Back in late 2013, the world witnessed the impossible. At the time, an unknown digital commodity called “bitcoin” soared from obscurity and into $1,000 territory. Seemingly in one burst, this next-gen investment overtook the likes of Google (when it was known as Google) and Amazon — actual companies with a bright future. Few could have imagined that it was actually the cryptocurrency markets whose flames would cast a more luminous light.
Of course, within days of breaching that mercurial target, bitcoin prices began to show serious weakness. By a month later, the bitcoin collapse was in full swing. Eventually, the cryptocurrency would slip badly, falling into $200 territory. The mainstream media sat smugly, scorning those who had invested in the fervor. Really, who could blame them? If you had bought into blockchain assets at or near the 2013 peak, you essentially absorbed an 80% hemorrhage.
Today, it may seem like the history cruelly repeating itself. Indeed, we are in the midst of another bitcoin collapse. At its record intra-day milestone, the digital coin peeked into $5,000 territory. Just 24 hours ago, bitcoin prices dipped below $3,000. In theory, those enthusiastic bulls that bought bitcoin at $5,000 lost an eye-popping $2,000 in two weeks.
In any other investment industry, losing that much money in such a short period of time is more than enough to justify job termination. But in the cryptocurrency markets, it’s simply par for the course.
First, if we’re going to analyze blockchain assets, we have to look at the entire context. The reason why alternative news sources like Crush The Street often question mainstream news is that the bought-and-paid-for major news conglomerates frequently look at one side of the picture. Regarding the bitcoin collapse, they ignore the fact that bitcoin jumped over $700 in less than 24 hours. In other words, the massive bitcoin collapse also generated a massive buying opportunity.
Second, we need to look at an apples-to-apples time table. Much talk is made about how quickly the bitcoin collapse destroyed its own market capitalization. But the 13 days during which bitcoin dropped 40% of value is the equivalent of 48 “Wall Street days.” Remember, the stock exchange is only open for six-and-a-half-hour intervals. Considering that stocks don’t trade during the weekends, these two weeks of falling bitcoin prices is actually equivalent to nearly 10 weeks on Wall Street.
Third, and most critically, blockchain assets represent truly free markets. Sure, the mainstream media may sharply criticize the astounding bitcoin collapse. But in the cryptocurrency markets, we don’t have a plunge-protection team, no artificial hand to give traders a “cooling off” period. It is this point that is truly and dubiously remarkable.
Wall Street prides itself as being the bastion of capitalism. Nothing could be further from the truth. In any other industry, if you make a mistake, you will pay for it. In high finance, the bigger your mistake, the more likely the government will step in to save you.
This is one of the basic reasons why I’ve largely given up on mainstream investing. No matter what you do, at the end of the day, you are controlled. If you want to trade outside of New York hours, you can’t. If you want to participate in post-closing bell transactions, you’re denied.
In fact, the “paper markets” give you every reason not to believe in their authenticity. Blockchain assets, on the other hand, operate under the true dynamics of human psychology. If something freaks out the masses, then you will see sharp corrections and collapses. On the flipside, mass enthusiasm will generate unbelievable valuation rises.
It’s all relative, but most importantly, it’s all free.