Will Bitcoin fall back to zero?

Its history of bubbles and crashes is marked by an almost continuous increase in interest from both institutional investors and individuals. The first of the cryptocurrencies continues to be threatened by its success…

Seeing the collapse of the legal system, Voltaire wrote: “Paper money always returns to its intrinsic value, zero, based on its sole reliance on the government that prints it. »

When FTX and its nebula of satellite companies, valued at several tens of billions of dollars a few weeks ago, are no longer worth anything, one can question whether Bitcoin, like any paper currency, will return to “0”.

For this, let’s go back to the very beginning of its history.

Bursting bubbles in succession

Officially, Bitcoin was born on January 3, 2009, the day the source code was released. The first exchange opened in March 2010, when Bitcoin traded at $0.003 among several insiders. The first transaction with real goods took place on May 22, 2010. Laszlo Hanyecz (one of the first Bitcoin developers) paid his bill for two pizzas with 10,000 BTC…or $30.

Investment prices begin on July 18, 2010, and on February 9, 2011, it will reach the insane value of $1 for the first time – 333 times its initial value. What a bargain! But in reality, the breaking of this resistance will open the way for a real speculative bubble.

Thus, BTC will experience exponential growth and on June 8, 2011, it will rise 10,000 times its starting price to $32 in just 11 months.

Like all speculative bubbles, this one will burst and prices will drop sharply to $2 for a long consolidation.

In 2013, a new speculative bubble will emerge with an exponential rise, bringing the price to $280. This will be the first leg of another crazy push to $1,245. At the end of 2017, prices will spike to $19,798 before falling to $3,349 in January 2019. Everyone else knows this: Bitcoin will make two violent upward waves, which will bring its price to $69,000 on November 10, 2021.

Since that famous November 10th, prices have fallen, and one bitcoin is worth about $16,200 at the time of writing. This represents over 75% consolidation from above.

Without being an expert on the subject, Elliott waves are known to go up or down in 5 years. In the chart above you can see the first 4 waves, 2 lower impulsive and 2 corrective. For the layman that I am, there is no fifth bearish impulse that can bring prices back to “zero”.

The next step for cryptocurrencies

For me, who remains a (frustrated) observer, Bitcoin is, on the one hand, an experiment sponsored by the monetary oligarchy that wants to test digital currencies, on the other hand blockchain, On the other hand. This first prototype, which consumed a lot of energy, showed its limits. It’s the Ford T compared to the Ferraris that have come out since.

Crypto maniacs will claim that Urbi and orbi, said that the concept of “blockchain currency” is a currency that is finally freed from States and banks, while the very concept of a currency is to remember all transactions. Its most advanced version will thus allow transactions to be allowed or disallowed according to the criteria set by the game master.

I assumed from the beginning that when central banks launched their own digital currencies, MNBCs, they would somehow clean up the sandbox of libertarian cryptocurrencies. However, the New York Fed began an experimental phase of the electronic dollar on November 15 with 12 of America’s largest banks. This version of the electronic dollar is designed to speed up interbank transactions at a lower cost than SWIFT. There will be no consumer currency yet.

The BoJ, for its part, is experimenting with the e-yen with the three largest Japanese banking groups. Timely.

“Krypto” means hidden in Greek. Prager Metis, one of FTX’s accounting audit firms, is proud to be the first accounting firm headquartered in the metaverse, that is, a fictional universe.

The recent high-profile bankruptcies in the field of cryptocurrencies may cause a domino effect in the sector, but will certainly lead to a tightening of financial authorities.

Bitcoin, according to its fans, is a hedging The decline against the dollar is similar to gold, the dollar has been suffering from a sharp rise for a year. Since the end of September, the correction of the dollar (visible in the Dollar Index) has only allowed a horizontal consolidation of BTC.

At the same time, falling stocks and bonds exacerbated the latent liquidity crisis, forcing investors to sell their leveraged Bitcoin positions. This should, in theory, make BTC’s actions less violent. Nevertheless, the S&P 500 rose above 4,000 points last week, even though the curve of the difference between the 10-year and 3-month bond yields points to a serious short-term decline.

As in 2001, 2008 and 2020, margin calls during a stock market crash force investors to sell anything liquid. Bitcoin should not be an exception.

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