The r0ach report vol 2: Bitcoin analysis & Ethereum rough consensus attack

Greetings day traders, lawyers, and humans.  If you tuned in for the last r0ach report, I mentioned I was selling a bunch of Bitcoin (but not all) to buy a truckload of silver.  It seems everyone else must have thought that was a great idea too, because the price of silver is now up here:

And the price of Bitcoin is now down here:

Having said that, let's further delve into what's really going on in these markets.  To find out where the price is going, we must first look to the past:

Sooo, basically what's going on here is, everyone and their mom has just been sitting on their hands waiting for these big longs to deleverage before they make any moves.  Active interest is around $52 million, and people really wanted to see that deleveraged to something like $38 million before they buy.

At the same time you have these big Chinese miners who mine Bitcoin 25 hours a day and put up their wares for sale on the ask side.  Since people were scared to buy, here's what the China whale miners do.  They say, oh, nobody buying?  Well, screw you.  I'll just dump all these mined coins to crash the market while simultaneously shorting to make money off the crash.

At this point, the top traders all know this song and dance is going on.  What everyone is looking for is what happens to the amount of leveraged longs during all this.  I fully expected to see some of them drop out and deleverage, and then Bitcoin throws one of the biggest curve balls I've seen in a while.  Not only does barely anyone deleverage, even MORE longs pile on.

You could take this information several different ways.  Maybe there's just more money on the exchange than there used to be, so the long and short open interest is bigger as a result.  This is somewhat plausible, since the open longs have increased 30% while the shorts have more than doubled in the same two month time period.  Or maybe the longs just refuse to give in.

The other possibility would be that the market is even more dangerous now due to longs being on the verge of giving in, but we're at the point now where most of the downside has already been reached.  Most people do not expect it to go below $582 fib level support, and will probably bounce back to $620 or more regardless of what happens in the short term...so you can just wait shorters out

As for Ethereum, it's in a full blown rough consensus attack.  The coin was forked for Vitalik and the Ethereum foundation accomplices to avoid legal repercussions of losing investor funds, while also financially benefiting from not losing their own DAO funds at the same time.

The problem there is, they created a prisoner's dilemma.  You can only fork when you have a win/win situation for everyone, or at least the majority on your side.  If someone benefits by not forking, you've got issues.  They underestimated the fact that there's a lot of vulture capitalists with their eyes on the altcoin scene now like Pantera Capital and Digital Currency Group.

(yes, this guy looks like Ned Flanders, but he would probably burn down your house if you let him short it first)

These guys all came in on the prisoner's dilemma and said, whoa, whoa, hold on there Vitalik, since we have bazillions of dollars, we now declare the original chain is the real chain and the chain you forked is the imposter. 

Now these actors have the financial incentive to prop this thing up as long as it takes to see how much gold they can rake into their coffers.  It's basically a battle of whales trying to rip each other off at this point.  Since there's a lot less trust in the developers of Ethereum after the DAO fiasco, and a simultaneous rough consensus attack, I do not see a future of one chain winning and going right back up to it's old price.  

Both chains are basically grenades now as far as I'm concerned.  You can make money by momentum trading on top of the vulture capitalists, but it's not the best long term hold.  A lot of people are going to get burned by choosing the wrong chain and just leave Eth, never to come back after they lose a bunch of money.  This probably isn't going to end well. 

*this episode of the r0ach report is dedicated to my dearest cousin shorts, who had a heart attack and died when BTC dumped:

And my sidekick MatTheCat: