My take on all things Crypto
My take on all things Crypto
We previously devoted two articles to Bitcoin, so we cannot remain silent now and must respond to current developments. In this article we will discuss a shortcoming in our last article on bitcoin, then we will continue with the current price development of bitcoin and other cryptocurrencies. Finally, we discuss various developments in the crypto space. But let’s be clear, this is our take on crypto and not investment advice.
Author: YS Koen, Klaten, 28 May 2021
We didn’t feel the need to comment on what’s going on in crypto space, but our mailbox and chat apps just keep raining down with requests for my opinion on what’s going on. To get here, we first have to go back to our latest publication on Bitcoin (see article).
Yes, I am going to admit a shortcoming in that article. It took a long time, but in the end, it is admitted that Bitcoin is not as limited as they want the entire world to believe. Yes, the 21 million Bitcoin will never be more, only less if Bitcoin are burned. But does everything stop there?
As I described in that previous article, Bitcoin is an upside-down currency of what we are now used to. There is a built-in ceiling at the top, this ceiling can never be raised, but it is not closed at the floor There are different ways to lower that floor, for an explanation see (video 1.). In the same item, Andreas Antonopoulos comes up with a comparison by stating that when you buy a pizza and you want to eat more, you cannot have the pizza divided into 16 slices instead of 8 slices so that you get more pizza, the amount of pizza remains the same. He is right about that. However, this does not apply to Bitcoin, as Andreas explains in a previous video (video 2.). In the system no Bitcoin is registered, transactions are not executed in Bitcoin, but in Satoshi, so Bitcoin is not the unit of account, instead Satoshi is the unit of account. A split or subdivision of Satoshi ultimately doesn’t increase that amount, but as Andreas explains in the first link video, by means of a hard fork (29.30) more Satoshi can be created. And when that happens, it goes very quickly. We are not used to thinking in decimals, at most 2 decimal places but 8 or more, that requires a total reset of the traditional way of thinking.
That’s why I had already made the comparison with buckets of rice in the previous Bitcoin article. 21 million buckets of rice, each bucket contains 100 million grains of rice, what happens if that amount of rice grains is increased to 1 billion grains of rice per bucket? During a hard fork it is not possible to determine whether only a limited number of buckets will consist of 1 billion rice grains, it is all buckets or none and if not, everything will remain the same again. If that decision must be made, then we have come to the point I described in my previous article, and it can no longer be argued that the money press is not being used. I hope my point gets across clearly. Now let’s see what’s going on with the price and the many rumors that come with it.
That drop from US $ 63,000.00 per Bitcoin to US $ 40,000.00 first and then slipping further to US $ 35,000.00 comes as no surprise to me. This didn’t happen in the space of 24 hours; it took more than a week to get from the highest point to where we are now. The strongest drop that Bitcoin has shown in 24 hours is +/- 25%. Whatever anyone may say, this is not the strongest drop in Bitcoin’s relatively short history. People like sensational and hysterical headlines over articles and videos, but none of this is that shocking. The past week there has been fighting on social media, people had to be victimized. That didn’t really surprise me, it confirms what I wrote in my previous article. On the commercial side of the Bitcoin spectrum, there are gurus who pretend to own the truth, when someone gets out of line they are immediately bombarded as the enemy. Let me be clear, the loudest screamers are doing this purely for their own good, they are so deep in Bitcoin with such irresponsible risks and now the balloon of their dreams has exploded.
It should have come as no surprise that the pressure would come off the kettle. If any market makes huge leaps in price development in a relatively short period of time, sooner or later it will cool down. Sense is mixed with nonsense and is taken as truth to drive up the price further. This is nothing new, this will always be the case, the development I have observed in Bitcoin and crypto over the last year and a half was like a déja vu for me, memories surfaced of 1999 early 2000 just before the Dotcom bubble was burst. That is why the development in the price decline was no longer a surprise. In this, the price development of Bitcoin moves like a commodity. This is not to say that Bitcoin can be compared to a commodity, you do not hear me say that Bitcoin is a digital version of commodities. It says everything about the speculators who have entered the market. I am not talking about those who are “professionally” involved here, but rather those who have recently joined. You see this happening regularly, but I do not want to stigmatize anyone.
We experienced the same phenomenon in the mid-1990s in the commodity markets, led by precious metals and oils. These types of markets are not for the faint of heart, yet you could see them pounding on the door where they wanted to enter, purely for fear of missing the opportunity. One enters into investment constructions that one does not understand, the providers of these products are certainly guilty of this. But also guilty are the investors whose nerves are raging and who react to every movement. Now I also must admit that the last few days I have been glued to all screens to know what the price development in crypto did. If I really investigate it, I can calculate down to the dollar where the price development will go, because it all is not new what is happening here. After a sharp fall in price, you will always get a slight recovery and then decline further step by step. In addition, you see that most crypto have the same price development. More than 85% of all top 100 crypto by market cap show the same patterns. You can, so to speak, slide each other’s chart over the other and observe the same result.
