The current state of the market, which has already been dubbed the “crypto winter,” causes a considerable number of investors to have two questions: “Who is to blame?” and “What to do?” As analyst Phillip Nunn noted, if you recently saw the price of Bitcoin at $3,500, you should not complain about why it is so low, but you need to think whether there will ever again be such a situation in the history of this cryptocurrency when you can buy it for such a small amount of money. Crypto enthusiast Bobby Lee, brother of Tom Lee, the founder of Fundstrat Global Advisors, draws attention to the fact that buying cryptocurrencies in such a market is not easy, because it is easy to feel like a “black sheep” when most people sprinkle ashes on their heads and sell crypto coins. These are all reasonable assertions but do current and potential investors in cryptocurrencies listen to them?
The Negativity in the Media Has “Crushed” Bitcoin
As already analyzed by DeCenter, Bitcoin shows an enviable zero correlation with many market parameters; however, the influence of media publications on investor sentiment can hardly be overestimated.
The Clovr company summed up the study of articles about cryptocurrencies, which were published from 2013 to the beginning of this year’s fall. In total, 7,500 publications were in the focus of attention. It turned out that for three years in a row, before the beginning of 2017, there were more positive publications about cryptocurrencies than neutral or negative ones. In the first months of last year, however, the gradual “coloring” of most articles began in a neutral color, and when the cryptocurrency reached the historical maximum, the “black paint” of negativity began to dominate. After that, the decline in cryptocurrencies was accompanied by an increase in their negative coverage.
Traditional Financial World Is Ready to Face Its Extinction
What does this mean? For a long time, there was positivity even in traditional media, but then it changed to negativity. Apparently, the world of conventional finance has come to the understanding that cryptocurrencies are not just a transforming force, but a disruptive one, that is, they are not “transforming,” but “destroying” the principles of the work of classical finance.
This fact was shown in a recent study of sentiment in the banking environment in Belgium, one of the key countries for European finance. It turned out that 62% of bankers were convinced that soon, banks might just disappear as unnecessary structures, and the entire range of financial services provided will “move” to decentralized platforms. This kind of research almost never lands on the pages of leading business newspapers and magazines of the world, even though in this case, for example, there is an influential National Bank of Belgium behind it.
Society Is Determined to Support Cryptocurrencies, But Not Necessarily Bitcoin
Meanwhile, various measurements of public opinion show that the global community has matured an enormous demand for changes that are expected from traditional financial markets. Generation Z, that is, those who are no older than 22 now, most clearly demonstrates their opposition to working with traditional financial institutions, including banks with their bank cards.
Such sentiments, however, are increasingly becoming mainstream, even if crucial business publications in the world “do not notice” this. 94,894 people took part in a large-scale survey on the Twitter account of ex-Congressman Ron Paul, of whom only 2% said they were ready to accept U.S. dollars as an investment gift against 50% who spoke in favor of Bitcoins as a symbol of cryptocurrencies (other crypto coins were not offered as an option). Analyst Ren Neuner, having conducted a similar survey, but adding different crypto coins, received answers from 15,816 people, 93% of whom preferred to have any cryptocurrencies rather than, for example, bonus miles to save on air travel. It is curious that in the study of Neuner, as well as in the surveys that followed him on Twitter accounts of entrepreneur Wolfman, Cryptojabroni, and eToro analyst Mati Greenspan, Bitcoin lost the competition to other crypto coins.
All this also reflects the pessimism that has spread in the traditional media, which have chosen the oldest crypto coin as the primary target for their negativity. It is noteworthy that even representatives of the cryptocurrency community, in particular, Samuel Leach, come up with a subtle rationale for the possible “death” of Bitcoin in the face of competition with other cryptos.
Bitcoin Pessimism Has Failed
It is not surprising that against this background, public opinion polls showed that 74% of respondents did not believe that Bitcoin would be able to overcome the $8,000 mark by the end of the year. It is important to note that this survey gathered a large number of representatives of the cryptocurrency community, and nevertheless, there is pessimism. What we can say about the poll on the Twitter account of Charlie Bilello, research director of the New York-based company Pension Partners: 86% of 3,358 respondents are sure that Bitcoin will not be able to rise above the level of $4,200 in the next 12 months.
The survey was conducted on November 21, and after that, Bitcoin was able to reach the level of almost $4,500 in a week, that is, the majority of Bilello’s subscribers, including a significant number of his colleagues, who are professional portfolio managers, were mistaken.
Mass Purchase of Cryptocurrencies at Present Is Real
For a small number of players in the market, especially whales, it is clear that at present, there is an excellent opportunity to buy even more cryptocurrencies before they rise in price again. From here, we see that the largest investors have now increased their investments, for example, in Ether. The situation is the same for Litecoin. But there is no such information about Bitcoin. It seems that the No. 1 cryptocurrency was betrayed, and not only by traditional financial institutions, but also, apparently, by some representatives of the cryptocurrency community who have “dumped” it, seeing it as an unnecessary competitor.
