As I sit here on this beautiful May morning, staring at my screen and lost in my thoughts, it occurs to me we are amidst a unique period in monetary history.
Since entering the sound money space in 2002, I knew the current system needed to die, but had no idea when or how this would happen. After 16 years of watching it taken toward the abyss by historically dangerous levels of financial engineering, market manipulation, and propaganda, I now know it will be the Digital Age – which back in 2002, wasn’t even a pipe dream – that will be its downfall. Led, of course, by the one of the most brilliant technological innovations ever, Bitcoin – which solves the monetary issues man has wrestled with for millennia…particularly centralization, which its all but miraculous “immaculate inception” resolved.
For OGs who have been in Bitcoin for several years, it couldn’t be clearer we are still in cryptocurrencies’ VERY early days; as while BTC is a “grizzled veteran” at nine years old, the average altcoin is less than two...and most, less than one.
Yes, we had a major speculative surge last year, that brought a lot of temporary attention to the sector - and profits, that rapidly became losses. At its peak, the average crypto investor was likely less than a month from his first crypto investment – typified by a complete lack of understanding of what he was invested in; particularly, the value of Bitcoin, and lack of it in nearly all altcoins.
The problem is, that once the speculative surge peaked; in my view, principally caused by the launching of dozens of “crypto hedge funds” on January 1st; the sectors’ flaws were exposed - as right now, investors are looking at altcoins and wondering why they invested in them. Yes, a handful have the potential to create something truly valuable down the road. However, most were no more valuable than dotcoms; i.e., pump and dump money grabs that benefitted a few at the expense of many.
Meanwhile, the FUNDAMENTAL factors that have enabled Bitcoin to steadily grow in value and adoption; that made dramatic stair-steps higher last summer, when SegWit was adopted and the BCash fork failed to split its network; continue to advance, with the vast majority not watching. There is far more attention than ever – by powerful entities, politically and financially. However, few are yet embracing its potential; and now that prices have subsided, acknowledging it as a threat.
Thus, we appear to have entered a period of Bitcoin “limbo” – in which the price meanders in an increasingly tight trading range; well below January’s highs but well above 2017’s average levels. For OGs, it’s unquestionably frustrating – as sentiment couldn’t be lower; and those, like myself, with Bitcoin-related businesses have seen demand collapse...in my case, forcing me to alter my business model just nine months after launch. However, it’s a FAR better scenario than last year – when prices were MUCH lower; and the FUD we dealt with REAL; as opposed to today, where Bitcoin is so secure, it’s laughable to worry about anything.
https://steemit.com/andyhoffman/@andyhoffman/5-23-andy-hoffman-cryptogoldcentral-com-mass-mental-capitulation
Such an environment is ripe for doom-and-gloomers to preying investors’ fears; particularly, those with high cost bases - who cumulatively, are on the razor’s edge. This is why I get so angry at TA and other FUDsters claiming Bitcoin is on the verge of collapse – when fundamentally, its outlook has never been stronger. Frankly, the fact it has maintained a $128 billion market cap; which if it were a stock, would make it one of the world’s most valuable tech companies; in environment of DEAD sentiment and expectations, tells you just how valuable its wealth storage function has become. Which I assure you, a burgeoning European financial crisis won’t weaken; nor the parabolically rising level of debt that MUST continue ad infinitum - as fiat currency regimes, by definition, are Ponzi schemes that MUST grow larger to survive.
Unfortunately, the OGs represent the minority of crypto investors, even if they hold the vast majority of Bitcoin. Conversely, the majority are the aforementioned speculators that came in late – sitting on losses, and without knowledge or conviction of Bitcoin’s fundamentals…let alone, altcoins. For them, this is more like purgatory than limbo – and each day it doesn’t resolve positively, more and more fall off the bandwagon. This marginal selling pressure is holding prices down – but unquestionably, passing more and more Bitcoin from weak hands to strong…as equally assuredly, the institutions that started researching it once it became investable - for many, at the $100 billion market cap level; are slowly but surely, scooping up panic-sold Bitcoin, at prices WAY above the pre-SegWit, pre-BCash levels.
How long will it take before it ends? There’s no way of knowing, but if we indeed bottomed at $7,000 Monday night - in a capitulative episode at the most illiquid time imaginable (during Memorial Day BBQ’s in America, whilst Europe and Asia slept); that would be an incredibly bullish sign, given that we bottomed at $6,000 in February and $6,500 in April.
Irrespective, I have little doubt we’ll be past the Bitcoin Limbo/Purgatory soon – as in the “double dog years” pace of cryptocurrency developments; in Bitcoin’s case, ALL positive; dramatic changes occur in shockingly short period of time. Which is why, I might add, HODLing is the ONLY logical investment strategy.
Beautiful May morning, what?!
Btw, Andy, would you please unblock me on Twitter? @StormWatchGirl. You blocked me just because I mentioned that in the past you had owned Litecoin and interviewed Charlie Lee. Was that fair? I was telling the truth.