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Bitcoin - Stick A Fork In It - It's Done

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softail

As of November 15, Bitcoin had yet another fork which triggered yet another wave of price declines (according to coinmarketcap and coinbase) the combined value of Bitcoin and Bitcoin SV is far less than the $6,200 that Bitcoin was trading at on November 14.

This latest drop in price just added to many awkward Thanksgiving conversations.  I remain of the view that it isn't a total coincidence that the meteoric rise in Bitcoin to almost $19,000 in December 2017 started just ahead of American Thanksgiving as college students came home and explained the potential investment to their family and friends.

But now, over a year later, anyone who purchased Bitcoin has lost money (in US dollars).  Not making money in a year is enough to demoralize some die hard HODLers, let alone curious potential investors who were largely drawn to crypto by the fear of missing out on the next great investment.

Why is the decline in Bitcoin continuing?

Bitcoin is too confusing.  These forks confuse the casual investor.  For a product that relies heavily on new users adopting it, the confusion and price action is slowing adoption or in some cases, causing people to reverse prior decisions to buy it.  I want to focus on one particular aspect that is problematic for a lot of potential investors.  That problem is that one of the alleged benefits of Bitcoin is its 'decentralization'.  I've questioned that from the start and now I see at least two problems with this alleged benefit:

It makes it easy to create forks, which are confusing enough, but it also makes it easy to create new cryptocurrencies, or smart contracts, or whatever you want to call them. Heck, even the Wall Street Journal created their own mock cryptocurrency. These splits and new products diminish the power of Bitcoin itself and all cryptocurrencies as even avid investors have trouble keeping up, let alone someone just looking to dip their toe in the water.  Bitcoin futures open interest is steadily declining and even the hype around ETFs has diminished as it seems that some sort of broad based crypto ETF is more likely than a Bitcoin ETF which just highlights the confusion most casual investors face.  The 'choice' of multiple cryptocurrencies to invest in isn't viewed as a positive by many - it is a sign that the market is too fractured and too easily split to reach the full potential many tout.

For all the talk of decentralization it seems as though the miners carry a lot of weight.  If there was a 'governance void' that human nature has a tendency to fill, it seems as though the miners and a handful of early HODLers are filling that void - to their own ends.  Why does a certain large holder want to go down a certain path?  For the public good?  Hmmm.  Why do miners want to pursue a certain path?  For the public good?  Hmmm.  Not only are the miners very powerful, have their own self-interest, by all accounts, many of the largest mining enterprises are based in countries or regions of the world not known for pristine business practices (to say the least).  By not having any centralization of power, the power has centralized to the miners over time - which doesn't give the average potential investor a lot of confidence.

What Can Change The Current Downward Trend?

Price action.  Let's not be naive.  If Bitcoin (or one of the other cryptocurrencies) can start trading higher and regain a lot of the lost momentum than people would care again and we could see another wave of fresh adopters 'forced' into the market by FOMO (I suspect we'd need to see Bitcoin above $8,000 to create a lot of buzz - which would be a 100% return for existing holders).

The reality though is someone needs to get Bitcoin back on track.  I wrote that Bitcoin Lost Its Way back in June and I stick to that claim.

Speaking to some HODLers and Maximalists  there are some people trying to take steps to drive the cryptocurrency in the right direction and attract new users and investors.  I will examine some of those steps in another piece, but for now, I think Bitcoin and Cryptocurrencies have lost their luster and I think Bitcoin will break $2,000 before it hits $6,000.

https://www.forbes.com/sites/petertchir/2018/11/24/bitcoin-stick-a-fork-in-it-its-done/#5deb36f4e40b

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TequilaSunset

PONZI says Hi

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Lordblacknail

When the bug bit me I tried to buy bitcoins, but there was so much red tape, I couldn't find anybody to take my money. Thank goodness. 

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Salty Dog
4 minutes ago, Lordblacknail said:

...I couldn't find anybody to take my money...

I can help you with that...:P

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GBT62

This was an interesting take on why it has sat stagnant for most of the year - till a few weeks ago ...

https://www.news.com.au/finance/markets/world-markets/dirty-secret-revealed-in-new-bitcoin-crash/news-story/18d203a429ee1cc145f79d3ada7e2086

Dirty secret revealed in new bitcoin crash

"It was looking pretty good for a while, an odd period of stability. And then Bitcoin crashed — a crash that hides a much darker secret.

Bitcoin’s latest huge crash contains a pattern that could reveal a horrible secret about manipulation of the cryptocurrency.

In the last week Bitcoin has lost 30 per cent of its value, again. Bitcoin FOMO is over. The digital currency, which earlier this month notched up a year of underperformance, has entered an ugly new phase.

If you bought Bitcoin a year ago (at around US$8,000), and held on ever since, you have lost around 46 per cent of your money. This next graph, from Coinbase, shows Bitcoin’s performance over the past year — terribly exciting at first, then just terrible.

image.png.7547f06738cb8e6178b6b948bf52b704.png

Bitcoin’s price was crazy volatile a year ago. It surged to a huge peak just before Christmas 2017 and then spiralled uncontrollably down to hit a low by February.

