-establishment of this movement creates a feedback loop. That's what is different than tulip bulbs. There are several billionaires \ Peter Thiel for example, that are tired of the status-quo and crypto is the idea whose time has come. They are the anti-George Soros.  Don't underestimate their resolve, all of the CNBC "experts" still haven't come to grips with this. They've never seen anything like this. 

The Goldmen employees are 'required' to report their crypto purchases to the company according to an internal memo. I wonder how many actually will? 

 

 

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 474
FYI

Just in case anyone hasn't seen this.

AKG

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
money flows

Mark-

Ultimately, the whole mess requires net money flowing in to keep prices moving higher.  Its not the resolve of the HODLers - its just about net money flowing in.  If what you are saying is that new money is being transferred from the new buyers to your HODL group, I can certainly believe that.  Especially if some subset of that HODL group has become very experienced at engineering price movements to cause the very plunges we witnessed over the past few weeks.  How much volatility is natural, and how much is constructed for our entertainment (and their profit)?

In the gold universe, we call such market participants "the commercials", and we call the technique "the wash-and-rinse cycle."

And it appears we just went through the rinse cycle.   How many new buyers were rinsed out?  Is the rinse cycle over?  I wasn't invited to the meeting, so I don't know.

Meet the new boss, same as the old boss.

Certainly, as long as money entering exceeds money leaving, HODL and BTFD is the right answer to the (quite possibly) engineered smashes we are seeing.

As long as money entering exceeds money leaving.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
Funny! and often true

For reasons like that - is why I say 95% of the coins on CoinmarketCap are scams.

 

charleshughsmith's picture
charleshughsmith
Status: Platinum Member (Offline)
Joined: Aug 15 2010
Posts: 718
how many real-world (not digital) people do you know

How many of your real-world friends, relatives and associates (not digital contacts) do you know who actually own a meaningful sum of cryptos? How many have exposure in some way to stocks and bonds? How many of your real-world friends, relatives and associates own as much crypto as they do stocks, bonds, ETFs, mutual funds, 401Ks, precious metals, etc., IOW how many people do you know with $100K in stocks/bonds/PMs and $100K in bitcoin?  

The answer to these questions shed light on real-world participation in cryptos and thus where BTC et al. are in the bubble cycle.

I personally only know one human being other than myself who owns any crypto, and he bought $400 of Ethereum way back when, so the gains are substantial but not life-changing. (If Dave is secretly HODL'ing some BTC, then I know 2 people who own cryptos.)

It's difficult to know how many individuals actually own substantial amounts of crypto, but the number appears to be signal noise in the context of global finance.

This data suggests to me that we are far from the final blow-off top in cryptos. If inflation kicks in (as I expect) within the next few years, the limited-by-design cryptos like BTC could do quite well for all the reasons I laid out in my essays here 18 months ago.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5464
where we are

Charles-

Way back in 2013, nobody held substantial amounts of crypto.  Huge gains were ahead of us.

And yet - the crypto correction back in 2013 took 1 year to play itself out.

So you could well be right.  1 year from now, things could be just amazing.  But between now and then...we could correct down to 3000 and languish there for a year.

I'm not suggesting bitcoin has hit its ultimate top.  I'm not that smart.  It didn't hit ultimate top back in 2013, but it sure did spend a year in the wilderness after doing its blow-off thing back then.

Snydeman's picture
Snydeman
Status: Platinum Member (Offline)
Joined: Feb 6 2013
Posts: 507
Perspective

I'm a teacher at an independent school with two young kids, so I have very little to invest, and certainly won't invest in crypto if I don't understand it fully at every level (which I don't). Where I personally have a problem is watching a few friends on Facebook pushing crypto as the newest greatest most certain way to make money hand over fist, and then offering to be the gatekeeper for friends and family to enter into the best money making scheme in history, usually using platforms that offer some incentive for referrals and such (or for a nominal cut of your profits). I watched friends and family pour in, and so I tried to remind people some fundamentals on investing that I know from my own studies and experiences:

