Counter-Currents
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The last year has seen the price of a Bitcoin (BTC) crash from $69,000 to just under $16,000, a decline of approximately 77%. This is par for the course with Bitcoin, which usually has enormous 80-90% crashes every four years, with a number of smaller, 25-50% crashes occurring in between.
But as with each cycle, there are distinguishing features that set them apart. In this case, Bitcoin has matured into an asset that now has very liquid futures markets, as well as much wider mainstream adoption. In any gold-rush industry, there are people who use the rampant speculation to make a quick fortune and then exit stage left. This is “crypto” and “defi” (decentralized finance) — the Potemkin villages that seek to confuse and excite wide-eyed speculators. They attempt to replicate the appearance of genuine innovation that Bitcoin offers while remaining functionally centralized. Even worse, they offer no real benefit to users beyond speculation.
I’m fully aware that many people reading this will be thinking, “But isn’t Bitcoin also mere speculation? What does it offer users beyond the hope of future riches?” And for that I would direct readers to this piece on the subject. (The purpose of my piece is not to make a fundamental case for Bitcoin, but rather simply to explain the recent happenings involving the collapse of two large crypto exchanges, and what we can expect going forward.)
People who have paid attention to Bitcoin for a long time will know about an early exchange that was called MtGox (short for “Magic: The Gathering online exchange”). Originally, this site was for players of the collectible card game to meet and buy or sell their rare cards. When the owners of the site became aware of the nascent Internet currency Bitcoin, they saw an opportunity to create a large market for traders. The fellow in charge of MtGox was Mark Karpeles, a French-Jewish man living in Japan. The exchange had an effective monopoly on Bitcoin trading for a while and helped elevate the price from a few dollars up to more than $1,200 at its peak. They did this with the aid of some manipulation: a bot that would automatically buy Bitcoin at opportune moments, which created fake demand that traders interpreted as heavy interest at key support levels in the chart. This is what drove the first Bitcoin hype cycle and ultimately resulted in a 90% crash after the peak in winter 2013.
This “demand spoofing” coincided with MtGox being (supposedly) hacked and losing 850,000 BTC, of which about 200,000 were recovered. Thus, early users of this exchange who kept their coins in MtGox’s custody are still waiting to receive a fraction of what they had, and the Japanese trustee is dragging his feet in returning the coins. This was the first big lesson in the dangers of trusting a third party with Bitcoins — and it should have been enough, but most people don’t learn from observing others’ mistakes.
The more recent exchange collapses occurred in a much more mature and large market, spreading across many different cryptocurrencies. In the case of Celsius, its CEO, Alex Machinsky, was a 1982 graduate of the Open University of Israel who later attended Tel Aviv University and majored in Economics. Apparently they teach financial alchemy in Israeli universities, because after starting Celsius he began offering high-yielding accounts at a time when interest rates were very low. This in itself is suspicious and should have set off alarm bells. How was Machinsky guaranteeing returns well above the rate of interest? By definition, that requires excessive risk-taking. To make matters worse, Celsius wanted customers to deposit relatively new and illiquid altcoins and stablecoins. This whole charade would have been somewhat more believable if customers could deposit regular dollars and get a dollar yield. Involving crypto implies that the financial magic trick only works when demand for these altcoins is high.
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Newbie traders who were mostly financially illiterate fell for the trap, however. It didn’t help that YouTube mini-celebrities were also pushing these products and trades. There is an unfortunate romanticization of the trader profession, particularly on social media. As much as I appreciate the importance of the market system of price discovery, I also find full-time trading to be a sleazy thing to aspire to. One should hope to contribute to the world in a more personal and meaningful way. Every one of these exchanges play on the same dopamine triggers that casinos do. This is why in my first article for Counter-Currents I made the case that people not even attempt to trade. Trying to time the market almost never works, and only leads to more stress than a simple gradual accumulation strategy. I also warned against altcoins. In finance, the devil is often in complexity, so a simple Bitcoin-only strategy is what I use and I recommend for most others.
