President Trump gets "credited" with a lot these days. A recent post by CoinDesk is now giving him credit for the "crash" in Bitcoin's pricing. And, as most of us know, where BTC goes, the rest of this asset class, e.g. STEEM, goes with it.
At least up to this point in time ...
So how did Trump pull this one off? Christopher Giancarlo was a former Trump administration official, as chairman of the U.S. Commodity Futures Trading Commission (CFTC). He had this to say, in his recent interview with CoinDesk:
"One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked."
Hmmm. The CoinDesk post goes on to further point out:
"Bitcoin futures listed by the Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE) were announced by the CFTC on Dec. 1, 2017 and went live on Dec. 18. Bitcoin’s price peaked at nearly $20,000 one day earlier, on Dec. 17, before falling dramatically in subsequent weeks."
There can be no question that the drop from BTC's ATH (all-time high) was dramatic. And, as most of us are painfully aware, the welcome rally in 2019 that was well on its way to retesting this ATH was cut short. And continues to fall steadily backward, including yesterday's major downturn.
Let's discuss this a bit more ...
Death of Speculation?
Anyone involved in this asset class during the exhilarating and wild ride up to many of the ATHs late in 2017 and early in 2018 are familiar with the reference to speculation's role in it.
IMHO, our human condition being what it is, the "something for nothing" impulse driving far too many of us is nothing new. And is not going away. At least not voluntarily, on its own ...
So ... We see reference to the word "taming" in some of the articles about the use of futures applied to the BTC market. Specifically, that there are savvy enough investors, with sufficient amounts of capital to apply to it, who can "control" this market, by keeping speculation "tamped down."
I make no claim to being a futures expert. I can only say that, if speculation is truly being "tamped down," then I am all for it. And am prepared, as a long-term investor, to wait for the day when there is a genuine "use case" which is made for BTC and the rest of the altcoin market, that withstands any and all market pressures to drive the price down.
Like any of my dear readers who may be similarly inclined, I wonder when that might be? And what will it be based upon?
"Halving" of 2020 and Supply and Demand
There is a pretty widely known event coming up in May 2020, known as the "Halving" of Bitcoin. It represents the time at which the mining fee for Bitcoin is cut in half. Which historically has led to an associated drop in the supply of BTC. This is the 3rd time this will have happened, as it has already occurred in 2012 and 2016.
Here is an article saying this will definitely cause the price of BTC to climb! 😊 And here is an article, to the contrary, issuing a warning! 😞
Either way, it is a considered a big event in this asset class and even has its own "Countdown" website.
Yes, dear reader, you are right! 🤔 This picture has nothing to do with the subject of this post. Being from the power industry, I just liked it
and it's my post. 😏 And ... Technically ... It is related to supply and demand, if you know anything about generation and transmission ... 😉
So ... Which will it be? Up 👍 or down 👎? Since I am still writing posts on the Steem blockchain, I believe it is still going to go up (BTC that is. Much less sure about STEEM ...). One of the final points which convinced me to ever invest into this asset class to begin with is the idea that Bitcoin represents a type of "virtual gold." My faithful long-time readers know my "old life" consisted of many years in the mining industry. Participating directly in the "gold rush" in Nevada in the 1980s. So, this concept is very appealing to me.
A well known and critical characteristic of gold is man cannot go out and simply print more of it. I spent years in the industry with companies spending greater and greater amounts of money to mine lower and lower grades of gold-bearing ore. This has a natural and very powerful effect on supply
On top of that, there is (at least that is the "big story" of the moment ...) the projection that "institutional money" is in the early stages of "flooding into the market." Which is supposed to lead to skyrocketing demand.
Plummeting supply and skyrocketing demand. A "no brainer" indication of a bright future for huge profits, right? Of course, I have no way of knowing. My crystal ball is no better than anyone else's.
Maturing Market and "Smart Money"
As I and many others have written about in the past, this asset class should be considered "immature." Perhaps even still in its infancy. Did the referenced (above) introduction of futures trading and the associated "taming" of this "immaturity" provide an indication of a maturing market?
In addition, the introduction of the ICE's (Intercontinental Exchange) Bakkt platform was heralded as the next "big thing" which was going to lead to a dramatic increase in the amount of institutional money pouring into this asset class - so-called "smart money."
Hmmm. Is "smart money" going to flow into an "immature" market? Particularly a volatile one where the risk of loss is considerable? Well, I don't pretend to be one of these wealthy, "smart money" people, but it is just common sense to me to figure these people will expect some assurances that they have a reasonable expectation on a profitable return. If not so, how did they ever get to become "smart money" people in the first place?
I personally view this more or less positively, as I don't think "smart money" is speculatively made. Rather it is made by investing in markets where real value, i.e. real wealth, is being created. And, hopefully, along with their investments, they bring much greater resources to bear on keeping any unfair manipulation and corruption in the market to a minimum.
Closing
There can be no question, for anyone who has spent any time at all as an investor in this new asset class, that it is highly volatile. And there can be no question futures and options are powerful derivative tools.
On the plus side of this CoinDesk post, we can perhaps celebrate at least some "taming" of this volatility. On the negative side, though, to what extent does their use allow for manipulation of the market? By forces far more financially powerful than any of us, my dear reader?
Well, I could say a lot more, but I'll leave it at that for now. What are your thoughts? Are you still long-term optimistic for this asset class, in the face of these recent events? Or have you had enough? I’d love to hear any feedback you may be inspired to provide.
Until "next time," all the best to you for a better tomorrow, as we all work together to build up our Steem Communities and increase the value of the Steem blockchain! 👍 😊
Respectfully,
Steemian @roleerob
Posted using SteemLeo and “immutably enshrined in the blockchain” on Thursday, 24 October 2019!
P.S. Usual caveat: This post is not to be taken as financial advice! Please perform your own due diligence and research, before ever investing into anything. It is solely your responsibility. Not mine ...