 

"I've seen a few articles lately about Bitcoin investing that seem to indicate that investing in Bitcoin or other crypto-currencies is a surefire way to get stupendous amounts of money overnight with virtually no risk. So, I feel the need to remind my FB friends of some very fundamental rules in investing that are valuable to remember:

 

1) The rate an investment offers as a return on your investment is a function of how risky that investment is, because the person or group seeking investment capital knows that it has to provide suitable incentive for people to invest; so, if an investment is riskier, they have to entice you with a higher possible return on that investment...or else why would you risk your money in the first place? The rule of thumb you should always have when investing is this: If the rate of return is high, the risk is high. Always. Even if you can't see it. I've also learned that the more a person or institution claims there is no risk, the more they are trying to hide the risk behind smoke and mirrors, or the more they themselves don't see the risk.

2) The more 'average people' (not professional investors) begin to pile into a "sure-fire way" to make easy money, the more you should be wary. To use an analogy, this is because the more packed an auditorium becomes, the fewer people will be able to escape when the fire starts, and the more the "rush to the exit" will cause its own casualties. So, if you see a lot of people piling into a high-return investment, the more you yourself may consider moving to the exit now. Every investor THINKS they can "time the market," but if that were true there'd never be any losses in investing, which isn't ever the case.

 

Ultimately, though, it's your money. I'm just trying to point out the fundamentals."

 

I then went on to be bombarded by priests of the Bitcoin Wing of the Crypto Church about all the ways I was wrong. About how crypto was different. How it was the revolution incarnate against the powers that be. Well, I'm not convinced, and here's a response I gave as to why: 

 

"Please know that I understand what crypto currency is - if not on a technical level - and why it is an effective means of storing and transferring capital outside of the current system. I get what you’re saying. I’m a Pleb too, and I’d love to see the Patricians fall. 

However, I’m referring to the speculation in the value of bitcoin itself. There’s a futures market about to open in Bitcoin! That tells me that traditional market forces are co-opting it and integrating it into a more traditional market structure. So, it isn’t Bitcoin’s functionality or inherent value I’m warning about, it’s the speculation and horse-trading surrounding it I’m warning about. 

Then there’s the crypto-currency competition. Right now bitcoin sits in a market of over 1700 other crypto currencies, with more seeming to pop up every day. Are you certain Bitcoin will become the one crypto of the future? Can you guarantee that? I can’t. 

Lastly, while I share your hope of it becoming the basis of a new world order in which power is returned to the people, so to speak, I’m less optimistic that the powers that be will allow that to happen easily. Have seen the emergence of articles about how much energy Bitcoins take to produce? I see that as the “powers that be” are setting up the justifications for regulating or attempting to destroy (or co-opt completely) crypto currencies. Do you really think the central bankers of the world will allow the complete undermining of national currencies? I’m not so sure. 

Anything that exists can be destroyed. Even Cryptos"

 

Now I'm watching the wails of the fools who have recently been parted with their money. Normally, I'd just shake my head and say "you should have known better," but these are sometimes people I know and love, and it's painful to watch them do stupid things with their non-excess money. Yes, they should hold, or hodl, or whatever cute word we're using to describe the idea that you stay in for the long haul, but that isn't always possible for everyone who went all in, head and shoulders. Let's just remember that there are real people with real wealth who will be destroyed by these fluctuations.

 

So, I'm still a major skeptic of all this. Not skeptical of the value of cryptocurrency to be an alternate way to store or transfer wealth, or even for it to be a viable alternative to fiat currency. Rather I am uncertain that it indeed can ignore the laws of investing, or that the powers that be will ever allow it to usurp the current Kingdom of Fiat, and thus, the base of much of their power and influence, at least not without a major fight.

New_Life's picture
New_Life
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 338
Great post.

Syndeman, very wise and level headed post, hope your friends thank you for trying to look out for them.

