Down 70% from the peak. This is just not fun anymore.
Bitcoin dropped to $5,860 at the moment, below $6,000 for the first time
since October 29, 2017. It has plummeted 70% in six months from the peak of
$19,982 on December 17. There have been many ups on the way down, repeatedly
dishing out fakes hopes, based on the ancient theory that nothing goes to
hell in a straight line (chart via CoinMarketCap):
If you’re a True Believer and you just know that bitcoin will go to $1
million by the end of 2020, as promised by a whole slew of gurus, including
John McAfee – “I will still eat my dick if wrong,” he offered
helpfully on November 29 – well you probably don’t need this sort of
punishment. You’re suffering enough already. And I apologize. I feel your
pain. I was a true believer too a few times, and every single time it was a
huge amount of fun, and I felt invincible and indestructible until I got run
over by events.
With 17.11 million bitcoins circulating today, if bitcoin were at $1
million today, it would amount to a market cap of $17 trillion. But new
bitcoins are constantly being created out of nothing (“mined”) by computers
that suck up enormous amounts of electricity. And by the end of 2020, there
will be many more bitcoins, and if the price were $1 million each, the total
would amount to about the size of US GDP.
This doesn’t even count all the other cryptos that would presumably boom
in a similar manner, amounting perhaps to half of global GDP, or something.
People who promote this brainless crap are either totally nuts or the
worst scam artists. But I feel sorry for the True Believers whose fiat money
got transferred and will continue to get transferred from them to others.
So OK, there’s still some time left. It’s not the end of 2020 yet. And
True Believers still have room for the fake hope of a $1-million bitcoin.
But at the moment, bitcoin is even worse – incredibly – than one of the
worst fiat currencies in the world, the Argentine peso, which has plunged
“only” 35% over the period during which bitcoin plunged 70%. That takes some
doing!
There is always some reason or other that is cited for the drops: The
endless series of hacks into exchanges during which crypto tokens and coins
just vanish. Nervous regulators cracking down on the scams surrounding
cryptos, initial coin offerings (ICOs), and how they’re being promoted. Or
advertising platforms such as Facebook, Google, and Twitter, and email
newsletter platforms restricting ads and promos about cryptos and ICOs.
And then there were studies
that showed how Tether, via the crypto exchange Bitfinex, was used to
manipulate up bitcoin last year. Manipulation is good as long as it is upward
manipulation. But it’s apparently not working anymore.
A lot of big hedge-fund and family-office money was plowed into it last
year with great fanfare that was thickly plastered all over the media, thus
creating artificial demand for something useless that is in artificially
limited supply. It worked amazingly well for a while. Now these funds are
having trouble getting their money out without crashing the cryptos any
further.
Whatever it is, it’s just not fun anymore.
In the end it’s always same: A miraculous ascent of anything begets more
buying in the belief that this miraculous ascent will continue, and it
continues until some folks decide to pull their money out. They have the
early-mover advantage and they’re laughing all the way to the hated
fractional reserve bank with their hated fiat currency. Everyone else is
getting dragged down.
The overall crypto space peaked on January 4, when market cap reached $707
billion, according to CoinMarketCap. Less than six months later, market cap
has now plunged by 66% to $243 billion, despite continued creation and sale
of coins and tokens that add to that number.
Among the other biggest cryptos:
Ethereum plunged 68% from its peak of $1,426 on January
13, to $440 at the moment. Market cap collapsed from $138 billion to $44
billion:
Ripple plunged 88% from its peak of $3.84 on January 4 to
$0.453. Market cap went from $148 billion to $17.8 billion.
Bitcoin Cash plunged 83% from its peak of $4,138 on
December 20 to $679 at the moment. Market cap dropped from $70 billion to
$11.6 billion. On November 12, I featured Bitcoin Cash in an article
subtitled, “Peak Crypto Craziness?” where I was observing how it
quadrupled in two days to $2,448.
EOS plunged 59% from its peak of $18.16 on January 12, to
$7.18. I pooh-poohed it on December 18 with “The Hottest, Largest-Ever Cryptocurrency ICO Mindblower.”
The purchase agreement that buyers in the ICO had to sign – the ICO was not
offered in the US due to legality issues – stated explicitly that holders of
EOS have no rights to anything related to the EOS platform, and that they get
nothing other than the digital token. A perfect digital scam surrounded by
piles of logical-sounding gobbledygook.
Litecoin plunged 79% from its peak of $363 on December
19, to $76 at the moment. Market cap went from $19.7 billion to $4.3 billion.
Its founder admitted on December 20 that he’d wisely cashed out his entire
stake, with the first-mover advantage. The True Believers have simply gotten
run over by events.
There are now 1,586 cryptos listed on CoinMarketCap. Anyone can create
them, and they do. This compares to about 160 fiat currencies. And in the
end, it was fun for those that got out in time – those that grabbed the
first-mover advantage in one of the most elegant wealth transfers of the
century.
One of the biggest such deals ever, happening now: How investors
allow a group of PE firms to extract $3.75 billion from a company after
they’d already extracted billions. Read… This
Deal Shows How the Junk-Credit Market is Still Irrationally Exuberant
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