June 26th 2022 - Failure Is an Option
Things got much worse since my last post. Bitcoin fell not only under the psychologically important price level of 20,000 US$, but actually went much further down, reaching 18,000 US$ and remaining there for few days. This represents the first instance when Bitcoin, during the downturn, fell under the ATH in previous bull market.
For many Bitcoiners, even the most experienced, this is the new, uncharted and rather frightening territory. Almost all “fancy” models of price action, like S2F, proved to be worthless. Bitcoin and other cryptocurrencies are for the first time facing true economic recession and worst geopolitical turmoil in a century.
Because of that many expect downwards trends to continue. Few dare to proclaim the current state of affairs – Bitcoin slightly recovered and remaining around 20,000 US$ - to be the bottom. Many expect Bitcoin to fall towards 12,000 US$, and some influencers even mentally preparing audience for catastrophic Worst Case Scenario of Bitcoin at 6,000 US$.
To make things worse, all the Nocoiners look validated and claim that Bitcoin failed. It failed as a store of value and it failed as inflation hedge. In a sense, it would hard not to agree with such claims, at least in a short term.
What became apparent in last weeks is that the immediate source, or at least catalyst for apocalyptic Bitcoin dive isn’t among the usual suspects. China FUD and government regulation FUD didn’t work. Bitcoin didn’t fall because of paper hands retail investors. It didn’t even fall because of overleveraged degens. It began to fall because of liquidations of major exchanges and crypto lending services. Not the retail, but what was supposed to be “institutional money”.
And that “institutional money” proved to be guided by the same greed and incompetence like all those “Masters of the Universe” responsible for 2008 crash, the very event that sparked the creation of Bitcoin and other cryptocurrencies. Bitcoin, instead of saving the world from it, became part of the problem, too connected with whales, manipulators and slavishly following Dow Jones and whims of Jerome Powell.
To make things even more ironic, there are calls for Bitcoin to be saved in the same ways global financial system, or to be precise, those responsible for 2008 crash were saved – through bailouts. The very same arguments that allowed tax payers’ money to be directed to the banks are now used for bailout of troubled crypto exchanges and lending services. Someone or something big, whether charismatic billionaires or big corporations, must intervene and pour insane amounts of money to keep the likes of Celsius afloat and prevent cascading liquidations.
Needless to say, if those suggestions are listened to, many companies that were supposed to fail would stay and the crisis created by institutional money is only temporarily be averted by more institutional money. And the old crypto establishment is going to strangle cryptosphere just like big corporate banks strangled world economy and maintained what should naturally fail.
While it is ultimately to free market to decide, temporary salvation of those undeserving salvation would only postpone the inevitable and makes the next crash even worse. If cryptosphere is to survive and thrive, it must learn from its mistakes and something new and better might grow only from the ashes of the old. Failure is not only option but necessary teaching tool and basis of future success.
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