Crypto is not for the faint hearted, ultimately its akin to a casino, only walk in with what you are prepared to gamble and lose and can cope to live without, that way when the flash crashes come you don't lose sleep.  For those that have the stomach my rule of thumb would be to speculate no more than 5% of your investable income and know it will be a rollercoaster, indeed Mark almost advocates being willing to mentally write off any money you put it.

As for referrals, MLM, Ponzi  & Pyramid schemes exist everywhere, Crypto, YouTube and Social Media just help propagate that.

Is the constant waves of price speculation in Crypto a form of Ponzi?   Most probably yes.

Is the Fiat currency and debt ridden GFS a form of Ponzi, definitely yes.

Is the Stock Market, your 401k share portfolio a form of Ponzi, absolutely yes.

Will PM speculation become a form of Ponzi needing another type of greater fool, also most likely a yes (Look at $50 Silver from a few years ago).

I guess there's no absolute answers, however the spirit of PP remains strong, I prefer a portfolio of varying risk, so I am comfortable with 5% of my investable income is in a high risk asset class, best advice to your friends is for them to clear any debts first, invest in education, real things and relationships that will enrich their lives.

I'm still a skeptic myself, still digging in any trying to look for the next pitfall to catch me out, if your sat wondering who's the patsy, etc, etc.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2840
Sh*tcoin

Thanks AkGranny. That was good for a chuckle wink.

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2247
Hey Charles, did you see your

Hey Charles, did you see your June 2017 Bitcoin chart appeared in an article today, "Bitcoin Backing Firms Feel Crypto Crash Pinch"?  The article includes a Nov 2017 tweet by Max Keisier referencing your chart.  Per the article:

"Lessons up for grabs

While the future, as it always is, is uncertain for the crypto ecosystem, there are lessons to be learned in this latest Bitcoin ‘death.’ Bitcoin has been dead and buried countless times as its volatile nature is too much for some to take, sending them fleeing.

However, it has shown stronger and stronger resistance and ability to bounce back over the years and the crashes. Something that companies that are facing unprecedented dips will need to be aware of.

Bitcoin believer Max Keiser explains these movements in a graph he tweeted..."

 Here's the link to Max Keiser's tweet containing your chart (sorry; I don't know how to post the chart):

https://twitter.com/maxkeiser/status/870632362694123521?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fbitcoin-backing-firms-feel-crypto-crash-pinch

charleshughsmith's picture
charleshughsmith
Status: Platinum Member (Offline)
Joined: Aug 15 2010
Posts: 718
thanks pinecarr

thanks pinecarr-- I've been a guest on Max's show many times and so he has permission to use the chart--guess he loves the chart for depicting the many obituaries of BTC.

Dave, the year in the wilderness could repeat, for sure, and I expect it will; but the public awareness of BTC in 2013 was a fraction of the awareness extant today.  When as many people own cryptos as own PMs, stocks and bonds, then I'll be looking for the top.

mrees999's picture
mrees999
Status: Gold Member (Offline)
Joined: Aug 16 2013
Posts: 428
How many teachers 'get it'?

I've had many conversations with teachers, professionals, economists, bankers, lawyers, accountants, and almost nobody gets it at first.  With only a cursory knowledge it must look crazy.  Even to those who are into it deeply - it's a mend-binding world that you can likely hardly imagine.

It's too bad that PRICE is the first thing people think about, and focus on - and is the cause of so much speculation and the focus of a ton of scams and Ponzi schemes (See Bitconnect, Onecoin, USI-Tech) that take advantage of people that rush in with the 'gold 2.0' rush. Just like every other mad rush (Stock market 1920s, Gold rush of 1849) there are fools that rush in and it's almost impossible to talk sense to them while in the throws of greed.

But, I'm not sure we blamed stocks, or gold itself for the problem. Or was it the nature of people to get greedy without learning about the nature of the investment opportunity, or understand the risk? Do we blame the money that the bank robber steals?

