Well not really I guess, but I do want to devote this post to some rambling commentary concerning current events in the crypto world. I will try to be nice, but I can’t promise that some of this will not be off-putting to anyone who bothers to read this post. And, I will offer no concrete examples, just personal opinions based on personal experiences.
First, a little background. I am an attorney that worked in the real estate and default (foreclosure) industry before, during, and after the mortgage meltdown of the mid-2000’s. I either directly witnessed some aspects of the crisis, or heard firsthand accounts. And I can tell you from my experience, the explanations proffered by the ‘experts’ are either neat packages that do not come close to revealing the whole story, or flat wrong in my opinion. Also, as background, I have been involved with cryptocurrencies for quite some time. I got into Bitcoin in 2014, after the Mt. Gox fiasco, when it was trading in the sub-$300 range, and have watched charts/monitored forums ever since. I witnessed many blank stares as I told friends and family that I bought a little Bitcoin. Those that understood what that meant were likely to chuckle about it either when I left the room, or right there in plain sight. Every time I pressed the ‘Buy’ button in those days was almost always preceded by multiple aborted attempts, and followed by a feeling that I may have just set fire to hundreds of dollars. But, somewhere in there I believed that I was not buying enough, and that is clearly an understatement. Hindsight is 20/20, right?
What this is leading to is two things: 1. Markets melting down, especially cryptocurrency markets, is nothing new. 2. The eventual response is not a surprise. I reminded some friends who were lamenting the losses they incurred in the market even before the big drops experienced this past few days that barely two years ago Ether (the cryptocurrency of the Ethereum network) was trading for approximately $98. Even at the time of this post Ether is holding (barely) at $2,000, down from a one-year high of almost $5,000. Prior to this was the excitement of 2017 when Bitcoin exploded from its constant sideways movement to hit an all-time high of nearly $20,000. This was the moment of validation, and the time when people stopped chuckling and started asking how they could buy in. These conversations were almost always about what I thought was going to be the next winner because they ‘missed out’ on Bitcoin, which allowed me to chuckle because they obviously knew nothing about digital currencies. And, when the excitement and prices dipped, so did their patience. So, most of the people I talked with sold their small stakes for losses in frustration that they did not become gazillionaires in six months time.
2019 had some fun action. Then, this last round of monumental gains. Everything zoomed past previous all-time highs by orders of magnitude. We were flying high with no end in sight. Until it inevitably stalled and pulled back. These were natural market forces. As usual in cryptocurrency markets, it was hard to predict the next move. My unscientific feeling was we were in for a deeper correction. The general terrible economic outlook also had something to do with that feeling. I did not see the events of the last 48 hours coming, but they don’t surprise me in the least. Talk of market manipulation, people losing everything, all of it is no surprise. While I feel for people who lost big (and anyone currently invested in this market has lost big, at least on paper), I one hundred percent oppose any call for government action. The truth is, in my mind anyway, all markets are manipulated. When Robinhood, Charles Schwab, etc. ceased purchasing of Game Stop stock claiming overwhelming volume, but would certainly allow selling at the exact same time during the short squeeze executed by a group of small fish investors, that was market manipulation. It made me mad for sure. How dare these companies force action to protect large investors who were in the process of shorting companies out of business? But, I still wanted no part of government involvement. No one was going to be punished for this, not really. In fact, the government officials that did get involved in some way actually talked of investigating the little guys for wrongdoing. Which drives home the main point, any time the government gets involved in the interest of protecting consumers/investors, it tends to spend lots of tax dollars holding hearings, then pushes through legislation and rules that limit the ability of ordinary people to participate. The ‘protections’ apparently are designed with the belief that ordinary people are too ignorant to responsibly make risk assessments, so the choices need to be eliminated. So, I say resist the urge to cry to your congressperson. No matter what was lost. No good will come of it. The sad truth as I see it is that it won’t matter though. Governments are bound to intervene, even if not invited. As if they were impatiently waiting for the chance.
