On November 14th 2018, the entire crypto market began to bleed. While some might correlate this event with the upcoming BCH hard fork and speculation that Craig S. Wright is an angry Satoshi who uses #fullbillionairemode to destroy his creation like an Old Testament deity, it’s most likely not the case.
There is so much more to this $200 billion market than a Bitcoin hard fork which gave the big block advocates a revitalized sense of purpose. This time we’re witnessing a seemingly-coordinated dump which comes directly from the whales. Otherwise, how could all the top 100 cryptocurrencies that aren’t stable coins crash within minutes around 11 AM EST?
We can probably look for reasons and point fingers all day, but perhaps it’s better to just point out some facts: stable coins like Tether (USDT), True USD (TUSD), and US Coin (USDC) have shown a negligible increase which hardly exceeds one percent, BCH’s loss is proportional to the BCHSV (Satoshi’s Vision) increase, and this year’s Black Friday is quickly approaching.
Black Friday discounts too appealing to miss
Now that we can see that the money withdrawn from the crypto market didn’t pour into altcoins, then it’s probably safe to assume that a series of fiat withdrawals have occurred. Though 2018 has been an incredible year for institutional adoption, the merchant side didn’t seem to catch up – and it’s mostly due to the volatility and ambiguous fiscal policies.
Furthermore, we know that exchanges can take up to a week to process fiat withdrawals and Black Friday takes place in exactly nine days. If you’re a cautious consumer, then you must take into account processing delays and make sure that you get your dumb money just in time to buy some gifts for your loved ones.
We’re still light years behind in terms of seeing major merchants accept Bitcoin, and confusing legislation and clueless lawmakers add to the problem, forcing even the most crypto-savvy of us to use fiat, at least for the time being. At least we know that spending government-backed currencies is a wise idea, as inflation constantly lowers their value.
The Jimmy Song argument for spending with fiat.
In October 2018, blockchain programmer and Bitcoin advocate Jimmy Song made a seemingly-outrageous comment in regards to spending. Using an economic rationale, he basically explained that it’s silver that we should be spending thanks to abundance and low chances to appreciate in the future, not gold.
Therefore, it makes much more sense to spend with your credit card and benefit from the advantages such as no fees and bonus points, and only make Bitcoin payments when necessary. Ideally, you should hold onto your sound money and use lesser valuable liquid assets, like fiat. You can find out more about Jimmy Song’s rationale by watching Crypto Insider’s exclusive interview.
How is this argument relevant? Well, it’s likely that some whales have run out of money and need to buy some gifts. Not all Black Friday stores accept BTC and the timing is just right to manipulate the market sentiment. If it all goes well, they can buy at a lower price whenever they decide to return. Maybe that their credit cards have reached the overdraft point and require some fresh fiat that can only be obtained by selling some BTC (which always brings the entire market down).
Tone Vays might have been right too.
Now let’s stop speculating on the BCH drama and Black Friday consumerist habits for a little bit and give credit to Tone Vays. Last month, he was laughed at for opening a short position around the $6500 price point for Bitcoin. At the time, some commentators speculated that he’s irrational because the price seemed stable around that range and it appeared to have reached the absolute bottom.
Well, the former S&P500 trader was right in his prediction and maybe he deserves some apologies. On the other hand, this drastic drop doesn’t look like something that graphs can predict and is more akin to good old market manipulation. Losing more than $500 off the value of Bitcoin in one day isn’t quite something that technical analysis highlights.
Tone was right.
— John Carvalho (@BitcoinErrorLog) November 14, 2018
Brief pumps in XRP and BCH have also reminded the entire community about the sweet taste of a bull run, and maybe that the market sentiment has been influenced by these increases. We wanted to believe so badly that the bear market would end soon that we were blinded by our faith and got rekt. So consider this an acknowledgment that Mr. Vays was the more rational actor in this story.
In conclusion, whales need discounted Black Friday gifts too.
This explanation makes so much more sense than acknowledging that CSW is an angry Satoshi or looking at other FUD sources. There’s no rational reason for the entire market to drop so quickly and drastically other than looking at future events from our spending cycles.
Buying your Christmas gifts on Black Friday is a rational choice from an economic point of view. And if we consider that crypto whales are also rational actors, then we can agree on this reason. The reason of this quasi-humorous and ironic conclusion isn’t to diminish the importance of the BCH fork (which in itself is a fascinating event from a technical and political perspective), but to suggest that there might be broader reasons behind our narrow crypto market-centric views.
There’s always something big to look for in the outside world, and it’s good to pay attention and try to find correlations even though they aren’t the only cause. Now the only questions that remain are “Have we hit the bottom?” and “When moon?”.
Crypto Insider has contacted Tone Vays to comment on the situation. His response was the following:
There is no market manipulation, I have been talking about a swift break down from 6k to 5k for over 3 months. This was going to happen with or without any news event, the charts told me – Tone Vays
There is no Market Manipulation, i have been talking about a swift break down from 6k to 5k for over 3 months. This was going to happen with or without any news event, the charts told me.
— Tone Vays – TheFinancialSummit.com (@ToneVays) November 14, 2018