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Updated: The Next Bullmarket. Self-fulfilling Prophecies, Depression and Necessities.

Updated: The Next Bullmarket. Self-fulfilling Prophecies, Depression and Necessities.

A commentary.

It’s summer 2018 in the northern hemisphere but winter in the crypto-sphere. While Bitcoin started to move way higher than expected in November 2017, right now we’re even lower than October, price-wise. As a result, almost everyone that invested after mid-December lost money, and those who bought in October, but didn’t sell, too.

~813 billion Dollars peaked the capitalization on January the 8th. The market lost almost 600 billion Dollars until today.

The gigantic investment bubble took its toll on the majority of its investors which presumably learned an important lesson. Don’t trust crypto. And they shouldn’t.

A bear market is not a natural occurring hazard, it’s a mix of supply, demand and the influence of countless early investors, the “smart money” that have the knowledge and influence to manipulate the market in order to create a big return on investment.

Supply and demand, obviously the most important indicator for a moving market is also the easiest one to interpret.

How many people need crypto-currency today? Except for a few perpetual travellers and dark-net customers, I assume no one really needs crypto right now.

Sure, people use crypto to hedge against weak currencies, they try to improve their personal situation but if they are looking for the perfect medium of value transfer, Bitcoin, Ethereum or IOTA are not the technology they need in order to buy groceries, electronics, or to pay their bills. Not yet.

The demand is almost solely composed of speculators, short-term investors and those who heat the bull-market oven.

So, if you want to distinguish between an organic bull market and one that has been pumped with speculative energy alone, just remind yourself how many people really pay with crypto-currencies in their daily lives.

That being said, I think we can agree on an artificially pumped market that has been fed by the “dumb money“, also by expectations, greed, and naivety.

What can we do in order to get investors back into the system now that a big part of the dumb money is gone, presumptuously forever? I find an answer to that in the last part of this opinion, but you won’t like it.

The trust that has been lost in the last weeks is a currency we can’t generate with high hashrate but with honest information and an honest ecosystem that doesn’t only benefit the experienced traders.

This takes time. Warren Buffet said some interesting things in his lifetime. And no, this one is not about investment.

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

That being said, we shouldn’t exploit and exhaust this new market, because it could generate benefits for everyone, but we pay with reputation, a currency we can’t afford to lose in times of socio-economic tension and dangerous climate forecasts. We need the innovation ‘distributed ledger technologies’! But we don’t organize this new era efficiently in order to make it happen as fast as we need it.

What’s really happening is the contrary. Countless Wallstreet companies, ex Goldman-Sachs speculators and numerous Venture Capital companies are joining this ecosystem.

Only short-sighted investors should be happy about it.

Self-fulfilling prophecies

If you repeat it often enough, you can create your own reality.

Very influential people use their position. -of course, not a new phenomenon.

Coinbase CEO Brian Armstrong (220.000 followers) tweets:

Some other self-fulfilling prophecies are created by Venture capital investors such as Chris Dixon (582.000 followers on Twitter):
Venture Capitalist Chris Dixon Believes Bitcoin Will Hit $100k

Or even social media/yellow press cadaver such as John Mcafee who proclaimed that:
1 BTC will be worth $ 1 million by the end of 2020” – fans even created a website in order to push his prophecy.

In times of falling prices, an interesting example of how the ‘Wallstreet mentality’ was carried into this new ecosystem is that every market movement is explained and accompanied by quotes from successful investors, usually bullish.

The quote we all are sick of is Warren Buffett’s: “Be fearful when others are greedy and greedy when others are fearful.” And it’s commonly used by investors that want to change the market back to a bullish sentiment because their portfolio shows red numbers in times of falling prices and a bad outlook.

A better quote by Buffett is: “Honesty is a very expensive gift, don’t expect it from cheap people.” Cheap people, that are only in here to fill the wallets they created at Deutsche Bank, Western Union, HSBC, JP Morgan. The bad guys, or not?

And that is the wisdom we should stick to in cryptoland because the appearance of good news, hype and promises correlates with the appearance of people that could earn a lot of money if the mass market would follow their “instructions” and buy crypto.

Right now, no one knows how crypto-currencies will take a place in our daily lives, especially because these global protocols don’t meet the expectations of governments, which are looking for financial tools that go hand in hand with tax-regulations, transparency and control of the cash-flow.

As of today venture capital analysts take advantage of an unregulated pot of gold that promises an insane return on investment in a short period of time, faster than regulation can follow. These VC-investors act faster than the law so to say.

That makes this ecosystem so dangerous for new speculators that rely on crypto mainstream media such as Cointelegraph and Coindesk, which also happen to be in the hands of big venture capital companies from New York and London.

Lightspeed innovation doesn’t come without issues.

