The Bear Market Is Bitcoin’s War Of Shitcoin Attrition

And as the war rages on, the tide that raised all boats now slowly evolves into the drought that has stricken the land of cryptocurrency. Only the strong will survive a prolonged crypto-winter.

Dec 5, 2018 · 6 min read

As the bear market nears close to a full 12 months since it reared its ugly head, the reality that approaches in the sobering light of day is one of blind excess, stupidity, business and treasury mismanagement, topping it all off with sheer and utter greed.

What will come next exactly I’m not sure. If the prolonged bitcoin bear market lasts another 12 months it will definitely hurt, but it will also help cleanse crypto of stupidity and charlatans. Darwinism in full effect.

Classic Crypto!

The recent story of ETCDev shutting doors will be echoed in the hundreds more crypto businesses and ICO’s yet to capitulate in the coming months. A story of mismanagement and greed that can no longer be hidden by the ability to sell overvalued tokens into a hyper-speculative market full of immature retail speculators.

The unfortunate reality is that speculative money tap has ran dry and may never turn back on, even on the return of the bulls.

Another one… Who’s next Khaled?

Cold Hard Crypto Truth

Much of crypto is extremely poorly managed and continually subsidised by the stupidity of the retail ‘investors’ purchasing tokens to speculate on profiting from them.

Very soon, without the return of a bull market to crypto, how poorly managed and subsidised these businesses and startups are will finally begin to become evident.

Just how deep this whole rabbit hole goes is another story. I believe that the vast majority of ICO’s made crucial mistakes in how they managed their treasury, many were indeed just sniffing their own farts and maintaining an almost total crypto treasury, and many were relying on their token price to steadily rise in value, and for a strong secondary market to exist to sell it in.

Riddle Me Something…

How many ICO’s rather stupidly kept almost their entire treasuries in ETH thinking it would keep going up? How many are still holding heavy bags of ETH at a monumental loss? How many panic sold that ETH at massive losses?

Why? Were they bold, brazen, or just plain stupid?

Sharks & Whales

I once heard a remarkable tale from a very close friend of mine, that at the height of the bull market a local Australian ICO’s CEO was drunkenly bragging that they were ‘drowning in ETH and were now ‘filthy fucking rich’… Only to hear some short months later that same ICO was seeking additional external funding due to approaching the end of their capital runway, and without further fundraising, they would soon enter insolvency. Feels bad man.

They were greedy. They were stupid. They spent money they didn’t have. They flew all around the world first class selling themselves on your dime. They were subsidised by you and they expected a pot of money at the end of the rainbow whether they delivered a working product or not. They thought markets only went up. Tough shit. This is reality son, buckle up.

Dear Cryptogods, your terribly unprofitable business model cannot be saved long-term merely by adding cryptocurrency, tokens, or blockchain. Geddit?

The Emperor Has No Clothes

Entering a period of prolonged weakness for bitcoin has begun to unravel the false value assigned to many altcoins and tokens.

While BTC’s large movements either drives most the entire market up, down, sideways or anywhere in between, many alts have lost in the regions of 80–95 per cent of their value versus BTC alone in this market.

Bitcoin has itself lost roughly 80 per cent of its value from its ATH against the US dollar, which means that treasuries kept in crypto have borne both the cost of heavy losses against BTC value and the USD value. Losses on losses. Ouch.

The entire cryptocurrency market given enough time is directly correlated to BTC, and the bear market eventually reveals who truly has no clothes.

I believe the entire alt market to be largely illiquid and mostly consist of numbers on the screen. One small push by a whale in either direction slips their entire market cap seemingly creating or destroying millions of dollars of value out of thin air. The market cap of most cryptocurrency beyond bitcoin is largely fictitious, and the token supply is gamed by the creators to give the illusion of a large amount of value backing a project. There isn’t.

Is 2019 The Year Of Rekt?

If we don’t see a return of the bulls early, unless ICO’s demonstrated some semblance of intelligence and converted the majority of their treasury to dirty fiat early in the game (or at early signs of weakness), they will begin to collapse like dominoes, one by one running out of money and folding.

Better yet, many will soon be running out of their treasury funds and needing to seek external investment. This investment may at times require a complete restructure to the business and the eventual removal of the wasteful and/or illegal token economy. Colour me surprised when this happens to a few ‘gems’ I’m tracking.

This Is Crypto

With the lack of bull market hysteria bringing in retail buying pressure for useless and overvalued ‘utility tokens’, there is absolutely no chance of most of the cryptocurrency market surviving their unprofitable business model in a prolonged crypto-winter.

Rent seekers without renters will go broke, this is pure capitalism, this is crypto. I won’t shed a tear for the rent-seeking parasites.

Warning, many projects are already closing in on insolvency, skullduggery & fuckery will now be afoot. 🤬 Watch out for bull traps set up by borderline broke ICO’s and founders looking to fool punters and exit/or survive a few more months by dumping tokens into the market.

They will use every trick in the book, from paying market makers to create bull traps, bribing influencers, to backing it all up with hyperbolic news full of meaningless buzzwords and partnerships that will never truly mean anything to the price. Don’t fall for it again.

Be Vigilant

There may be some truly great hidden gems that are down 90+ per cent from all-time highs and are absolute bargains in this climate, but there is going to be just as many that will never return and whose founders have been slowly selling their treasuries to the market. Now isn’t the time to double down on stupidity. Do your research!!

In the bear market, any project that doesn’t tick the box of total transparency and a booming healthy project that is meeting and/or exceeding milestones should generally be avoided at all costs.

Be Ready

While BTC is the tide that raises all boats, it subsequently doubles as the alcoholic step-father. When bitcoin goes on a tear, alts can get bled dry. Already 95 per cent down? You can always go down another 95 per cent.

All it takes is for bitcoin to wake up to make your already hurting alt heavy folio bleed even more. Everything is correlated to BTC, so balance your folio wisely. The only way to truly hedge against bitcoin is an uncorrelated asset class outside of crypto, not by diversification inside crypto.

Rory Highside

Written by

The opposite of populist cryptocurrency commentary. Rory is a contributor for CompareAndInvest.com.au and a moderator for CryptoAustralia.

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