Bitcoin’s ten-year history has been littered with massive corrections, including four of at least 65% since 2011. Thus, its supporters - and the few HODLers that have held on – say it’s “just Bitcoin being Bitcoin”…and that inevitably, it will shake it off and hit a new all-time high. The problem being, that the first rule of investments is that “past is not prologue.” Moreover, each time a new all-time high is achieved, it becomes more difficult to surmount. To wit, the Mt-Gox all-time high, despite all its hype, was a mere $15 billion market cap - compared to $320 billion last year.
The Bitcoin community believes what just occurred is “no big deal” – but again, we’re talking about the VERY small percentage that still remain after a bear market that has cut BTC prices by 80%, and altcoins closer to 90%. Just listen to the crickets on CryptoTwitter, Crypto YouTube, and other social media to see just how few people remain; let alone, in the mainstream world – where most institutions, which didn’t believe in Bitcoin in the first place, have headed for the hills. TRUST ME, they won’t return until the “Hoffman Line” – i.e., a $100 billion market cap – is again exceeded, and maintained for a significant amount of time.
To the question of “is this just another Bitcoin correction?,” my heart says yes, but my head says no. I mean, it’s downright comical to equate what just happened to Mt Gox, Silk Road, or any other prior corrections – as this time, Bitcoin is a MUCH bigger asset; with a MUCH higher hash rate; PROVEN anti-fragility - having won last year’s “scaling debate” and survived everything from major exchange hacks to a Chinese crypto ban. This, at a time when fiat currencies the world round are failing; Precious Metals are trading at all-time inflation-adjusted lows; global debt and inflation are soaring; Central banks have been ceremoniously discredited; and the seeds of a potentially devastating financial crisis sown.
Let alone, after Bitcoin’s “Hoffman Line” had held for an entire year – before being obliterated by, of all things, a fork of the disgraced “competitor” BCash; by a disgraced member of its “management team”; creating an even more ridiculous version, featuring far larger blocks. To that end, a month into the SV fork, it’s looking more and more like BOTH chains are failing – with a combined price of less than $200, representing an all-time low from the day BCash was unceremoniously spawned 16 months ago.
Heck, it’s starting to look like NEITHER ABC nor SV will “win” the meaningless, hyper-destructive “Hash War” that has taken all of crypto down – but instead, could morph into a long, sector-draining affair akin to Star Wars’ “Clone Wars” – which potentially, could yield a prolonged depression of Bitcoin’s hash rate…as dying Bitmain and crusading Faketoshi waste every ounce of SHA256 hash power they can to fight each other.
https://twitter.com/Andy_Hoffman_CG/status/1072259376658804736
- Andy_Hoffman_CG
Of course, that’s just one possible scenario - as we could conceivably witness a “best-case” in which BCash destroys itself…yielding heightened confidence in Bitcoin, and a resurgence of interest due to widespread belief that in fact, there is no chance it could be usurped. This is what Bitcoin maximalists hope and believe – and based on Bitcoin’s successful history of fending off challenges, could very well happen.
https://twitter.com/Andy_Hoffman_CG/status/1072479000688246784
- Andy_Hoffman_CG
However, it’s also possible that the course of crypto has not yet been set in stone – in terms of its future role(s) in the world, and which one or ones will dominate. To wit, Peter Schiff’s “Beanie Babies” analogy – of how the first mover is rarely the long-term leader. Of course, his “analysis” is deeply flawed – in that 1) he knows essentially nothing about altcoins; 2) Bitcoin’s lead is incredibly large, in terms of hash rate and acceptance; 3) his claims are biased by his personal business model; and 4) there are plenty of examples of first movers being long-time winners - like, for instance, Ford Motor.
That said, when I wrote this week that “Bitcoin ain’t goin’ away,” the more appropriate observation would be that CRYTPO ain’t goin’ away – as while Bitcoin’s future as a store of value and transactional medium is still uncertain, digital assets will UNQUESTIONABLY play a major role in the 21st century economy.
Compared to fiat currency and Precious Metals, cryptocurrency is a VASTLY superior medium, in every imaginable way - at a time, as noted above, the global need for superior monetary products has never been higher. So, even if one is a Bitcoin skeptic (sacrilege to “maximalists”), it’s nearly impossible to refute, by all but the most “Atlas Shrugged-like” status quo figureheads, that crypto is here to stay.
That said, even though Bitcoin FEELS like it’s very old – particularly, when compared to altcoins that, on average, are as old as last year’s bubble – the fact is that it is still just 10 years old, with rapidly evolving technology including, amongst other things, a new wave of mining algorithms that may or may not be one day consider superior.
Only time will tell what Bitcoin’s ultimate position will be in the financial world and cryptocurrency landscape – but one thing that’s for sure is that it has not yet been cast and stone. And while right now, it’s difficult to conceive it being “usurped” by another crypto, one must be mindful of the chance that it could – particularly when observing the damage SV has done in such a short period of time.
Personally, I sold by Bitcoin when the Hoffman Line broke to preserve capital during an extremely uncertain time for both crypto, and financial assets in general - with the caveat that I believe so strongly in BRhodium, I have little doubt it will recover AT LEAST as much as Bitcoin if the sector rebounds sharply in the near (or not so near) future.
I still believe very strongly in Bitcoin’s future – as a, and likely THE, dominant cryptocurrency. However, I am open to the possibility that alternatives scenarios are possible – as in my view, aside from “bad actors” like Roger Ver, Jihan Wu, and Craig Wright, Bitcoin’s biggest enemies are “maximalists” that don’t think progressively, and consider such alternate scenarios.
https://twitter.com/Andy_Hoffman_CG/status/1072285673577635840
- Andy_Hoffman_CG