Another recent collapse was the Terra Luna stablecoin. A stablecoin is a cryptocurrency that’s meant to be pegged to the value of a government currency, in this case the dollar. The creator of this currency was Do Kwon, a young Korean man who tricked people into believing he could maintain a value-peg without having full backing. Normally, a third party would promise to exchange a token for the underlying asset, necessitating the storage of the asset itself. Instead, Do Kwon would use some kind of automated trading algorithm (sound familiar?) to artificially maintain a dollar peg while transferring risk away from the stablecoin and into the Luna token. To fully understand the inner workings of this system would require “Slippin’ Jimmy” levels of scamming experience. But again, it comes back to a fatal flaw that some skepticism and common sense would have noticed: It’s simply not possible to mint a new token and then decree that token is worth the same as some other asset, particularly when you don’t have that asset in your vault. I don’t care how complex your trading algorithm is. Even governments can’t do this (such as in 1971, when Nixon unpegged the US dollar from gold because he knew there wasn’t enough gold in the vaults). Anytime someone says something is “pegged” to the value of another thing, you should be skeptical.
The Terra Luna and Celsius collapses occurred after Bitcoin’s first peak in April 2021 at $64,000. Then after crashing below $30,000 that summer, another bull run commenced, bringing Bitcoin to its all-time high of $69,000 in November 2021. The precise causes of these bubbles and crashes are complex and varied. I liken it to trying to guess where a piece on an Ouija board will land next, because everybody is trying to move it in different directions, and there are many people who profit on both sides of the trade. Price manipulation occurs in both directions. But traders view Bitcoin as part of this larger crypto industry, and a lot of the collateral used to leverage altcoin trades happens to be Bitcoin. This means that when altcoins and Ponzi exchanges flounder, Bitcoin suffers some of that selling pressure. Notice that this is not a fundamental link between Bitcoin and crypto, but one imposed on it by the impressions of low-information traders.
The most recent crypto firm to go under was FTX, a large exchange founded by Sam Bankman-Fried, a young American Jew who graduated from MIT. Sam’s parents both worked in the tax compliance field, which gave investors some sense that he was trustworthy. The mainstream media fawned over Bankman-Fried, writing gushing pieces and producing videos about him in which he was shown to be a wild-haired slob who wears cargo shorts and cheap t-shirts. In the videos, he bragged about how frugal he is despite being a billionaire, and says he wants to give all his money away to make the world a better place. He managed to give $37 million to Democrats in the last election cycle alone, and made the maximum donation to Nancy Pelosi’s likely successor, Rep. Hakeem Jeffries (D-N.Y.). This placed Bankman-Fried just behind George Soros as the largest individual contributor to Democrat causes, and it is almost certain his long-term goal was to take over where George Soros leaves off. This is why I believe the Right is fortunate that FTX collapsed. If it had continued to grow, Bankman-Fried’s fortune would have likewise continued to balloon.
The collapse itself was similar in many ways to the Bernie Madoff scam, where the firm was investing depositors’ money in risky bets without their knowledge or consent. FTX created its own cryptocurrency called FTT, and this token had no real reason to exist beyond providing a few small perks to FTX traders. People started to notice that the token would occasionally fall to $22 and then bounce along that level for a while before recovering. This would become important later when the CEO of FTX, a 28-year-old woman named Caroline Ellison, announced on Twitter that she would happily buy up another exchange’s FTT tokens for $22 each. This essentially confirmed to traders that $22 was a key price level that FTX was defending to the death. Caroline’s announcement was stupidity squared. The first mistake was making FTX’s balance sheet so heavily reliant on the value of a worthless “utility token” like FTT. The second was publicly giving away the price level at which FTX would scream “Uncle!” Naturally, the market reacted by dumping FTT, taking the price from $22 to just $1 and rendering FTX insolvent in the process.
Because FTX was leveraged to the hilt, and the assets side of their balance sheet had just struck an iceberg, Bankman-Fried was forced to get on Twitter and announce that they would be halting all withdrawals and that they are officially insolvent. This sent all cryptocurrencies crashing even more — on top of the existing crash that had been unfolding over the last year. Today we are finding out that Sam Bankman-Fried, Caroline Ellison, and around eight other people were living together in a single house in some kind of polyamorous open relationship, and there are even threats being made by anonymous accounts to leak pictures of the scandalous sexcapades that these financial wizards were having in the Bahamas. As Trump would say, “They’re not sending their best.”
