In an article posted on April 13th 2021 and titled THE END OF CRYPTOS that made a lot of noise, with some commentators even taking pictures of our post to make Non-Fongible Tokens, we highlighted the reasons why Cryptocurrencies in their current forms would never become a currency and would end up being criminalised.
Since then, Bitcoins lost 50 % of their value and the political pressure to outlaw them is mounting in every corner of the world.
Just a few months ago, crypto enthusiasts were touting that Crypto-currencies were the currencies of the future, forgetting that currencies need the backing of a state to become a store of value and price stability to become a medium of payment.
Speculation, quick money, social medias combined with the ultra liquidity engineered by the FED and the encouragements of pseudo Gurus like Elon Musk sent the whole complex into a speculative bubble of extreme proportions.
Even the largest financial institutions, pressured by their clients had to counter their own rational reticences and went with the flow… Making the bubble even more dangerous…
Having analysed and traded cryptocurrencies for years, predicting the ultimate outcome was not difficult. Our analyses are always based on our in-house in-depth research and unbiased analytical framework. Our conclusions can at times be against the consensus, but that is precisely where we add value.
Getting the perfect timing was certainly more difficult, but this is where decades of experience and analysis of the dynamics of the undercurrents brings enormous value.
Major secular tops are ALWAYS marked by an iconic event, and, as we highlighted then, the IPO of CoinBase was the ideal marker of the end of the mania. The significance of the issuance of Central Banks Digital currencies and China’s clampdown on Bitcoins were the telling story of these underlying dynamics.
Since April, Cyberattacks demanding Bitcoin ransoms, wild volatility and rebukes from regulators have eroded the optimism of the Crypto optimists.
Policy makers are poised to make a number of critical rulings on virtual tokens in the coming months — decisions that may reveal how deep of a hole the industry is falling into.
Evidence is growing that Capitol Hill is moving in the direction of curtailing the crypto world.
Senator Elizabeth Warren recently said a key feature of cryptocurrencies is that they allow people to secretly move money, making the coins a “haven for criminals.”
The Colonial Pipeline Co. hack triggered fuel shortages across the Eastern U.S., impacting citizens andd the economy for hours if not days. As in previous breaches, the culprits demanded ransom payments in Bitcoin — shining a spotlight on the cryptocurrencies’ national security implications that we pointed at.
Long gas lines predictably attracted the attention of lawmakers and the scrutiny could make some on Wall Street nervous about further embracing assets that are regularly linked to illicit transactions.
A reminder of her point came Wednesday when JBS USA , the world’s largest meat producer , packer and distributor disclosed that it had paid $11 million to hackers who forced the company to shut down all its U.S. beef plants.
With Senator Warren taking the lead of the crusade, it is only matter of time before regulators, legislators and the SEC clamp down on the eco-system…
Maybe more damaging even, Bitcoin has lost 50 % of its value since its April Peak, leading many gullible investors sitting on losses. Wealth destruction is never good for an economy, especially if very few get very rich on the way up and the public at large gets poorer on the way down.
A series of negative tweets from Elon Musk contributed to the plunge, underscoring that token prices are too volatile and easily influenced by social media to be safe for unsophisticated investors. Enquiries are going on with regards to these tweets and Tesla’s investments in Bitcoins and it remains to be seen in the company’s July earnings if it still holds its position or has sold ahead of the pack.
Should Cathy Wood, the other pseudo-guru be probed as well for stating publicly target prices at USD 500’000 with never an explanation on how she or any of her analysts could come to that sort of stupid number … Maybe by assuming the Bitcoins would soon represent 20 % on the money in circulation in the USA ? As she did when. assuming that TESLA would sell 20 million vehicles in 2030 or 30 % of the entire car market ????
The frenzy tied to non-fungible tokens and Dogecoin — a cryptocurrency created as a joke — could all but amplify those concerns.
If America reaches the stage where Dogecoin, a joke token, is seen by a generation as a possible legal tender for its economy, it won’t attract foreign capital from the rest of the world?
After the Banana Republic raid of the Capitol of January 6th, a” joke” currency is all what is needed for the US to lose its status as a model for the world
The US legislators, regulators and the US FED bear a massive responsibility in allowing these events developing.
In doing so, they quashed one of the most exciting feature of Crypto-currencies in the eyes of the enthusiasts : the fact that they could not be controlled by Governments. The pseudo-philosophical rebellious act of paying in a currency disconnected from the State wa suddenly proven to be a myth.
Potentially under consideration are whether to approve Bitcoin exchange-traded funds, allow crypto mutual funds and grant banking licenses to financial firms.
In May, Securities and Exchange Commission Chairman Gary Gensler urged lawmakers to pass a law regulating crypto exchanges, arguing that the lack of oversight posed a serious threat to U.S. investors. The comments shocked Bitcoin proponents who predicted Gensler would be an ally because, unlike most government officials, he is well versed in virtual coins.
In the past few years, the SEC blocked multiple ETF applications, arguing that Bitcoin is too volatile and susceptible to manipulation.
Gary Gensler’s comments that crypto exchanges lack investor protections signals he may share some of those concerns. “It’s a big shift from four months ago when everyone said, ‘Gensler taught a crypto class at MIT so we’re going to get all our applications approved,”’
The SEC faces a June 17 deadline on one proposal to list an ETF from VanEck Associates Corp., one of several applications it’s considering. The agency has previously delayed making a decision on VanEck’s plan, and amid Washington’s heightened attention on crypto, it may choose to kick the can down the road again.
The regulator may also put off decisions on the five other applications, but the agency needs to respond to each of them by July 16.
The SEC has also expressed worries about mutual funds investing in Bitcoin futures, something that is allowed under existing rules. The agency warned in a May 11 statement that it would be scrutinizing funds’ crypto holdings.
In the next few months, the SEC will consider proposals for four mutual funds that would invest heavily in CME Group Inc.’s Bitcoin futures contracts, according to documents filed with the regulator.
One instrument, the Stone Ridge Trust NYDIG Bitcoin Strategy Fund II, would use the derivatives to seek an exposure to the cryptocurrency that’s worth as much as 125% of the fund’s net assets, according to its registration statement. The firm wants to start offering the product to investors in July but it could be delayed amid the SEC’s review process.
Policy makers generally look to the underlying fundamentals of an industry when reviewing statutes, brainstorming new legislation or drafting new regulations.
The problem with Cryptocurrencies as they exist today is that besides helping criminal activities and constituting a dangerous speculative instrument, there are STRICTLY NO OBJECTIVE FUNDAMENTAL ADVANTAGES to them.
Investors in Bitcoins could as well go to they favorite online betting application to punt on their price levels.
At the end of the day, what we are seeing right now with the crypto Mania, the Meme Mania, the commodities mania is Central Banks that are starting to have to face the consequences of their dangerous plays with liquidity…
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