Bad News is Bullish Now?!
Well, the bulls are back, but should anyone rejoice?
For some background context, I'm a full-time bitcoin market analyst since 2017, I work in a trading think-tank and consult on bitcoin fundamentals to a market analysis firm for trading operations. In short, I'm a professional trader and educator on technical analysis and bitcoin fundamentals. My home base is https://cryptotraderspro.com/, if you want to learn more.
I have been a bitcoiner since 2012, part of a (failed-to-fully-launch) mining and SPV wallet operation in 2014 and got into the scaling debate in 2015. I ran a Core node before it was cool, and a couple of BU nodes before I realized that I really did need hashing power for it to matter. Amid the toxicity, I became a passive alt-coiner and started mining Monero successfully in the time leading up to the 2017 market cycle.
In 2017, Bitcoin Cash got me excited about bitcoin again, and I chose to aggressively support Bitcoin Satoshi Vision in 2018, because it was the roadmap that I have been advocating for since the earliest days of the block size debate. I came to realize I can't trust the narrative to anyone, so I soapbox for bitcoin the way I see fit! And the fittest bitcoin is the one that trusts that this entire economic experiment was created by someone with a plan. My basic assumption is that Satoshi was not an idiot, and therefore, I choose BSV.
So, I've been around a while, seen a lot of things, and have been successful in many facets of the bitcoin space, but let's talk about this market movement!
I'm terrified about what could be happening on the flip side of this rally. This bullish BTC and "altcoin" move is really bugging me because of the number of conflicting externalities: BTC/Tether is the most frequent trading pair in the whole market. All tether enters the market through Bitfinex, but Binance is the largest holder and trader of tether. IFinex Corporation (parent company to Bitfinex and Tether Corp) and Blockstream both function as parent entities and advisors to Bitfinex and Binance, so there’s a major connection there, especially if you follow the money up to AXA Investments. There's also connections to Silver Lake, Bain Capital and Digital Currency Group if you keep digging, but this isn't a hit piece on venture capitalists...
What is troubling, though, is the markets had a big bullish sentiment shift while the fundamentals are a nightmare:
- Bitfinex needs to sell a billion dollars of LEO token just to be solvent in their tether reserve.
- Tether, Inc only has 74% of USDT covered by reserves.
- Blockstream just announced issuance of “L-USDT”: off-chain USDT pegged to real USDT, which is only partially pegged to USD, which isn’t actually pegged to anything. This does explain why Adam Back, Samson Mow and the other Blockstreamers circled the wagons around Tether even amid the thickest of the damning allegations though!
- Binance, on the tether news, emptied their USDT cold wallet and put it through mixers for a week, spreading their tether out to thousands of hot wallets, then got “hacked.”
- Justin Sun announced issuance of Tron-USDT, then offered to bail out Binance, then Binance locked customer accounts for a week.
- Conveniently, with doors locked and most traders on the sideline, a huge bullish move happened worldwide on BTC.
- Add in that FINCEN just explained how any non-commercial entity without an MSB license and full KYC/AML compliance who is running a Core node, Lightning node, a mixer, almost any kind of DAPP, or even mining in many cases, has been committing serious financial crimes for which there will be fines and punishment.
But the bullishness persists.
Amid all of the red flags, the chatter about the big brokerage firms, ETFs, BAKKT and the “institutional money” are back, and everyone is singing hallelujah to their Lambo fund.
I just keep asking myself why anyone is celebrating a giant fractional reserve that is propping and pumping up BTC, or why an ETF or BAKKT are a good thing for bitcoin in the first place, but it just doesn’t seem to matter to anyone.
So, does anyone care about bitcoin fundamentals or innovating the world economy on chain? Does anyone care about the billion dollars of fake money that’s been created with tether and LEO token? Or do people literally only care about the fiat value of the UTXOs they are holding onto while all the opportunities for human freedom get cast aside for short term profits?
Well, everyone's favorite supervillain cares, has been talking about it extensively. The people of the Bitcoin SV economy have been crystal clear about Blockstream collusion with the major exchanges, wash trading, pump and dump scandals and pay-to-play entry into the fake "crypto" gambling economy for as long as we have been vocal about anything. For the record, that supervillain is Craig. Let's not be cryptic.
But what does it all mean? It means that the "market" is still severely immature, and that "LamBros" and "Moonbois" control the movements of the centralized "crypto economy."
Many people think that bots control the movements of the market, but as someone who has experience with bots, I can tell you they would have sold BTC at $6000. Instead, professional traders left Bitfinex two weeks ago amid the bad news with Tether. Given that Binance then locked out new deposits just a few days later, responsible professionals had no place to trade, so the market was left in the hands of the jubilant "noob" traders, who ignored rational resistance and pushed the market past anywhere the bears are willing to push back in the short term.
But that's to the longterm detriment of said "noobs," because these exchanges create a problematic choke point of centralization, and the assets traded are PURELY speculative. These unprofessional players will also get high on the pay-off of their own greed and they will miss the opportunity to sell their bags; probably riding them right back down into the red.
Short term, I think it's entirely plausible that Binance locked the doors so they could sell altcoins into BTC, pushing the price up and causing a FOMO rally. From that rally, the insider's club (CZ, Justin Sun, and the rest of them) can sell BTC on the OTC market for hard fiat cash and then use that cash to cover shortfalls from the fractional reserve of tether. Since the same insiders own all of the crypto media, there's very little blowback to be seen. It's possible that the OTC selling pressure will push the price back down, but the FOMO rally could push on for days or weeks as short positions continue to get squeezed and thin liquidity concedes to the bulls, emboldening the whole paper tower. There's a real chance that the slaughter comes in fast and hard on the back side of this rally, and it will happen because fundamentals matter, and these assets don't have strong fundamentals.
In the longer term, when utility meets reality, the halvening of the bitcoin block reward subsidy will come in and force everyone to be more honest. At that point, the only thing that will matter is real "antifragility." Then, when the fake money finally dries up, and regulators start to drop the hammer on the cabal of criminals that run this charade, we will start to see a real stripping away of redundant, valueless projects that don't render any economic velocity except that of an absurd investment class.
I'm not sure when that comes fully into play, but the sooner the better, because Satoshi has some real lessons to teach these poor suckers who think that bitcoin will just hand them value from the network rather than understanding that they must first contribute value to the network.
Relief rallies are fun. Bull markets are amazing. But this move doesn't smell right, and I'm afraid it's going to cause a lot of heartache.
Be vigilant, and focus on the long game, bitcoiners.
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