Depression

As a result of the shark-pond investors, the pillaging of investors and the hypocrisy of “mainstream media”, at some point, the overall bullish sentiment will hit a critical mass of bearish sentiment, harsh regulation and the wrath of uninformed investors that have been squeezed for years. That is the price we all have to pay because we allow vultures and hyenas to sit at the table before the herd has been fed.

Cryptocurrencies will enter a dark time if we allow venture capital sharks from the financial Mordor to apply the same rules to crypto that were responsible for the global economy-crisis in 2007 and 2008.

Margin trading, a Dollar backed crypto, Tether, that is used to pump the markets, mainstream media in the hands of investors and missing regulation that benefits the smart, big money only.

We shouldn’t underestimate the bubble of ICO’s we create, with private A rounds for VC companies and influential parties only, exchanges without trading fees and cryptocurrencies that supposedly strengthen privacy, but are used to wash money.

The majority of initial coin offerings create money out of thin, hot air. 30 million coins are created, one token costs $5 after the first investment round. We just created $150 million worth of technology with nothing behind it. And the first investors, the VC companies benefit and drink whiskey on the rocks from the frozen pool people are standing on, before they realize how thin the ice really is.

Arguably the most important investment quote of all time is Benjamin Franklins: “An investment in knowledge pays the best interest.

Knowledge is a scarce resource in a field that is about cryptography, math and economic relations. New people instinctively visit social media and look for influential persons with a huge number of followers, to check the legitimacy. If that person is the owner of Coinbase, Coindesk or other Venture Capital owners, I guess the outcome is clear.

People should take their time before they decide to put their money into crypto because if you follow the crowd, the headlines and quotes, you will end up investing after October.

Necessities

The evil word, not enough people accept as a necessity: Regulation. But after 9 years of innovation, we have enough evidence that regulation is important.

No? You might think that only a free market can work. If we stick to the old rules and accept inequality and financial black holes with no further meaning to the world, yes. Then we should continue.

If we believe in the creation of value, that benefits the majority of people, if we believe in a future of recreation of value, we should handle things a bit different.

We shouldn’t regulate “John Doe” though, but the financial actors, VC companies, exchanges, the big players. No one needs 300 million Dollar capital that has been created out of thin air and ice. It’s practically impossible to spend that kind of money in a normal, even in a luxury life.

If we don’t regulate this perversion, we accept sharks and a mass drowning.

So yes, we should regulate:

-Return on investment in ICO’s, in A round financing.

-Exchanges

-Venture capital companies

-We should investigate which players are creating the news because we cannot allow mass media that claims to be neutral when in reality, they follow the playbook of the great whites from New York and London.

-The media should be forced to use a certain standard that reveals the investments from the owners. In every article. If there are conflicts of interest, it should be regulated by law, that those are communicated transparently.

Would you accept ” ‘Green-news’  – the independent magazine about sustainability and fossil fuels“, if it was owned by the OPEC?  I doubt it.

But many people accept “CoinDesk is the leading digital media, events and information services company for the crypto asset and blockchain technology community. Its mandate is to inform, educate and connect the global community as the authoritative daily news provider dedicated to chronicling the space.” owned by the Digital Currency Group, Grayscale Investment (the same actors that are unequivocally connected to competing projects that attacked IOTA with false claims). Other Magazines are similar and also supply the ecosystem with questionable information. If you don’t have a problem with that, you deserve to lose money.

-ICO regulation. 15 developers don’t need billions of Dollars.

We shouldn’t accept ICO’s like EOS with 4 billions of investments, yes you read that correctly, four thousand million Dollars before the technology is built. That inherits chaos and an eventual bad ending. You don’t need to study economics or math in order to see that this is unnatural. There must be losers in a calculation like that. The losers are we, those who want to benefit from crypto-currencies in our daily life, with innovative technology, organic growth and adoption and of course, new investors, the dumb money.

If we want natural growth, an organic bull market, then we need to delete VC companies and ruthless actors from the equation. Because if not we carry the old problems into the new system, which could be the key component to solve severe issues in the supply of wealth in the near future.

In my opinion, the next bull market will determine, if this market will hit the critical mass of problems which were created by bad actors or if we see healthy regulation in order to protect normal investors and adoption.

I, personally, expected that the next bull market starts around August/September and I was wrong. Seems like the amplitude of the old bubble is still active and a longer sideways-phase follows.  Please be careful with articles (even with this!)  and price predictions you read in social media and crypto-magazines. Don’t feast with sharks.

One Reply to “Updated: The Next Bullmarket. Self-fulfilling Prophecies, Depression and Necessities.”

  1. Mit seinem Wunsch nach Regulierung liegst du völlig Falsch.
    Fiat Währungen sind das Problem. Obwohl sie Reguliert sind schaffen sie Aktienblasen,
    Immobilienblasen usw . Das ungezügelte Drucken von Fiat Währungen ist das Problem.

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