Bitcoin’s $20,000 Dilemma

Have you heard about Bitcoin™ today? My guess is, if you’re having any experience such as mine, that is now a 50-50 proposition, depending on what day of the week it is.

An example of this, I’ll assume, goes something like this, again, based on my own non scientific results:

  • If Bitcoin is rising in price by double-digit percentages? The phone, email, or face-to-face questioning from friends and family goes from casual, or almost disinterested conversation. To demanding inquiries – even from total strangers I may pass in the street.
  • On the other hand; if Bitcoin is falling (again) by double-digits? __________________(insert crickets here.)

So has been the basic story of Bitcoin. I’ll also add – the above covers more in-depth technical, or fundamental analysis into the entire crypto-currency phenom – than anything being regurgitated across the entire mainstream business/financial media. i.e., It’s currently nothing more than an over-exaggerated, over-rated, momo/momentum, pump-and-dump, game of who’s going to be the last bit-bag-holder. Period.

I can’t help but laugh every time I see some new ICO (initial Coin Offering) or sudden corporate name chance to include something “crypto” in its rebranding, then the subsequent tripling or more of its share price. I often wonder what Bernie Madoff must thinking, sitting in his cell, pulling any remaining hair out, wondering why he’s in jail for making stuff up.

It’s gone far beyond unhinged to anything one thought of as ethical business behavior. Hint: I’ll use Long Island Ice Tea™, as one, for your consideration.

However, with the above stated that doesn’t mean I see no use, or possible benefits related to the blockchain idea, and have always made that clear. (e.g., Kodak® may very well have merit to its seemingly us-too positioning, let alone the IMF and its ongoing discussions based on the distributed ledger principle.)

What it may or may not do, or be worth, in the future is very, very, very (did I say very?) much still up-for-grabs, for blockchain may not be the format of choice going forward to solve many of the issues it is said to. e.g., Hashgraph may be a better overall structure in the end.

To think this has all been decided and one “needs” to invest on the premise (much like those on TV inherently argue) has been beyond ludicrous. And that premise of “ludicrous” investing ideas is now showing up in some very real, very sizable, losses requiring payment (as in losing) actual, real $Dollars and cents.

(On an aside: If you have one-red-cent “invested” in any form of crypto-currency, and this is the first time you ever read, or even heard of the term “Hashgraph?” That proves prima facie that you too have been caught up, or followed the same investing premise known as “mania” that engulfed the “investing” public back in the 1600’s now known to all as the “tulip bulb craze.” If you’ve ever sat back and wondered “How could people have been so crazy?” You now know first-hand. It would appear de facto the only thing that never changes – is the human condition.)

So why did I use the argument that Bitcoin now has a $20,000 problem, you may be asking? Fair question, and it is for this reason…

Unlike the general stock market of the last nine years or so, Bitcoin is not backstopped, or propped-up via any central bank largess. In other words: There is no central bank “put” to ensure “investments” aren’t subject to the true laws of supply, demand, and more importantly – emotional swings of the investing public. And Bitcoin (and all its ancillary brethren) are at the epicenter of a purely emotional investing public. Period.

Why? It’s all been about get-rich-quick. At least, that’s my opinion, over the last 6 to 12 months. So much so Unicorns are tearing, if not out right bawling, with envy.

People didn’t, haven’t, and still don’t care what Bitcoin or anything else did, or does, as far as a product is concerned. All they’ve cared about is what the stock price is currently – can they get in on it – and will it keep rising? That is all the “fundamental” analysis that has mattered.

And many a so-called “experts” has been more than willing to wrap more specious styled analysis around that fundamental to sound as if they “know” something others don’t, when in effect, they are nothing more than speculating themselves with more makeup and better cameras.

The issue today is this: Fundamentally – the price has gone from around $20,000 per, to around $11,000 (and lower), depending on what day of the week it is.

The compounding and fundamental problem in all of this, is this: People who bought into all the hype from around the $10,000 mark, to watch it then go to around $20,000 – are now consistently sitting, day after day, not just in break-even territory if they’re lucky. But rather, some are now not only sitting on just double, or even triple digit losses. But quadruple digit losses.