False Modesty Driven by the Rise in Bitcoin Prices in December 2017
In addition, instead of closing ranks, we see that representatives of the cryptocurrency community are beginning to “repent” that Bitcoin price skyrocketed in December last year, laying the foundation for the doubt that this cryptocurrency could grow so “naturally.”
This is evidenced by Michael Casey from the Massachusetts Institute of Technology, as well as analyst Jill Carson, who assert that last year, interest in Bitcoin was extremely speculative. Meanwhile, there is nothing speculative in expecting that an asset that has an ideal formula for limiting its own supply on the market cannot just grow in value, but demonstrate a constant, long-term growth trend, which Bitcoin shows, despite the current downward correction.
The U.S. “Offended” by Cryptocurrencies That Subvert Sanctions
Only a speculative motive can explain the reluctance to invest in Bitcoin when it is so attractively cheap. It is hard not to suspect someone attempting to derail the price of this cryptocurrency even lower. It is no coincidence that the authors of the change.org petition demanding to “stop the fall of Bitcoin” addressed it primarily at American regulators: the U.S. Federal Reserve, the SEC, and the CFTC.
Although the source of pressure on cryptocurrencies should be sought even further in the Office of Foreign Assets Control (OFAC), a division of the U.S. Treasury, which is responsible for developing sanctions. There is an obvious link, as at the G20 summit that took place from November 30 to December 1, it was decided to adhere to the FATF recommendations regarding the regulation of cryptocurrencies, which deals with countering financial crimes at the global level. Meanwhile, the President of FATF, Marshall Billingslea, who is also an assistant U.S. Treasury secretary, demanded that member-states of FATF urgently “regulate” cryptocurrencies, proposing to simply ban them if “any risk is detected.” And the main “risk” that came to light is that the existence of cryptocurrencies nullifies the financial sanctions of the United States, which became apparent when failing to block the work of two Bitcoin addresses that are associated with Iran, which fell under American economic restrictions. It is clear that the cryptocurrency community should be opposed to the actions of the U.S. authorities, which are aimed at restricting Bitcoin and are determined by political motives.
The Image of Cryptocurrencies Is Most Important
Reporting objective and positive information to users of news agencies and readers of traditional media, including the Internet, is what is called “public relations.” But who will do this on an ongoing basis in the case of Bitcoin? Obviously, such work is necessary, and the decentralization of this cryptocurrency does not justify the fact that, in essence, there is no focused work with traditional media.
What are the owners of vast fortunes in Bitcoins doing? On August 20, the billionaire Winklevoss brothers founded the Virtual Commodities Association, but its main goal is to create industry standards. There is also no focus on working with the media and the general public among the purposes of the recently established Association for Digital Asset Markets. What is most important then? The WTO report on blockchain and cryptocurrencies states that the main thing for cryptocurrencies is infrastructure development, and this requires investment. The partner of Morgan Creek Capital, Anthony Pompliano, also adheres to this point of view, considering that it is even more critical than “buying cryptocurrencies on centralized platforms.” Not everyone, however, agrees with this opinion. One of the founders of Ethereum, Joseph Lubin, is sure that the main thing is people, not technical solutions.
But still, it can be said that the main thing is an appealing message, which is very important for any product or service that pretends to be global, and cryptocurrencies are such an asset, a message that traditional media will not be able to ignore. Improving the efficiency of transactions using cryptocurrencies is billions of dollars saved on migrant remittances. It is also charity that receives an incredible push thanks to crypto coins. All these are small examples of what traditional media would have to write about.
Cryptocurrencies as a Way to Resolve Global Problems: A Step-by-Step Solution to the Pension Issue
Joseph Lubin is confident that cryptocurrencies can solve “world class” problems. So why shouldn’t the whales go so far as to promote a cryptocurrency solution to the global pension problem, which concerns many countries, ranging from the USA and Canada, ending with France and Russia? Russia now has $461.8 billion of reserves. A large part of them is kept in U.S. dollars, whose issuer, in its recent first report on financial stability, unequivocally warned that the U.S. national currency might roll downhill along with other assets.
The capitalization of all Bitcoins now is slightly over $61 billion. It is enough to invest $10 billion in them, first, by 2020 to bring the level of Russia’s international reserves to $1 trillion; and second, to set a new trend to address the issue of improving the welfare of retirees around the world since the more countries develop their retirement plans based on investment in Bitcoins, the more expensive this asset with finite supply will become.
All this seems unlikely to some, but it is the country that first invests its reserves in Bitcoins that will be able to provide its population with the maximum gains. Whether it will be Russia, the United States, or France only time will tell, but the fact that such a development is irreversible is obvious.