Wall Street missed the boat. They are late and they know it, but the question is; will it really make a difference in the end? I am not so sure, and here is why we are in for a bumpy ride for a little while.
Accumulating Bitcoin is cheapest through trading; selling high, accumulating more at a lower price - standard. It also serves correct that the more you own, the more you stand to accumulate in the dips. Sure, publicly, Wall Street says it is hands off. Bitcoin is too volatile claimed Goldman Sachs, though reportedly also opening a cryptocurrency trading desk in 2018. Accumulation is king, and the fixed supply of Bitcoin makes accumulation without question the most important aspect of dealing in any financial product related to Bitcoin. The market cap is currently tiny enough to be easily manipulated when a selloff is initiated on the heels of negative media attention, ‘FUD,’ hacks, or a large price spike.
The more Bitcoin you accumulate, the less of your stash needs to be used to assist in market panic - inherent in Bitcoin and cryptocurrency - which ensures a few things. It ensures less Bitcoin will be available in the markets, which will help keep the pullbacks from catastrophic levels and reduce investor confidence. It will help maintain more robust resistance levels, prop the price in dips, and here is the big one - it will drive the price up, way up, over time.
Yes, I am talking manipulation, and we may have never seen a more prime asset class than cryptocurrency. Nice try, Jordan Belfort.
Bitcoin has allure for a few reasons, but only some are important for market manipulation. King among them is supply. Bitcoin is limited to 21 million, and we can all agree that it is highly likely some 15% - 20% of that has already been lost in the misplacement of private keys. Satoshi Nakamoto owns 1 million Bitcoin which has never been touched and I will suggest they never will be. At the current price, it is highly unlikely that many private keys will be lost moving forward, but when Bitcoin was pennies, we know a lot was taken off the board. The volatile history of Bitcoin is also important, because if we have learned anything about Bitcoin over time, we have learned it is resilient. It always comes back, and as the financial products on Bitcoin increase, regulation is set, and Bitcoin is seen in a more mainstream and favorable light, crashes and pullbacks will not scare investors the way they do now, and they will become smaller.
Big money factions the world over will own the majority of the asset, with retail investors still trading, potentially using Bitcoin as digital cash as it was intended - if it can solve today's scaling and speed challenges, which I believe it will - and as an investment. The price will skyrocket as the Winklevii predict - I strongly agree with them - and Bitcoin’s price will be far less volatile, far less of a risk, and more people than ever will be involved, they just will not own a large piece of the pie.
If one Bitcoin is worth one million dollars in a few years - or close to it, slowly selling off their stash will not spook the market, and more importantly it will return so much profit on those accumulating at today's price, it will be one of the greatest plays in Wall Street history. There is no missing the math, the strategy, or the plan here. The prospect of Bitcoin reaching the millions is what keeps speculators and investors interested, despite the pullbacks or crashes. The more Bitcoin you own, the less you make available to the market, the more scarce and expensive the asset becomes. The more you own also means the more power you have to influence the market. Regulation will attempt to close certain gaps, but cryptocurrency is inherently open to manipulation due to supply levels and low liquidity, comparative to other asset classes.
The key is that what they invest today, while the markets are largely unregulated, can easily be used to manipulate the market to increase their holdings without the use of large amounts of capital injection moving forward. For example, we know that in December upon the news of Bitcoin futures, the price ran up to an unsustainable almost $20,000.00 price point. Billions of dollars were added in a short period of time. Then the markets were overwhelmingly shorted on futures, and the price crashed. Coincidence? Drive the price and cash in on the ride going up, sell high, cash in on your short, buy back at the low; and massively increase your Bitcoin holdings. If you buy back slowly, the fear fades, confidence returns, we consolidate, and up we go to the next run. Bitcoin futures contracts the second time around were overwhelmingly long. Shocker. Collect on your long, and long again a few more times, before doing it all over again. The entire goal with Bitcoin is to use it as an engine for profit, not as digital cash, or to bank the unbanked, or anything else. Bitcoin has one purpose with the big players now getting in, and that is to make money. And they are going to make a lot of money.
But, there is still room for those in cryptocurrency now to get filthy rich from the path that I firmly believe we are on. Switched-on traders and those holding for the long haul stand to benefit the most, keeping your trades focused on Satoshi levels and not the USD is very important. Outperforming Bitcoin when trading is imperative. The realization that needs to be made from everyone involved at this point is that in order for institutional investors to make the largest amount of money, Bitcoin’s price needs to reach astronomical levels, and it is going to. The CFTC (Commodity Futures Trading Commission) is the most open and friendly to Bitcoin, with the SEC still not quite sure what to make of it. We saw this last week with CFTC Chairman Giancarlo becoming an overnight crypto hero with his testimony at the Senate hearing. SEC Chairman Clayton was still open, but not quite as open. Futures exist, ETF’s do not - yet. We can already see who is warm and who is reticent. Senator Warner, the second most giddy on the panel towards crypto, is a very rich and successful investor. It adds up.
Wall Street is built for cryptocurrency trading. The waffling we see right now is nothing more than the big players diverting attention and using their resources to buy them time; and it is genius. The sleight of hand going on is beautiful to watch. It also defeats the purpose of decentralized currencies, but as with any innovation you never know how it will ultimately be used. Bitcoin is never going to be used as intended. It is going to be digital cash, but that digital cash will be turned into massive amounts of fiat for those accumulating right now.
How long this play will take, and will it play out to perfection, no one knows. I highly suspect it will, and it is important that serious investors remove themselves from the general media narrative and see the big picture. This is not only being played with Bitcoin, it is going to be played across the board. So, buckle up, hold on, and accumulate yourselves. It is going to be a bumpy ride for a bit, but it is going to be worth it in the future, which may come a lot sooner than expected.