So where does this leave us today? Currently, Bitcoin has been beaten down to such an extent that it is underpriced by even the most conservative metrics. Rapidly rising interest rates, as well as a rising dollar index, have conspired to push the prices of all risk assets even lower. We also have the threat of an impending deep recession and a housing market crash. The question is: How much of this fear and uncertainty has the market already factored into the price? There’s no way of knowing for certain, but we can see on the blockchain that the number of BTC that have not moved in over a year has risen to a new all-time high of 67%. Historically speaking, when that figure hits a new high it is followed by a long bull run. And it would make sense that Bitcoin recovers at least somewhat over the next year, given how terrible the last year has been. At some point the marginal sell pressure will become exhausted, and we will see a short squeeze.
This reveals Bitcoin’s hidden base of demand, which is constantly growing. This base of demand is the key, but it’s impossible to see except during periods of extreme market fear. Just two years ago Bitcoin traded at under $4,000, and now we are just under $17,000, so the trend is still Bitcoin’s friend. Let the bears have their fun. Meanwhile, I am accumulating!
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23 comments
Until last week, I had never heard of FTX. (Is SBF jewish? – surely not.) I still don’t understand it, except that it’s some kind of convoluted Ponzi scheme involving “blockchains” and higher mathematics. However, this article helps, providing a useful summary of the history of crypto-currency.
The entire industry is a scam, as the FTX scandal has revealed. And it’s promoted by the Left – dead give-away. They are all losing money now. That’s good news – with lots of schadenfreude for the masses. And it reveals the corruption of the Democratic Party and the Deep State. Expect the media to ignore this aspect of the story. Expect the US regime to exploit this scandal to harm us and then blame it on us.
Crypto-currency has no valid function. There is no “electronic” or “high-tech” way to avoid government-issued currency. Other alternatives are good, such as commodities, gold and barter. But not crypto. It’s an obvious scam and should be outlawed. And the government officials & mass media who promoted FTX should be held to account.
Government issued currency is currently in the process of destroying itself.
It’s not. At least the USD is backed by the biggest military industrial complex in the world, and that is better than the gold.
Anyone prefer to use USD instead seeing the russian orcs raping and plundering his country. So the USD is very well and is going to do very well in the future.
The trouble with the inflation is the consequence of stupid ideeas and behaviors that plagued the white race for so long.
– Do you want integration with people that can not be integrated? Then you spend lots of money, get nothing in return, compensate through inflation.
– Tolerate commerce with China? You get some plastic stuff of the most disgusting quality, horrible overpriced. You got nothing on long term and you have to compensate through inflation.
– Do you want peace and trade with Russia? It’s OK, only that they believe that London is ruskii mir too. So you have to pay for that.
– Do you want “make work” and “paper pushing” work for everbody? OK, you kill robotics, electronics, automations and bring one billion people from Africa and Asia to make poor quality stuff in your country. That’s inflation too.
– Buying overpriced shares without revenues? Inflation too.
– Want to save everybody? So you fund all kind of NGO doing whatever they are doing. Funny case with Norway, non EU country spending money to save sub Saharan people to drown in Mediterana, paying russian operators to man the ships. That’s inflation too. You pay hansomely for more troubles.
Do you like this?
https://en.m.wikipedia.org/wiki/Aquarius_Dignitus
What I said is for US, Europe, and my country.
I don’t see how the actual evidence you present supports your argument. All of the decisions you describe seem to be the various ways the USD is in the process of unraveling itself as the world’s reserve currency of choice. The BRICs are on the prowl and the Jews’r’US State Department makes their job easier every day. Money is one of the most important ancient technologies. There’s no reason pro-Whites cannot have their own money to manage their own economy. I don’t see any reason why that needs to be the USD. And I cannot understand why any pro-White would defend the USD. It’s not our money. It’s the Jews’ money.
1. Who makes the BTC?
Are you mining them in your basement?
Or are you buying them on a jewish trade platform, and they are mined in China and Rusia?
2. The money are backed by only one thing. The character of the people. Money is a promise. It depends on people to keep the promise. The martial character of US makes the USD a better promise than anything else.
3. I said I trust more USD or EUR. Much more than BTC, or russian rubles, or chineese yuans.
4. Everthying I said are things worth fighting for in order to prevent the inflation. Things that can be addressed and also can be packaged for various audiences.
5. What I said are things that affect all the white man money. Adding BTC to the basket is complicating the problem by giving leverage to the racial enemy.
The collapse of FTX no more makes cryptocurrency a “scam” than the collapses of Lehman Brothers and Bernie Madoff make government currency a scam.
