Offering a few quick thoughts on the recent Mt.Gox trustee news: Meet The ‘Man’ Who Crashed Bitcoin In 2018 from zerohedge. The recent bitcoin price crashes were possibly driven by the Mt.Gox trustee selling large batches of bitcoins to recover fiat money to make Mt.Gox creditors whole.
Some of the bitcoin wallet transactions overlayed on a price chart. Bitcoin sales are assumed to have occurred soon after the bitcoin transaction to the exchange:
Grim, but funny in a sad way:
So let me get this straight.
1. I lose my BTC at MtGox in 2014
2. Slowly trade my way back from nothing, staring at the charts every day for 4 years
3. Finally reach back to where I was
4. Long on BitMEX
5. MtGox trustee wrecks my long by dumping my own goddamn coins on me?! https://t.co/mlsBvDL5tw
— Eric Wall (@ercwl) March 7, 2018
More sales are on the way:
Here are some thoughts:
Timing and Method
These coins were going to be sold eventually, this was just a question of when. The Mt.Gox trustee could have used Over the Counter (OTC) markets to try and sell the stash on dark pools so that it didn’t necessarily all hit an exchange at once, to limit the impact. But in the grand scheme of things, this is not a huge deal, it just means temporarily cheap coins.
What’s promising about how it played out
The fact that people were (and still are) clamouring to buy more bitcoin after each dump is a good indicator. It’s not that the demand for bitcoin died and people went to other cryptocurrencies, these people continually bought bitcoin (mostly).
The ‘strong hand’ / HODLer mentality
The truly strong hand veteran HODLers do not care. They care about the long term vision for bitcoin. Along the way, of course there will be some mass bitcoin sales, as whales sell their stash down. Even if we have more periodic cycles up/down, these are more chances to accumulate more bitcoin cheaply.
From the bitcoin maximalist view, your future net worth will be measured in BTC. So any chance to cheaply acquire more BTC now is an exciting opportunity.
Cost is what you pay, value is what you get
If anything, from the HODLer point of view, it’s a great time to accumulate more while the Mayer Multiple is low.
Fundamentals are virtually unchanged
- The SEC appears to be cracking down on ICO’s, but not on bitcoin
- Bitcoin’s development is proceeding rapidly with many new technologies coming in the pipeline (see Rusty’s talk here for an overview)
- Lightning network is coming online with many people on testnet and mainnet
- Institutional money is still looking for ways to get into this space once custody and other related issues can be solved
- Retail investors are just getting started and we’re probably still <5% adoption overall
- Governments continue to inflate their fiat currencies, and continue to impose capital controls. There is also discussion of banning high denomination cash notes, which also drives people into the arms of cryptocurrencies.
Given the above, why wouldn’t I be bullish?