The first law of thermodynamics is the Law of Conservation of Energy. It states that energy cannot be created or destroyed in an isolated system. That's exactly what happened last night on the crypto markets.
Bitcoin's Flaky Fundamentals
The cryptocurrency market capital has been steady around $200 billion for a few weeks now, ever since Bitcoin started skyrocketing (again) to almost $8000. The new flood of investments and tradings has nourished FOMO, leading to new record highs for BTC. With the recent cancellation of SegWit2x, a sentiment of disappointment emerged, leading to some sharp declines in BTC price. I'd like to insist on the word "sentiment", because that's the only reason driving BTC's insane price. In fact, the fundamentals of BTC haven't changed at all. I have written about that months ago: Bitcoin is declining. Why? FUNDAMENTALS, and my arguments still stand. Nothing changed: Bitcoin transactions are still slow, and get even slower under heavy load, the fees continue to increase, and the developers continue to fight and feed their egos. Just last night, while I was trading on Bittrex, the website lagged several times, and I couldn't make some critical trades. So not only is Bitcoin flawed fundamentally, but the exchanges themselves are too; don't even get me started with Poloniex!
The New Ping Pong Players
There were many flippenings since last summer, when the cypto craze started, mostly happening with ETH and BTC. But now, it's between BTC and BCC. Last night's pump and dump (PnD) shows how toxic the cryptocurrency space has become. Within a few hours, BTC gets dumped to around $5500, the money shifts to BCC, propelling it from $900 to almost $2500. This morning, the opposite, BTC bounces back to $6300, while BCC drops with some support around $1400. It's a ping pong game. In the midst of this, some people make money, others lose money. The first law of thermodynamics was obeyed: the market capital didn't budge, it's still at $200 billion, the traded volume was pretty much equal between BTC and BCC, around $8.5 billion.
Lesson From The Past
Not only do we have new players this ping pong game, but we have a new audience too, aka Wallstreet Bankers, who are sharpening their knives and ready to drag Bitcoin into their slaughterhouse. While the CME Group proudly announced the launch of Bitcoin Futures in October (http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofBitcoinfutures.html), they prepare to hammer Bitcoin just like they did to gold and silver. Why do you think Goldman Sachs were predicting Bitcoin reaching $6000 while CNBC kept showering Bitcoin with glitter and publicity? Coincidence?
A quick rewind... The rise of precious metals was a threat to the US dollar back in 2009-2010; after the 2008 economic crisis, the Fed decided to print more money (quantitative easing), which gave gold and silver a huge performance boost. It lasted for a year, then Wallstreet decided it was time to re-pump the stocks bubble and made sure nothing would touch the supremacy of their fiat. Gold and silver nose dived with multiple corrections (Soros being the champion of that manipulation), while the Dow Jones kept rising without a single significant correction since that time! And where are gold and silver futures traded? Yup, you guessed it, the CME. A quick math: if 1 + 1 = 2, then BTC + CME = ?
Moreover, at that time in 2009, advisers like Max Keiser, Mike Maloney and Peter Schiff where all predicting gold and silver would be at $15,000 and $200 respectively. 8 years later, those predictions never came true. So when I hear people talking about Bitcoin going to $100,000 or $1,000,000, I comfortably sip my tea while grinning at lessons from the past...
Decentralization?
We may wonder what happened to decentralization and is it relevant? There isn't really any decentralization, as much as people would like to believe. The reality is that the mining has become highly expensive, so only those with financial means (that is millions of dollars) can build any profitable mining operation (farm). And since there aren't much regulations on the crypto exchanges, this leaves the door wide open to manipulations, aka pumps and dumps. In other words, whales and miners are holding the central power, along with top governments like China and the USA who can swing the prices with announcements, laws and restrictions. Add the CME to the mix, and we get a nice toxic swamp.
There are smart but dangerous whales controlling the crypto markets. If you thought Bitcoin was decentralized, think again. Bitcoin isn't gaining any wider acceptance, stores aren't flocking to implement Bitcoin transactions. The notion of Bitcoin being decentralized has lost its meaning. Instead of Bitcoin giving power to the people as originally intended, it has become a centralized environment giving power to those at the top. In other words, it's no better than your favorite government or Wallstreet bubble-making machine.
Conclusion
Will Bitcoin Cash take over Bitcoin and smash it this new ping pong game? Will we continue to see market manipulations and a more dramatic shift in capital towards Bitcoin Cash? Is the latter a better investment for the future? What will Bitcoin be in a year or two, after the CME starts trading it? To the moon, or to the dump? I honestly lost faith in Bitcoin, what about you?
DISCLAIMER: I'm not a financial nor a professional adviser. I formulate my opinion based on my own learning and interpretation of chart analysis. If you're not a professional, please educate yourself before doing any market trading and don't risk more than you can afford to lose.
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Crypto technology here to stay, value of currencies depend on many things.
I don't doubt that cryptos are the future. My view is, I don't think bitcoin will remain the champion forever.
The BTC vs BCC battle is a case of the loud minority doing their thing! :( I really liked this post. Well done! I'm gonna follow you.
thank you for some enlightenment on the matter!
upvoted
may be this interests you
https://steemit.com/cryptocurrency/@allthereisislove/how-i-made-a-near-100-profit-on-dash-in-10-days
thank you for your time
A very informative article. Crypto currency boggles my mind !! For newcomers and "tech-handicapped" like me, understanding bitcoin is a herculean task . I agree with you on this - "Bitcoin transactions are still slow, and get even slower under heavy load, the fees continue to increase, and the developers continue to fight and feed their egos".... And there is another rule to life. "The higher the rise, the harder the fall" 😊