But in recent months, Bitcoin has looked quiet. Too quiet …

A period of very suspicious stability fell upon cryptocurrency markets in September. In September, October and November, as global markets roared and wept, Bitcoin showed about as much volatility as a rock. Almost every day it was trading between US$6200 and US$6600. The flatness was remarkable.

The stability made Bitcoin boring. Until all of a sudden it wasn’t. When that happened, the crash had a very peculiar shape about it that made me sit up and pay attention.

image.png.ceef3a8437b5af332b9cee2579da2662.png

I felt like I’d seen this before. It looked to me a lot like the collapse of a fixed currency, also known as a peg. This next graph shows the exchange rate between Argentina and America, where the peg collapsed in 2002.

image.png.5021a1fe0f15bece526ad84c86b57dbd.png

 

A peg is where the exchange rate is set in concrete. Pegs were popular last century (the Australian dollar was pegged to the US dollar for a long time, for example) but countries learned you had to spend a lot of money to protect your currency.

Pegs went out of fashion in most of the world. Although plenty of countries held on until their currency collapsed, like Argentina, and Thailand.

When there is a peg in place we see stability. But it can be a facade. What we don’t see is that behind the scenes, things are straining. Here’s a graph showing Thailand’s exchange rate peg collapsing during the Asian financial crisis in 1997.

image.png.214f45291e4fc17eabfc59ad242a70b5.png

 

Pegs can exist in national currencies because they have governments behind them. Those governments manipulate their value for various reasons.

This is why seeing a “collapsed peg” pattern in Bitcoin is a surprise. Bitcoin doesn’t have a government. Or at least it is not supposed to.

Bitcoin is supposed to be an expression of collective free will in a system controlled only by the incorruptible mathematics of cryptography. The currency collapse pattern suggests Bitcoin may not be so free after all.

Certainly, manipulation is well-established in crypto-markets, where wash trading (buying your own sale to create an artificial price level) is commonplace, and price manipulation bots run rampant.

The recent stability was a mirage, it turned out. I certainly suspect Bitcoin was being manipulated during this period. Who was holding Bitcoin up? How? Why did they stop? Did they run out of money? We don’t know.

In the gambling movie Rounders, they say “If you can’t spot the sucker in your first half-hour at the table, then you are the sucker.” This may be good advice for anyone entering crypto markets.

If you’re not intending to commit manipulation, then manipulation is probably being perpetrated on you. That can work in your favour — many manipulators want to prop up the price. But you can never know when manipulation might stop.

Jason Murphy is an economist. He writes the blog Thomas the Think Engine."

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Cgu

Bitcoin is purely speculative. It has no use. The current design does not allow to scale, so it can never replace credit cards or any fiat. A block can be created only every 10min, so you could maybe have a max. of 5000 transactions every 10min. That is the reason they need to fork it - to scale.

Other blockchain based coins might have security issues as you could fool the chain if you take over more than 50% of the network and keep it up for a while.

Mining can be lucrative but only if you win against other miners, so they try to rent "computing power" reducing the profit. Only one can win and be rewarded every 10min.

Best keep out...there are way better opportunities.

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Cgu
1 hour ago, GBT62 said:

Pegs went out of fashion in most of the world.

Some currency are still pegged, but it can be a gamble.

Sorros made his money betting against the BOE, so govt. do not always "guarantee", they can go belly up as well.

Edited by Cgu

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DeedleNuts

The utility of CC isn't really as a store of value. 

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savarity

Just use it to buy stuff you can't use a CC for, ie, online pharm, otherwise don't treat it as an 'investment.'

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Cgu
9 hours ago, DeedleNuts said:

The utility of CC isn't really as a store of value.

Neither of bitcoin, its a ledger and the value is what people make it, there is no other value.

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Kreole
15 hours ago, Lordblacknail said:

When the bug bit me I tried to buy bitcoins, but there was so much red tape, I couldn't find anybody to take my money. Thank goodness. 

I was also interested when it dropped to $4,500 but hit a wall due to my not being fully appraised of what is needed before one make an investment (like where to safely store your bitcoins, etc.).  Coming up to speed really slowed me down as I watched the price go up and up.  At the same time I was reading how difficult it had become to buy and sell, having long wait times because of the increase of traffic. 

Imagine having to wait to sell your coins as the price dropped precipitously.  At that point, I withdrew all interest, and since then I discovered how the big holders were manipulating the ups and downs (pump and dump).  Being unfamiliar and naive from the start, I realized that I was not for me.

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musicman666

Crypto will become more popular when it is stable ....popular to use that is.

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DeedleNuts
3 hours ago, Cgu said:

Neither of bitcoin, its a ledger and the value is what people make it, there is no other value.

CC == cryptocurrency. 

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Cgu
6 hours ago, DeedleNuts said:

CC == cryptocurrency. 

Sorry mate😊😊. I use CC for credit card.

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liquido

I think its safe to say that Warren Buffet and John Bogle have good advice about CC..

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