Today boys and, two girls that watch me. We are going to talk about something, spooky. The thing that scares me most about crypto. And not a Tether collapse, or the market in free fall, or quantum computing unlocking your wallets, no, a much sooner threat. A threat we can be worried about right now. Aren’t we lucky.
First of all though let’s frame it with the idealist mindset. The hopeful mindset. Looking back at the bear period from January 2014 that lasted 1.5 years. Mt. Gox went under around March, responsible for 70-80% of all Bitcoin transaction volume. So it took a while for people to regain faith. Now a day’s things are very different.
Now is there any symmetry to this, could this pattern happen again? Here’s the chart from January of this year. We are now 8 months into this bear market. Still 2.5x up from this time last year, but still arguably a bear market. Assuming there is symmetry we are already half way through. But that’s not all.
We now have reasons to believe that this bear market could resolve itself sooner than previous. Today cryptocurrency has many more things going for it than ever before. Swiss banks and stock exchanges have and are adding cryptocurrencies. Mike Novogratz has started a cryptocurrency bank. Binance and Bittrex have added Fiat pairs. Bitcoin has futures contracts. Northern Trust, a company responsible for over $10 trillion in assets are opening their doors to cryptocurrency hedge funds. Not to mention a hopeful ETF approval.
Any one of these pieces of news this time last year would’ve seen a pump. The news was crazy tied to the price of crypto back then. Now it doesn’t care, and many people feel these instruments will just be used to supress cryptocurrency instead of pump it. This bear market needs to resolve itself first. While any one of these news stories didn’t impact cryptocurrency in a prolonged way, they have the potential to shorten the duration of this bear market, however long it’s going to take.
Now that we’ve finished framing the hopeful agenda, now we turn to what scares me most about cryptocurrency. It’s the trustee and lawyer for Mt. Gox. Nobuaki Kobayashi. He’s responsible for selling the remaining Bitcoin and now Bitcoin Cash that Mt. Gox still held after it’s closure. Interestingly there is some symmetry in this, with Mt. Gox raising its ugly head once more.
The man has already sold $400 million-worth of Bitcoin and Bitcoin Cash between December 2017 and February 2018: https://www.coindesk.com/mt-gox-trustee-denies-400-million-sale-caused-bitcoin-price-slump/ One date especially shows the potential damage of this, February 5th a day where this man moved 18,000 Bitcoins coincidentally coincides with a sharp decline. He has defended allegations made against him that he caused this bear market by informing us that this sale was done with over the counter deals and not on the open market. However, the argument is very thin as what stops the people who presumably got a bulk over discount from you from then immediately taking profits from exchanges.
Has he sold all of the coins then? Is the worst of it over? HELL NO. Unfortunately, he has 4x the amount that he has previously sold still in his possession. This website monitors the wallets in question: https://www.cryptoground.com/mtgox-cold-wallet-monitor/ Remaining Bitcoins are 137891, with the same number of Bitcoin Cash. With today’s valuations that is somewhere in the region of over $1 billion worth. Remembering that the market cap of crypto is a lie, it’s probably closer to 50x less than that, which is completely hypothetical it’s really hard to definitively say. If it was 50x less than it currently is, that would be $5.2 billion dollars of actual fiat backed money involved in cryptocurrency. I don’t want you all to read too much into that, it’s silly math, no one actually knows, suffice it to say the remaining coins from Mt. Gox could cause some damage if dumped on us.
People are pointing to September the 18th as a date where more coin could be dumped, as the court proceedings have been postponed until then. Some are under the impression that he is not allowed to sell anymore until this date, but that has been debunked. I’ll leave a link to that debunking down below if you want to read it, but the greatest proof is that there was activity in these wallets as recently as May. It seems he is able to sell any time he likes.
And that is what scares me most about cryptocurrency right now. I didn’t mean for this to be really negative, there were a lot of positives that I gave at the start. I feel the bear market will resolve itself, it’s just a matter of time. Exactly when no one knows, but it’s when enough weak hands have given all they have to give and the supply is only in the hands of those unwilling to sell, and coins become scarce on exchanges, then it’s really easy for things to go crazy, but it’s important to be given the facts, with sources quoted for those facts, so that you are more prepared for whatever comes. I have recently given a lot of thought to my “doomsday” scenario. By that I mean, what would my personal finance look like if Bitcoin fell a whole bunch more. And I have and am attempting to prepare for that outcome so that I and family are protected. I hope you’re all prepared for whatever comes.
Let me end on a story why I know digital money is the future, and no I don’t mean credit. Yesterday I went to go and see my new house, that’s why there was no video, and I tried to buy a new couch for the living room online. Not working online, ok I’ll give them a call. Tried to pay over the phone, I have to trust that he won’t keep a copy of my card details, payment declined. Well that’s weird I have the money in the bank. They suggest I call my bank to authorise the transaction. Ok I’m not sure if my bank can even do that, isn’t it the 3rd party payment processor that deals with that, that you can’t contact directly? Anyway, I’m on my phone to my bank, 25 minute que. By this point I’m fuming. I’m ringing a bank for permission to use my own money. And no the couch company didn’t accept Bitcoin. Who does? Still really early days for crypto. Anyway they tell me there’s a problem with Visa and my debit card has been affected. We can’t sort it and we have no ETA on when it will be fixed. Ok fine is Master Card working? Yes they believe so. I call back, use my credit card. Payment declined. Ooooh.
I had to bank transfer the funds. It was much more difficult than Bitcoin is. And that’s even before Lightning is rolled out more fully.
Smash like if you enjoyed this video. Thank you for your comments on my videos. Let me know what you think about all this. What scares you most about cryptocurrency? And I’ll see you in the next one.