Bitcoin maximalists continue to shriek about their beloved bitcoin and how the price is going “to the moon”.
Bitcoin may be lacking fundamental characteristics of a Ponzi scheme, but there are plenty of similarities. The endless pumping of bitcoin on Twitter and all manner of other social media is much the same as those operating in a Ponzi scheme. In the end, the only way they succeed in getting out is by getting more punters to buy in and keep the price high.
Granted – Jack Dorsey isn’t your typical punter. Buying around 4,500 bitcoin – 1% of Square’s treasury – is a total gangster move. It delivered him plenty of headlines and press which, in terms of earned media value ROI, is pretty good if he didn’t achieve anything else.
Of course, it wasn’t easy. Even with a market cap of over $211Bn, moving $50M into bitcoin would have set off a lot of alarm bells. This gamble (I can’t bring myself to call it an investment) had to be something achieved in a slowly-slowly approach.
If institutions can’t quickly move a few thousand bitcoin around without worrying about causing market movements, then what good is it? Today’s markets for trading bitcoin are so disorganised and dysfunctional that they are primarily used to arbitrage against each other by and for speculators.
Large transactions are still done in over the counter (OTC) markets. I regularly get approached to ask if I know someone who will do a deal for thousands – or even millions – of Pounds Sterling for BTC. And from the way the conversations go, it feels like a back-alley drug deal. It’s not just people looking to avoid the high commissions and fees of using credible exchanges; they are actively trying to subvert regulatory compliance. (Which is one of the primary aims of the DeFi movement).
Bitcoin Over-the-counter (OTC) transactions feel like back-alley drug deals.
Then we have the true maximalists. John McAfee has predicted a $1M BTC price for some time now. A major Tesla investor predicts the price to between $50,000 and $500,000 in the next five years. A former Goldman Sachs hedge fund manager – Raoul Pal – predicts a price of $1M within five (5) years. And of course, a former Facebook executive couldn’t miss getting in on the hype-train with their prediction of $1M bitcoin price.
These are predictions for which there is no basis other than wishful thinking. These delusional crystal ball wishes get picked up by the crypto Twitterati and shared far and wide. (Plus the equivalents of the Daily Mail and the Sun in crypto propaganda – it isn’t news).
When the chart monkeys trot out their bitcoin graphs with reds and greens and candles and all the rest of their wedges and flags, I just laugh. Their so-called “fundamentals” and price predictions, including those which applied to real businesses and real commodities, come from assumptions which are either never disclosed or easily disproved. Charts and fundamentals of tangible commodities and…