A highlight from 2017 PTSD and the Dip That Ate Alt Season


Twelve point three percent from fifty eight thousand five hundred to fifty one thousand three hundred. I did a whole show about this on monday. Basically twitter raced to give it a narrative explanation. They pointed to a rumor. Tweet from fx hedger's the treasury department was going after a number of firms money laundering with crypto. That tweet came about thirty minutes before so there was i. Suppose some evidence to the khazal easy. They also pointed to a significant decrease in hash rate after a slew of chinese miners went off. Line the even pointed to turkey where there's an upcoming ban on using crypto currencies while trading holding. An investing are still allowed. mike counterpoint. On that monday. Show that really. This crash had more to do with market structure and specifically leverage than any of these high falutin macro narratives. Here's how dig put it. In the analysis. They put out about a day later quote. We believe the root cause of the sell off with investor positioning rather than fundamental news simply put traders were over leveraged position long resulting enforced liquidations. Now some like sam tra- buco did point to coin bases ipo underperforming that the market started to sell but the violence of the move undoubtedly had to do with leverage and liquidations fast forward to the end of the week thursday night market. Start selling off again. In pretty vicious way and again we try to frame it in big macro narrative terms this time it was all about biden's capital gains tax plan. Here's coin desks headline between leeds. Price selloff across crypto market says biden tax plan bites with the subtitle. Bitcoin falls as biden's plan to raise capital. Gains tax hurts. Risk appetite in this conceit. The market has been trading super risk on because of agra liquidity from the fed. But now it seeing the reality of the biden administration and has started to worry. I'm a little skeptical of this. Not because it's unsound. But i think bitcoin functions is a macro asset on a medium to long scale. It's obviously undeniable that the macro narrative of the potential for inflation and unlimited money. Printing are the things that are driving people into bitcoins waiting arms. However i also don't think in the short-term fully response to news the way that stocks do that said inevitably the more overlap we have between regular stock market participants and crypto market participants. I suppose it will necessarily be some of that shift where bitcoin becomes more responsive in the same way the stock market is maybe a more reasonable version of the macro narrative came from the ceo of delta exchange who said cryptocurrency was already on the defensive having breached the long-held fifty s support earlier this week the tax news invited more profit taking interestingly. The dynamics of these to sell offs seem different. Here's how alex kruger put it. Crashes characterized by extreme liquidations in a highly levered market. Eeg april seventeenth bounce fast. Due to the mechanics of stop losses crashes characterized by heavy spot selling not in a highly levered market. Eg twenty second. Don't bounce his heart making by the dip much more challenging looking for the best way to unlock your cryptos. Liquidity next dot. Io is exactly what you need borrow against your digital assets. At just five point nine percents apr earn. Pass it income with yield up to twelve percent and swat between more than seventy five market pairs with the instant next exchange. Try the next wallet app to get the whole three hundred. Sixty degrees of crypto banking get started at dot. Io the sentiment is definitely a little rougher out there right now. I'm recording this friday afternoon. So who knows what will have happened between now and when you're listening but it's definitely a little gloomy going into the weekend given that. Let's look at the upside for the moment the first has to do with froth. Things have been getting overheated and not in the good way it a whole show earlier this week about the return of some very very 2017. Twenty eighteen dynamics in that show. I looked at doj. While i think does has some pretty unique aspects to its story it is still quite unhealthy to see six hundred percent gains in a month and something like ten thousand percent gains on a year on a project. That is more or less just to me. It suggests some pretty serious walking is going on as an aside. I'm in a magic. The gathering classic collectors group on facebook and someone was asking why a car that another person in the group was trying to sell with so expensive in response to that someone posted in a world where fake money inspired by a dog. Name is worth fifty five billion dollars. I guess anything is possible but still does wasn't really the thing giving me pause instead. It was stuff that i was starting to see. Pop up on tiktok. I an argument for x. Rpi totally divorced from reality. That somehow the sec lawsuit means that ripple was the chose an air to the us dollar that would have been one thing if it was just crazy crackpots but the price of x. rpi significantly at the same time same to with a whole slew of other two thousand seventeen twenty eighteen vintage coins worse however was safe moon. This is a coin whose main value proposition was a holder game where charged a ten percent fee to anyone who sold it and redistributed half of that to other holders tiktok was completely ablaze with content about safe moon and why it was going to moon. Who's all videos of people talking about. How if it only went to one cent per token you could turn thirty dollars into two hundred thousand dollars. The problem of course is that there are one. Quadrille moon tokens so that if it did become one cent that would make the market cap roughly ten trillion dollars or five x the entire size of the current crypto market. This is the type of logic that addictive and dangerous still safe moon. Pump like one hundred percent in the day and then crashed again and is sort of just kept falling as i said this is the good news section and the point. I want to make here. Is that these types of random pump coins being all over tiktok and that's actually working is not a sign of a healthy market. It is a sign of exactly the opposite in fact where there is no relationship between risk and reward on even the most tenuous level. That's the thing that ultimately toward the boom to shreds a huge amount of nothing pumped through the coin waterfall. Each step on the waterfall got people who are closer to the issuers little richer and so it was perpetuated but that sort of thing can only go on so long you can tell out there right now. That the twenty seventeen twenty eighteen. Ptsd is real. That wasn't just a normal market cycle. It was peak insanity and mania that took years of recovery to right side. anyone who lived through. That really really doesn't want to go through it again. There's this notion. Currently of a bitcoin super cycle the idea is that if in the past the crypto market cycle has followed a four year function where the decrease in supply of the having initially creates a boost in price as more people. Try to get in. And then that peter's off for a while until the whole thing starts again. That's the regular bitcoin cycle. That's the historic coin cycle. The idea of a super cycle is that because of all of these institutions that have come in we potentially have a new set of forces which keep a more perpetual ongoing demand. That isn't strictly focused around the for your having cycle. I can think of nothing that could do more to screw up any truth. There is in the super cycle concept than running a repeat of two thousand seventeen where tons and tons of retail investors. Get involved in these terrible projects and that becomes the thing that the bitcoin industry is to outsiders to regulators to traditional institutions etc. Right now it looks like this dip has wipe the momentum off of just about everything. Maybe maybe it gives us a chance to regroup and avoid this two thousand seventeen replay that. I'm dreading maybe before

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