Let me make one thing very clear, if there is an altcoin that shows a different price development, it does not mean that it is better than the rest. How the value for a cryptocurrency is composed cannot be compared with other assets such as commodities or shares and whatnot. Bitcoin and other crypto are primarily based on imputed value versus intrinsic value for many other assets. Before people start shouting that I have gone mad, let me say mainly, it mainly has an imputed value and less physical intrinsic value. That is one of the main reasons of the price volatility as it is currently developing. There is something positive in return. Every sharp drop in price knocks out a lot of air, that is the process of maturing.
People want to know the reason for current events, the cause must be sought, it is necessary to be able to explain why this drastic change of course came about. The real reason is the pressure on the system. People become hypersensitive to rumors. All rumors about, for example, China or a tweet from Elon Musk, it is nothing but noise on the line. But with every significant price increase, a bubble is automatically created, the bigger that bubble is blown, the closer we get to a moment when that bubble bursts. This is the case now, it is snowballing, the longer it keeps rolling the greater the negative sentiment gets. Trust has slipped out of the system for a while now. The Bitcoin community is very effective at hyping everything, so you can see this as hype as well. Initially, people cannot get into the moving train fast enough, and then flock to look for the exit if something goes wrong, causing panic reactions. We all want to be the first to get back on the platform and worry that we are still on that train as it rumbles further down the mountain.
Is the bull market movement over now? I would say not yet, certainly not for the long term, in my opinion we are not in a bear market yet. My expectation is that the price will bottom out somewhere low in the 30 high in the 20. But if it doesn’t keep that, and drops below 25, the next bottom is around 18 thousand. It all has to do with sentiment, hypes as I wrote before. But imagine if Bitcoin gets stuck somewhere between $ 18 and $ 20,000, did the project fail, do we need to move on to new things? No, please don’t, it’s only just starting to get interesting. Perhaps not so much with Bitcoin, because the possibilities have already been thoroughly explored. But the same can be said about gold and gold is not disappearing either, gold will always be the benchmark for all precious metals and that is what I expect from Bitcoin for the rest of the cryptocurrency.
Again, there is no reason Bitcoin will not move towards $ 300,000. Every day is one day longer in Bitcoin’s history, and we continue to make history. The leap beyond 300 will be more difficult, if it does it will be at the expense of other cryptocurrencies, but the developments taking place there are really interesting. Not so much as a currency / money, but more the different platforms, such as Ethereum, Cardano (ADA), Polkadot (DOT), Solana (SOL), even the “new” Internet Computer (ICP) and several others. But there is also the immediate danger, for example, I do not get so happy when I see what is happening on the Binance Smart Chain with the BNB BEP 20 token. When I look at some projects that see the light of day there, I really wonder why this should be possible? Why do they hide behind a wall of secrecy? The summary information they provide is also contradictory. Or they come up with a “whitepaper” that should not even bear the title of an ordinary sales brochure. I am simply amazed that these types of projects can count on attention of many. There is no artificial intelligence system that has ever created a blockchain or crypto, so why hide behind a mountain of fog? This does not give confidence to the entirety of Bitcoin and cryptocurrency, but on the other hand, the investor is also responsible for what he invests his money in. Think carefully, do your own research and if questions are not answered clearly or insufficiently, be careful. Unclear intentions like this cast a shadow over the good work that many do every day. You have scammers everywhere, but certainly also in the depths of the crypto world.
The most important thing you can do for yourself is to be patient when investing in 1 or more cryptocurrencies. The price may not develop as you intended, but especially with the larger cryptocurrencies, the price will always go in the direction you expect. Don’t be fooled by the predictions of others, often the price they quote reflects their investment in it more than reality, they think they are able to talk the price to higher grounds. For development platforms like the one I mentioned earlier in this article, it is important to be patient. Then consider whether it is realistic which way they want to go with the development, if it is feasible, do not panic immediately if they do not meet a certain date with the new release. Believe me, Innovators want nothing more than to launch a project, but it must be possible to do it in complete safe way, because it is to no use if a new project is immediately hacked or worse, large sums of money may disappear.
We are engaged in innovation projects ourselves, not in crypto, blockchain or the like, but we also have to change release dates regularly. That’s just as frustrating for us as it is for those who are waiting for it. This is not done on purpose, but often necessary for the security of the projects and for the later users. Hurrying is rarely good for a good project. As long as we make progress every time, we are at peace with it because we know what we are working on.
Enjoy the road you walk, don’t just focus on the end goal, otherwise you could get lost along the way.
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