You seem to think that there must be 'the one'?  Why?  Isn't it healthier if there is competition on the features of one and use cases of another can be found through survival of the fittest?  It sounds like you haven't done enough research to understand that many of these were built to complete completely different tasks? Currency itself is just one small slice of the applications that are being built.  You might think there are 1700 currencies trying to compete which is laughable when you take some time to evaluate the entire crypto ecosystem. 

As a teacher (which I consider myself) - I suspect you may have an inquisitive mind and might take a while to read the bitcoin whitepaper or something beyond the headlines of a mainstream newspaper with reporters or writers that spend almost no time themselves looking at anything deeper than the price of the top two or three. 

Yet, I can't complain about your approach to investments. It's prudent and correct in my opinion. We are in uncharted territory. The amazing rewards are on par with the amazing risk that comes with it. But we are seeing a mass migration happening before our eyes as we see reports of 250,000 people per day signing up with new accounts at Coinbase now for months at a time. The other exchanges are reporting similar numbers. Then there are exchanges in South Korea that the government threatened to close. It was met with 200,000 signatures within a day to protest that call and forced them to rethink the declaration. 

As a teacher, I might think you would be interested to see what is going on - with a historic change where the nature of money itself might be up for debate. The conversations about monetary theory and fractional reserve banking and property rights are brought up where they were ignored for decades.  Do teachers understand what game-theory is and how crypto-economics might make a difference where no government can compete because of the corruption that eventually stagnates all nations and monetary policies? 

You likely haven't dug in enough to know that these are even being discussed and perhaps it doesn't interest you to do this. But it seems to me that if you are offering financial advice on this new thing that you clearly don't understand, maybe you could take an hour or two to make a bit of an effort to understand the nature of the blockchain and the importance of a trust machine and the thousands of other use-cases you might have more sympathy for one that can be taken back by the possibilities. 

Then, when you warn them about the dangers of falling for the stupid Ponzi pushers, you can offer an alternative for their excitement and speak intelligently for the many great directions in the big-bang of innovation to be involved with. 99% can be accomplished without spending a dime. 

One of my favorite quotes I learned as a teenager and made a point to remember as an adult.

The world needs more examples in this world and fewer critics.

 

 

Snydeman's picture
Snydeman
Status: Platinum Member (Offline)
Joined: Feb 6 2013
Posts: 507
I don't disagree

Mark,

I don't disagree with what you are saying regarding my level of expertise of the finer workings of crypto. I acknowledge that while I get the concept of what cryptocurrencies are and what roles they fill and functions they can serve, I don't know as much on the technical level; something I also said to the more informed crypto fans on my own Facebook page. However, I don't think that invalidates my warnings as much as it reinforces them, since the point of my Facebook postings to family and friends was essentially saying "Don't heavily invest in what you don't understand, especially with anything other than excess funds you can afford to lose, but if you must invest, fall back on general principles of investing as guidelines." I'll repeat again that I have no problems with the value of cryptos with regards their function and purpose, but the notion that the investment markets and platforms surrounding those cryptos don't operate under the same laws as any other investment market based on some real, functional asset seems naive at best, and disingenuous at worst. I'll note that the most vociferous adherents to the Crypto Faith on my Facebook feed are also those who stand to gain monetarily by their friends and family pouring in (you need more buyers than sellers for the value to go up, right?), so forgive me if I'm a bit skeptical of what they say. It's in my DNA at this point. Either way, a lot of people who have no business investing in crypto have done so anyway, and some of them have suffered great pain. Natural consequences, I guess, but I still wince when it happens to friends and loved ones.

