New week in crypto. Tension grows, China Cracks Down on Cryptocurrency
A week ago, rumors began that China was looking into banning Bitcoin, or shutting down Bitcoin exchanges. On September 15th, several cryptocurrency exchanges including BTCC, ViaBTC, OKCoin, and Huobi were reportedly told to stop trading by the end of September. This comes just after a statement from China’s Internet Finance Association, who stated this Wednesday that Bitcoin lacks a legal foundation.
It’s clear that China’s actions will have a negative impact on the cryptocurrency field in general, considering that 23% of Bitcoin trading activity happens in China. The future of cryptocurrency in China is currently unclear. Some people believe that Bitcoin exchanges will re-open once additional regulations by the People’s Bank of China (PBOC) have been set in place.
Santiment Insight: There is a famous saying “buy the rumors, sell the facts”. It works perfectly fine in the opposite direction too. As the market was falling with the “China bans crypto” news, we were telling our community “sell the rumors, buy the facts”. Since then, the market has magically recovered. Wait for South Korea to regulate crypto too and you might see the pattern repeat.
JPMorgan CEO Refers to Bitcoin as a “Fraud”
Last Tuesday , Jamie Dimon (CEO of JPMorgan) went on a vicious attack against Bitcoin, referring to it as a “fraud”. “It’s just not a real thing, eventually it will be closed”, he said. What Dimon means by Bitcoin being “not a real thing” isn’t entirely clear. Dimon later joked that his daughter bought some Bitcoin and “now she thinks she’s a genius”.
Dimon also made several references to the Tulip Bulb craze of the 17th century, stating “[Bitcoin’s] worse than tulip bulbs. It won’t end well. Someone is going to get killed.” He added on to his comments by stating “Currencies have legal support. [Bitcoin] will blow up”.
Dimon stated that he’d immediately fire any JPMorgan trader who was trading Bitcoin because “It’s against our rules and they are stupid”. Ironically, later in the day Dimon warned about further declines in trading revenue for JPMorgan, stating that third quarter trading revenue will drop about 20% on a year-over-year basis.
Santiment Insight: This point is more basic psychology than real insight… but, someone from Wall Street talking about fraud? Well, he knows what he is talking about, right?
Former SEC Chair says “Cryptocurrency is Here to Stay”
Arthur Levitt, the longest-serving chairman of the SEC, believes that “cryptocurrency is here to stay”. In an article from the Washington Post , Levitt said that Bitcoin was “quite speculative” but that he would “consider investing in companies that use bitcoin, or trade in bitcoin”.
In the same Washington Post article, several other people reiterated Levitt’s view. Kevin Werbach, professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania, stated that “I’m a bull about the technology behind Bitcoin, but I don’t buy it because I don’t have confidence that I can predict the price.”
Chris Catalini, an expert on the economics of digitization, said most cryptocurrencies today will probably not exist a decade from now. “They are highly speculative assets and extremely risky investment vehicles,” said Catalini, assistant professor at the MIT Sloan School of Management. “Right now there is a very high level of enthusiasm about crypto tokens and blockchain, and this has resulted in unrealistic expectations about the
value of some of these tokens”. Catalini also stated that “it’s easy to dismiss Bitcoin unless you focus on what the major technological breakthrough behind it means for digital platforms. With bitcoin, you have the ability to exchange a scarce, digital token across the globe without having to rely on an intermediary. This is a fundamental change in how we transfer value across the globe and how we design marketplaces.”
Santiment bottom-line insight for this week: It’s clear from our set of facts that we have conflicting signals about the mood of the market. Some are seeing a bright future, others show concern but not panic, and still others believe crypto is a Fraud/Ponzi scheme. Long-term, these signals mean we have room for growth. Short- to mid-term, we are likely to experience corrective moves in the coming weeks, if not months. These moves can send the price of BTC up to $4000, $5000, or even an ATH (all time high), then down again to $2500. Newcomers might now see that there is no “easy money” in crypto. Rather it’s pretty painful and psychologically uncomfortable during times of correction.
More on it, together with some charts and deeper price analyses in our next weekly update. The founder and CEO of Santiment.net is drafting this next coming update.