Some may even be those who bought the extreme top, and sold the extreme (so far) dip. They would qualify for the investing term of: quintuple digit losses. Or said differently: Ouch! (e.g., Ten’s of thousands per “coin,” to just thousands.)

Yet you don’t (nor won’t) hear this type of analogy via most sources. And where you’re really not hearing it is on the so-called “informed” business/financial channels such as CNBC™ et al.

As a matter of fact, if you bring any of this type of questioning up, you’re met with nothing more than derision and insults. It would seem, once again, questioning of the “experts” is verboten. Unless, of course they’re questioning you, or your premise that may not align with theirs. Then it’s everyone pile-on and all fair-game. For clues, see Bill Fleckenstein clips, here, and here.

This type of behavior was (once again) prominently displayed on (once agin) none other than CNBC.

Yet, it seems to have taken on an even more harsh tone than ever before. I would assume it comes from the resulting issue that all those “investors” that were all but assured of even further riches – are now calling, wondering how in the world they could suddenly be so far underwater when all the so-called “experts” exuded assurances that this was all but “a sure thing.” i.e. BTFD’s (buy the F’n dips)

Last week this type of derogatory, no better ammo to counter a thesis than to throw out insults, was (once again) on full display on CNBC’s, Fast Money® program, where one of the panel members decided the best way to deal with any nay sayers was to lob a volley of nothing more than sophomoric insults.

The resulting “informative” information to bolster against anything that may claim Bitcoin may indeed be in for more trouble was met with panelist Dan Nathan berating the guest (Evercore™ ISI technician, Rick Ross) with such words of investing prowess as alluding to technical analysis as “his stick” I believe it was “schtick” but that just me.

Yet, it was his verbal coup de grâce of investing retorts that delivered all one needs to know about what’s currently taking place within the entire crypto arena. That retort? “…so go piss off, seriously.”

Ah yes, the fundamental sign (for those who want to see) that shows just how vacant the entire “get rich quick with Bitcoin” fallacy has fallen, and quickly.

Said differently: When the best argument for one’s position is nothing more than a vulgar insult, delivered meaningfully, and almost menacing in posture? On camera? Hint: That shows just how much that $20,000 high water mark is now a problem, and a very real problem at that. For the longer it doesn’t recoup back to its former highs? The more problems the entire crypto area is going to feel. Especially for those who were supposedly seen prior as “the experts.” i.e., I’d be on the lookout for the necessary bleeping of F-bombs for more clues into what’s currently taking place, than most or any the analysis I’ve heard. But that’s just me.

One can say till they’re blue-in-the-face that if one invested in Bitcoin 12 months ago they would be up 1000%. However, that does nothing for the myriad of people who piled in about a month ago at $10, $11, $12, or even (dare I type it?) near $20K to only watch in horror as its plummeted below $11K, rebound, then plummet again to where it sported a $9 handle. Those opinions matter more, and I’ll dare say: much, much more.

I’m going to go out-on-a-limb and just assume that the idea of losing 50% in value (and of one’s actual, real money) in and around a months time was not one of the selling points professed, or used, to entice those who “got in while the gettin’ was good” back in the good-ole-days of December. Call it: Just a gut feeling, that’s all.

What’s not a “feeling” by the way, and is very much fact, is that as I’m typing this Bitcoin has since risen, and (once again) sold off to have printed lower quotes than those quoted on the screen of CNBC as that “discussion” took place on the 17th. Hint: Not a good selling point for further investing. Maybe just a selling point of those already “invested.” But again, that’s just me.

Here’s my “investing” thought when it pertains to Bitcoin currently:

The longer it remains under $20K – the more calls of “piss off” will be heard across the entire crypto space. The only difference will be that it won’t be coming from the so-called “experts.” But from those being called to “invest” in the space – now that prices have been reduced and are most assuredly: “A screaming buy!” That is…

As long as you have cash in the bank to fulfill the transaction.

© 2018 Mark St.Cyr