Don’t look down.
In a stagnating market of ever-decreasing returns and a mere shadow of true price volatility, investors turn their eyes away from the traditional markets and towards alternative methods of finding financial and trading success. After all, the S&P 500 has been seeing historically muted moves and the VIX volatility index has been printing lower and lower, only enforcing the problem. With even huge black swan events such as North Korea’s missile tests being completely ignored in the stock market, it’s only natural for traders to look towards places such as Bitcoin to get their volatility fix.
And boy do they get their fix – Bitcoin has been on an absolute tear as of late, receiving the apocalyptic news of “fire and fury” from President Donald Trump extremely well, generating an immense amount of upwards pressure. The news has been taking Bitcoin to successively new highs, nearly doubling in price from previous all-time highs in the month of August. ICO craze has also been more insane than ever, with projects such as Filecoin generating over 200 million dollars in their sale and a massive influx of new projects entering the space.
Ethereum is also planning on releasing their Metropolis update, which has ramifications to the second biggest cryptocurrency platform that will resolve many current issues and enable more upwards mobility for the coin, as well as the realization of API and infrastructure technologies such as Tierion, that are now being put into place to truly create an architecture for even more bullish fundamentals.
With good news coming left, right, and center, Bitcoin’s doubling in price, and seasoned experts now putting up their token offerings for the market, it’s hard to wonder what could actually stop this rocket ship. Or at least, that’s current market sentiment.
The PBoC, notoriously known as one of the biggest thorn in the digital sides of cryptocurrency and Bitcoin (along with the SEC) have recently released a statement that they would be considering regulating ICO’s. Not a week after this statement did they release a second one stating that they would be banning Chinese participants from taking part in ICO’s.
Cue market panic and an absolute meltdown among the cryptosphere of traders heralding the “end of crypto”, the “bubble has popped”, or some other such nonsense. The honest fact of this kind of action feels like China is forcing their hand at its best and downright manipulation at its worst. With Chinese-backed crypto platforms such as NEO losing over 40% of their total market value in under 24 hours, one has to wonder – why now?
Let’s rewind a moment.
Back in January, The PBoC announced that they would be looking into inspecting all major Chinese cryptocurrency exchanges, and about a month later on February 9th, all 3 major exchanges were forced to halt Bitcoin withdrawals – this bearish sentiment rippled across all of the markets, causing a huge dip of 16%. However, this wasn’t the only time PBoC fundamentally drove the price of Bitcoin down. The image below represents PBoC meetings or announcements related to cryptocurrency and Bitcoin’s performance following:
As we can see, PBoC loves to employ a healthy amount of FUD to Bitcoin, and my personal guess is this is simply how the wealthy elite get in position into Bitcoin – as the cryptocurrency can now not be stopped, and buying at All Time Highs always presents a level of unnecessary risk, it makes perfect sense for an organization such as PBoC to make announcements like these in order to drive the market down, buying the panic dips of unsavvy traders, and locking in a position before the markets move back up.
And this is absolutely panic, make no mistake – even completely unrelated projects such as Ethereum and Bitcoin itself have been hit by the sell side, with traders and novice investors losing confidence in the permanence of Bitcoins, thus putting a cap on the ICO hype, selling off their assets, and making a flight towards the perceived safety of Fiat.
Another example of this kind of manipulation historically was with the SEC and Bitcoin ETF news – this has been covered more thoroughly in this article by Jesse Livermore, however it is many of the same fundamental bearish news followed by a huge rise in value from these manufactured dips.
It is of the opinion of this author that there are large propaganda efforts made by these companies/organizations (especially in the case of China, who loves to manipulate markets) to buy the subsequent dips and profit immensely in a stagnating stock market world. Keep in mind that China loves to control their opposition – simply doing something like banning ICO’s would mean that China no longer has any kind of control over them beyond the ban. A regulation, however, fits right into the Chinese playbook and is what I expect in the next few weeks. Look for announcements from PBoC unbanning ICO’s or otherwise “regulating” them in the future, followed by large upwards momentum in the crypto markets.
The Bitcoin Propaganda Machine is one that is insidious and takes no hostages, and a trader/investor should keep constant vigilance to make sure they’re not playing into the hands of a third party looking to relieve them of their hard earned coin.