Submitted by Steve Brown…
In January this year I wrote on twitter that Bitcoin would be targeted by the monetary powers when it reached $1 trillion in US fiat market cap, and that’s precisely what happened. Within just four days from 21 February when bitcoin reached its peak of $58K per BTC, to the 26th, bitcoin lost $10K in fiat dollar terms. Overall that loss represents $180 billion dollars US. Where do those ‘lost’ speculative dollars go? Into the share markets? No. Into notes, bills or bonds? More no. Into the gold or silver markets? No, noting that the forever manipulation of gold and silver was a founding principle for Satoshi’s adherents.
Bitcoin is a global phenomenon and derivative (of fiat currency) mostly represented by US dollars. While $180B is seemingly a small figure in relation to the trillions of dollars the US must bandy about, if any dollars can be found where they don’t belong the Fed/Treasury is more than happy to vaporize them at will – especially if such dollar liquidation impacts China. Since a large proportion of bitcoin activity does take place in China, and the computers to calculate bitcoin are made there, China’s capital flight and FINTECH closely align to US dollars. Bitminer sales represent significant exports for China, and according to the University of Cambridge China’s exposure to bitcoin may be 65% of the bitcoin market cap, where that market cap is just under $1T in USd fiat.
Bitcoin is not a real currency and is not accepted as such beyond fringe transactions. That’s because bitcoin can only transact seven times per second, resulting in high fees through arbitrage and delayed settlement times. The Lightning network aims to resolve such transactional problems, but there are significant roadblocks where “segregated witness” is one. Segregated witness will require a major change to distributed blockchain ledger accounting to work.
So, since bitcoin is not a currency… what is bitcoin? Bitcoin is a speculative asset which resembles a pyramid scheme dependent upon layered components which allow it to trade. One of those layers is tether which was recently enjoined by the state of New York from carrying out its illegal operations in the state, along with a related exchange called Bitfinex. Even so, attempts have been made to gentrify bitcoin by the billionaire Winkelvoss twins, ex Goldman trader Raoul Pal, Elon Musk, and by touts from America’s largest criminal bank, JP Morgan, with some success noting bitcoin’s meteoric rise per the last few months.
The bitcoin tumble predicted in January by an unidentified lazy crypto blog journalist at $1TN USd bitcoin market cap, represents the disappearance of about $180BN in (mostly) US dollar fiat, which is quite convenient for the Fed, and for the US regime’s China policy too. But where did that lost bitcoin fiat go? This time, small or “retail” speculators liquidated all or a portion of their bitcoin holdings — mostly in dollars and apparently sidelined, according to one source. Beside the China capital flight dollars, some major bitcoin holders or “whales” have held bitcoin while smaller retail investors sold. That could spell trouble for Musk, who probably acted illegally* when he touted for bitcoin.
That retail holders of bitcoin have sold while large commercial holders have held, spells trouble not only for bitcoin, but for those large holders. It means that bitcoin’s rebound will be slow, especially while bitcoin is plagued by legal matters and even impostors who claim to be the fabled Satoshi Nakamoto. This also means that the foundation for bitcoin – where one sucker hopes to sell it to another at a higher price — is endangered, when the punters drift away.
But again… where did that $180B in lost bitcoin** go? Beside the impact to China’s trade, other regimes such as Iran and Venezuela may have punted a fraction of their holdings for now as a hedge, and to focus on other sectors, the results of which we may see soon. But due to the truly opaque nature of bitcoin (regardless of what the “open ledger” addicts may say! -ed.) no one can say for sure. Suffice to say that resources in China have been impacted while many bitcoin punters have fled for now; and the Federal Reserve is more than happy with this result and just can’t wait for next time!
*bitcoin has not been declared a security by the SEC at this time
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.