 

As regards the issue of whether cryptocurrencies will challenge the status quo, I also remain unconvinced precisely because of my knowledge of history, which isn't complete or perfect, but it is my wheelhouse far more than most peoples'. What history tells me is that every attempt to subvert, overturn, disrupt, destroy, overthrow, or replace the elite, influential, powerful classes of society does not go as easily as planned. Nor does it happen without significant violence, conflict, and fragmentation. There's also the issue that the elite will often subvert or survive insurrections with remarkable resilience, or if the 'revolution' actually succeeds there emerges a new elite. So, while Bitcoin or others may indeed end up challenging the current regime of fiat currencies and the markets that use them, I don't expect that to come without significant and costly disruption, conflict, turmoil, etc. The problem there is such turmoil and disruption is a mighty large set of pins in a room full of bubbles (like the ones we talk about frequently here on PP). To put it bluntly, I don't think the current global economic and financial system can handle the kinds of disruption that revolutions tend to bring, especially if it is in essence an economic revolution.

 

Lastly, while I can't contest whether cryptocurrencies are hackable or not (that's well outside my wheelhouse), I can point to the fact that human hubris in human invention or innovation is often met with spectacular examples of such hubris proving to be overstated - the Titanic is one example, the superiority of European civilization and culture prior to WW1 another - and so I'm also skeptical of claims that Bitcoin or other cryptos can not be hacked. People said that about cellphones, yet here we are. Are you really that confident in the intellects of crypto designers to believe the collective talent of various intelligence agencies around the globe can't find a way to hack them? I don't know, but it's a safe bet to think there's at least a chance that Mossad or the NSA have already done so. I find the recent articles about Netanyahu claiming that Bitcoin is in fact unhackable to be more unsettling rather than less - what better way to use cryptocurrencies as an intelligence gathering tool than to let people think it is actually unhackable and untraceable after you've already figured out how to do both? I've no proof, obviously, so this is an anecdotal argument at best, but I find that, historically speaking, it is unwise to bet everything against the house unless you are certain what is in your hand and theirs. In addition, even if the cryptocurrencies are unhackable, are the platforms? The internet servers? The infrastructure of the internet? The phones and PCs of users? There are a lot of points that can be comrpomised in the process, as I understand it.

 

Still, you are correct that I need to know more about crypto in order to better understand it. Until then, I fall back on general principles and guidelines that have proven true historically. Your results and conclusions, as usual, may vary. I do plan on reading the white papers, as well as getting to know cryptos better, just as soon as I have the brain CPU to do so; being a teacher means there's a definite pace to my year which is very different than most people's - now isn't the time to delve deep into something, but summer will be.

Snydeman's picture
Snydeman
Status: Platinum Member (Offline)
Joined: Feb 6 2013
Posts: 507
Oh, and to add...

I would love nothing better than for cryptocurrencies to royally fuck over the existing Powers That Be and the elite. Yet while my heart is with the crypto world and its promises of the Plebeians finally overthrowing the Patricians, my head tells me not to always follow my heart without equipping myself properly (mentally, spiritually, physically) beforehand. As once noted during the Reign of Terror phase of the French Revolution, "Revolutions are not made with rosewater," and any usurpation of the existing status quo will be bloody indeed, on multiple levels. Are we truly prepared for what that will mean?

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5754
BTC and google searches

I find this fascinating... DaveF will too....

The google searches dropped off before the correction.  Best to put this "fundamental" driver into one's consciousness?

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 474
How Much Do You Know?

There is a great explanation in the YouTube below from Mike Maloney and others.  Think you know a lot about the cryptoverse world, watch and see.

AKGrannyWGrit

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1928
First generation prototypes

I keep coming back to Erik Townsend's viewpoint expressed here in late December 2017.

Blockchain Debunked: Why one of the most-important technological breakthroughs of all time was never suitable beyond use as a proof-of-concept prototype .

The two points in particular:

1.  That the distributed ledger (blockchain) is a fundamentally revolutionary idea that will be as disruptive as the Internet Protocol.  It will change everything.  (Consider:  How did you get your cute cat videos before the internet?)

2.  The current cryptocurrencies are early prototypes.  Think the Horseless Carriage or the Wright Flyer.

So we have the paradox of being brilliant, innovative and profoundly disruptive, but also that today's iterations of the cryptos are more likely to end up in the museums of history than in world wide commercial applications.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments