6/26/17 ANDY HOFFMAN - ETHEREUM FOLLIES, THE MOST BULLISH BITCOIN OUTCOME POSSIBLE
Through 15 years of hard, tiresome work, I have unquestionably become one of the world's pre-eminent "market manipulation experts" - a largely mocked and/or ignored role, in being the Cassandra that reveals the fraud financial markets are, and the rot underlying it, rapidly destroying Mitt Romney's "99%" for the benefit of the 1% (see today's Audioblog).
Through my studies, it's become crystal clear that the ONLY factor the bank-owned Federal Reserve cares about is the stock and bond markets. Thus, if it feels it can properly control them - particularly, in today's post-Trump world of relentless, heavy-handed 24/7 manipulation, it can say and do what it wants. Essentially, the trust it has developed in the ability to the President's Working Capital Group on Capital Markets, the Exchange Stabilization Fund, the Gold Cartel, and its own "open market operations" has become the hubris to end all hubrises - matched only by those of its "peers" at leading Central banks like the BOJ, ECB, BOE, SNB, PBOC.
Yes, I know that sounds like a topic as distant from crypto-currency as can be imagined. However, keep it in mind as I get to the gist of todays' article, in a moment.
But before I "go there," consider what I wrote in yesterday's "Bitcoin versus Ethereum and Everything Else" - when Bitcoin was trading at roughly $2,500, and Ehthereum the high $200's, with the ETC/BTC ratio still well above 0.1. To wit...
"The way I see it, there are just TWO legitimate crypto-currencies (Bitcoin and Litecoin); and by legitimate, I mean that I have no doubt they will both exist for years - and likely decades - to come. Everything else is highly speculative, with VERY strong odds of going to zero; i.e., the "dotcoms" of our time, only worse - as at least the dotcoms were somewhat vetted by Wall Street, the SEC, and stock exchanges like the NASDAQ; as opposed to today's "ICOs" - NONE of which are vetted by anyone, or subject to any regulatory scrutiny. To the point that, atop all their other terrifying risks, the SEC - and countless other regulators - could at any time arrest the leaders of CENTRALIZED ICOs, and force them to shut their businesses down."
Additionally, I espoused the following...
"...it couldn't be clearer that the vast majority of ICOs will fail...and frankly, the one that scares me most is Ethereum, as it has all the hallmarks of danger - from its cult of personality, to huge Wall Street and Main Street investment capital, to wild expectations that it will dominate the blockchain for decades to come. The way I see it, Ethereum is a wildly unstable "product" - having been the victim of everything from hacks to (centralized management led) hard forks to flash crashes and network freezes. Clearly, its scaling issues are AT LEAST as large as Bitcoin's, and far more complex -to the point that future hard forks are not just possible, but guaranteed. Not to mention, its valuation has risen so fast relative to its expectations, it has the potential to experience a pretty nasty plunge at any time - like the one we're seeing this weekend, which may or may not reverse any time soon.
Some people say Ethereum's success is good for Bitcoin, but I beg to differ. Being famous - or should I say, infamous - for having criminals like JP Morgan as investors, and hosting ICOs of completely worthless tokens - is not a recipe for success. And thus, when they spectacularly fail - it will decidedly not be good for cryptos' overall reputation. That said, when the smoke clears, Bitcoin and Litecoin's use cases will be unchanged - as opposed to 90-plus percent of "everything else"; most of which, will be permanently damaged. As for Ethereum, perhaps there's something to the hype - and thus, that it will one day become an undisputed crypto leader - worth more, LOL, than Bitcoin. Which, if that's the case, good for them, and anyone choosing to invest in its tokens. As for me, I'll simply say "sold to you," and continue to hold the "gold standard" of crypto currency, Bitcoin - along with a tiny (pardon the pun) "dash" of the silver standard, Litecoin."
Well, just one day later, Ethereum's weekend plunge accelerated dramatically, hitting a low of $210 a few minutes ago, down a round 50% from its high from a week ago. Simultaneously, Bitcoin fell to roughly $2,350, or 20% below its all-time highs - and more importantly, the ETC/BTC ratio plunged from a high of 0.15 to today's 0.095. Not to mention, "Bitcoin dominance" - which is a farce to start with, given how much altcoin "market cap" is pure fabrication, jumped a few percentage points, from roughly 38% to 42% - given Bitcoin's relatively modest decline, compared to the all-out bloodletting in the altcoin sector.
Keeping today's article brief, I believe the ongoing altcoin crash - which had to occur sometime, be it sooner or later - could not be more bullish for Bitcoin, for a variety reasons. After, of course, the margin calls; and desperate Bitcoin sellers - many of whom, are Ethereum owners via ICOs that will shortly crash and burn, who are selling their extremely thinly-traded Ethereum for Bitcoin - and subsequently, putting in "flash-crash-like" market orders to sell the Bitcoin proceeds for cash.
Once this process runs its course, those moving back into crypto-currencies will likely move into Bitcoin with far more than 42% of their funds, IMO. As per what I wrote yesterday...
"...there is absolutely no reason to own altcoins - given that the massive risks they entail, more than offset the potential of greater percentage near-term gains. Which frankly, may not even be the case - as when Bitcoin inevitably scales, it will be difficult for even the top "market darling" momentum ICOs from outperforming it."
And if today's episode of ICO mega-crash doesn't wake up crypto investors of said massive risks - particularly, those holding altcoins whose "development teams" may have just lost half of their investment capital in 48 hours' time; yielding the risk that they are holding tokens of a "shell company" with no assets, or sustainable projects - I don't know what will.
And when they look at the "gold standard" of crypto-currency, Bitcoin; and the "silver standard," Litecoin; my guess is they'll realize exactly what I was saying yesterday. I mean, think of how ridiculous it is to not invest in Bitcoin because it doesn't have "enough" upside potential - particularly, relative to brand new "companies" that have neither product, legitimate business plans, or sufficient investment funds. I mean, we're talking about a LOT of companies, in true dotcom fashion, going to ZERO.
Back to my original premise, it is my firm belief that the biggest "leverage" the big block bad actors have used on the Bitcoin community - aside from LIES like Mempool spamming - is the false confidence they felt due to the rising relative strength of altcoins (vanity statistic market cap padding, notwithstanding); but PARTICULARLY Ethereum - which, with this Wall Street and Main Street "backing"; not to mention, Vladimir Putin (LOL); which as recently as last week, was deemed to be ready to not only "flippen" over Bitcoin, but steal its crypto leadership forever.
This, despite having a "track record" of barely 18 months - during which, every imaginable bad things has befallen it, with the only "good" being the comically idiotic, and decidedly NOT technologically brilliant, ICO platform it provided. Which, as of today, is as dead of a meme as the equally fabricated "Trump-flation" - now that the whole world knows Ethereum cannot even handle the traffic of a few ICOs; let alone, the trading of its "stock," following last week's 96% "flash crash."
Moreover, not only do Jihan Wu, Roger Ver, and the other bad actors have to deal with the lack of an "Ethereum dominance" threat to FUD Bitcoin owners, merchants, and service providers with, but they are now dealing with an extremely weak Bitcoin market. And by "weak," I mean that the combination of the ongoing scaling saga - set to hit full force next month - and plunging prices, and sentiment towards, the entire altcoin sector - will make Bitcoin EXTREMELY sensitive to bad news. And by EXTREMELY, I mean that if Bitmain attempts to pull off anything even remotely like last week's UAHF proposal again, I can EASILY see Bitcoin trading in three digits again. This, as opposed to the likelihood of something closer to $5,000 if he just shuts up, accepts SegWit, and stops talking about the hard fork he KNOWS nobody wants.
Which is exactly what I believe will happen, as this is what open source game theory predicts - and what anyone without an agenda (like say, the Chinese government TRYING to destroy Bitcoin, which I don't believe to be the case) would desire - most of all, Bitmain, which receives more mining rewards, and transaction fees, than any entity on the planet.
Thus, if you are a long-term Bitcoin holder - like myself - you should be viewing today's bloodletting as a positive for Bitcoin on an absolute basis, and VERY positive relative to altcoins.
Using a Bitcoin analogy, bitmain so long as Bitcoin strong acts tough
Well written. I concur.
Wow, you always say it like it is! Adam Meister is going to love this!
Andy will be on my show to talk about this and more on Tuesday morning at 10AM EST!
His arguments are not really convincing. The markets going up and down with alts leading the (red) pack has been going on for many years already. Watch what happens when the markets rebound. Alts spike higher prcentage wise than Bitcoin. Then, everybody starts to cheer again and look at alts as the big money machines again.
Rinse, Repeat.
bitcoin and litecoin are the best