Is Bitcoin Going Down for the Count?

Part Two in My Series

The Bitcoin/crypto space is crashing and burning following the collapse of the FTX exchange, prompting some to speculate on whether this will cause wider margin calls an perhaps cascading defaults. This article from Fringe Finance is interesting:

After FTX's Collapse, Expect Crypto Armageddon To Continue

I say that because it was written a little while ago and he thinks that if the $20,000 bitcoin price floor doesn’t hold, that’s when carnage will start. So what’s the bitcoin price at right now on this magical morning of 11/11/2022? Here’s the one year chart:

It looks like BTC is not holding the $20,000 line. I’m wondering if this is an intentional price demolition being done to keep the big banks top dog. It’s a space I’m watching.

On a personal note, as this is part of my financial series, I have thus far had zero luck getting into cryptocurrency. I’ve read about it for at least 10 years and understand the theory behind it. But I suspect that it became co-opted as the inflows become increasingly tied to currency, making it just another investment and funding vehicle just like all the other investment and funding vehicles. Since so much of it is owned by the top dogs, they can move it however they see fit. This article explains my skepticism quite well.

“Bitcoin claims to be a fully encrypted form of digital currency that offers total financial anonymity. But that’s not true at all. You see, there are two primary ways to buy Bitcoin. You can send and receive it directly from other Bitcoin owners using a “digital asset wallet” or “crypto wallet” and making the transactions directly on the blockchain, which is a ledger of all Bitcoin transactions. Or you can buy them through an intermediary exchange service like Coinbase or Bitfinex, similar to brokerage sites for stocks (like Etrade or Fidelity). When you use the exchanges, you have to jump through at least as many hoops to set up an account as you would to open a bank account, including several forms of photo ID, proofs of address, your social security number, etc. In other words, you have no more anonymity than a bank account holder. Even so, using an intermediary exchange is far easier and less confusing than doing it the direct, anonymous way with a wallet. Just Google “how to buy Bitcoin anonymously” and see how long it takes you to figure it out. It’s immensely confusing and technical. Strike one. This is why the overwhelming majority of all Bitcoin owners use intermediary exchanges – they’re a whole lot easier. But this means that Bitcoin is no more anonymous than a bank card, and just as subject to taxation as fiat money. Strike two. Another supposed value proposition of Bitcoin is that it’s decentralized. No single political entity or group has monopoly control over it, unlike fiat currency which is controlled and issued by the central banks. Again, this is bogus. Just look at the chart at howmuch.net and read the results: Over 95% of all Bitcoins in circulation are owned by about 4% of the market. In fact, 1% of the addresses control half the entire market. Please read that again. That’s an astounding fact. It means the power to influence the value of Bitcoin in the hands of a very select few. Consider that strike three. And what’s worse, there’s no way of knowing who these few are. This is where the anonymity of the blockchain becomes a drawback rather than a benefit. You have no way of knowing who the Bitcoin millionaires and billionaires are. Yet because they have most of the world’s Bitcoin, they have tremendous power over it.”

Back in the year of personal infamy 2021 it seemed like everyone was getting into Bitcoin. I had facebook ads and personal messages about how much money was being made every day with little or no work. Most of the ads were in retrospect quite scammy. They usually featured say an incredibly hot chick strutting in front of a Lamborghini with a seaside mansion in the background. The facebook ads tried to personalize this a bit more to my location with some stupid headline like “Bangkok man turns $1000 investment into $1 million! Click here to learn more!” The pictures and descriptions displaying the obscene wealth never looked or seemed remotely like Thailand.

I did indeed try to learn more. Though really I think this guy gets the top award.

I guess that’s why Sean Penn awarded him his Oscar for best actor. You can’t even make this stuff up anymore. The jokes just write themselves.

I had three problems that came up in trying to open an account, being that I am in Thailand (which they know based on the targeted ads/my IP address) but am actually a US citizen. And I am ONLY a US citizen, sadly, not one of those jetsetting multiple passport holders. The regulations for currency exchanges and crypto vary from country to country. Unknown to US citizens who don’t leave America for any length of time, a lot of foreign financial services don’t want anything to do with them. Due to FATCA regulations it would open their entire books to the scrutiny of US tax authorities. In a lot of countries (like Thailand) where it would not come up a lot, it’s easier to just exclude all US citizens from their services.

1. The first problem I had was screens that didn’t have a drop own option of US nationality. They commonly had ASEAN nations (like Singapore) and sometimes seemed to have a list of pretty much every country on Earth except America. This stopped me from moving forward on several exchange sign ups. One investment advisor wanted me to sign up exclusively in my Thailand husband’s name. I didn’t mind that, but my husband was having trouble understanding what the guy was saying (he had a middle East accent). But then there were going to be problems funding the account from my US based bank or credit cards. So no dice.

2. I decided to search up US crypto and investment accounts, which tend to lump together anyways. In a lot of cases these sites were not accessible from my Thailand based IP address. I was able to get into a few and one had a verification process of facial ID recognition, show my passport, et cetera. Maybe my smartphone is old but the picture was always too blurry and out of focus. Then it went back to some person at the company for manual review, but he never got back to me. I cannot fathom AI taking over the world. It seems to me there’s always some manual review process that has to be done after their electronic added layers of complexity. It seems to me that all these regulations create more human jobs.

3. The third was a straight scam in retrospect. They had a cult like always follow the teacher type of thing and needed you to use their affiliate links. You were either in the cult or out of the cult. And you could not talk about the cult with outsiders. Plus they were really pushy about me funding my account, with an “investment advisor” calling me every day about it. Unlike the others they didn’t seem to care too much where I was from, where I was, who I was or anything else. But the investment house was legitimate. What they had done is put a spoof site link for a legit site which had a keystroke logger on it, so they could grab your password and thus take out any money in the account. I was amazed that they were able to do this with such ease the money was gone like 12 seconds later. Surely the upstanding arbiter of truth that is facebook wouldn’t allow scams to be posted as ads on its site. I suppose it’s the simple common sense rule: if they seem to be aggressively pursuing you and it’s all about the money, you must fund the account right now over the phone et cetera it’s probably no good. I had to put in a fraud alert so after some hassle I didn’t lose out per say. But my credit cards curiously began limiting my credit limit to exactly what I had spent shortly thereafter.

That said I remain curious about the cryptocurrency space. I am much more interested in the money being A: Safe B: Easy to use for everyday transactions, with very low fees. Now I think that cash remains necessary, both due to infrastructure outages and because it remains anonymous. I think the biggest problem is that crypto is being used as a store of value instead of a means of exchange. But perhaps there are ways to democratize it.

Bitcoin Lightning Network Micropayments To Support Dissident Creators

I am curious what your experience or opinion of crypto is. Do you think the whole space is going down? Or does it just need to get the kinks worked out?

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