I understand the appeal of Bitcoin, and I am hodling some myself. However, people should be prepared for massive government crackdowns on crypto assets as a whole (possibly even using the SBF scandal as a pretense) as the Fed moves further along with its CBDC digital dollar project.
The best hedge against this is probably Monero because a currency that is harder to track is harder to restrict access to. Not being on as many exchanges also limits XMR’s exposure to speculation, bubbles, and bad actor institutional investors.
Thanks for this article. I’d been hoping to hear from Mr. Thorburn with a ‘state of the currency’ comment. To me, the BTC held by pro-Whites is the ‘bank’ of any future pro-White system.
People’s faith in cryptocurrencies may prove as unfounded and disastrous as Admiral Dönitz’s confidence that the Enigma code was unbreakable.
Gold bullion coins have a reassuring look and feel. A self-respecting WN should insist on Krugerrands issued during the apartheid era.
I caught the silver bug a while back, to a small degree at least. It’s so dense, shiny, and pretty – just like in the days of our great grandparents when they had real money! I have nothing against gold, but I figure silver will be easier to barter if needed.
I received a silver quarter in some change recently.
Congratulations on your Ag quarter. I am very disappointed with 2022 as I’ve been unable to find any silver coins in circ despite buying hundreds of half-dollar rolls.
I did get a silver siliqua of Constantine III earlier this year but I had to buy that as I couldn’t find him in circulation.
Oh, you actually go through rolls of change to look for aberrant coins? That’s hardcore. No, I just occasionally find them in change. I have a good eye for it—I can spot them literally across the room! It’s the edge. Notice the edge of quarters is copper whereas the silver coins is almost bright white.
Do you know what that’s called? Copernicus’s Law, that relatively valuable coins are removed from circulation. He was a student of economics as well! Shiny new gold coins are held relative to worn ones because they retain more metal mass, and less debased coins are held relative to nondebased. Which typically means older, I suppose. Now the coinage is debased to no physical metal at all, pure imaginary, online, lol!
No! Whoever thought they would teach financial alchemy in Israel?!
That’s a great piece of information to remember!
It’s being reported in the MSM that Elon Musk is on a big recruiting drive for Twitter ™. There’s a real opportunity here for tech wizards of the Dissident Right persuasion to infiltrate into the means of information by applying for jobs, then once in bringing on more of the comrades.
Just sayin’…
I have a feeling that Mr Bankman-Fried’s setback will prove to be a temporary one, and that his genius for combining financial alchemy with effective altruism will enable him to remain at large, and liquid.
What about etherum. Thogh dated it has a blockchain and transactional use value.
Very informative history from mr Thorburn, thanks.
I don’t know if I said this before, but in the shooter Payton gendron’s “manifesto” he had a section on cryptocurrency. Counter to most altright types, he was against it and linked to some compelling articles on some Marxist website. They claimed that the crypto price was being floated by the stablecoins, such as Tether, in which most transactions in cryptos are carried out. Stablecoins are electronic currency pegged to the US dollar, and the companies that produce them claim that they have dollar reserves for coins. They don’t. Tether itself was fined 40 mill by the sec for not having the enough reserve, but the authors claim that this was a slap in the wrist compared to whatever money they were creating. They then use this dollars out of thin air to float the price of the crypto currencies. Essentially they are quantitative easing for Bitcoin. So the cryptos have caught up with the federal government in honesty! How about that!
I think I had asked thorburn to refute these claims.
I’m not fond of crypto-currency as an investment nor am I sure that this article is a deep enough investigation into its history so as to provide the fundamentals for acting on it.
Some of the early story is mentioned here is interesting tho in that the early supposedly stable price-points of both BTC and FTX were faked using methods to make them resemble some sort of hard asset.
Thus the “undervalued” BTC price level of ~$16,000 may not have any real meaning.
On Snooty’s comment on Kugerrands:
I believe that South Africa continues to mint and sell the 1 oz gold {containing, coin is slightly heavier as 22 kts is used} Kuggerands. These all depict Paul Kruger on the front. Apparently Decolonialism for South Africa today does not extend to removing an Afrikaaner from the front of their most famous coin.
They been made since 1967 and one made today is of identical specifications to one made under the apartheid government.
These all depict Paul Kruger on the front.
Yeah, I was surprised to see that. Kinda like the German Bundesbank still issuing swastika-stamped gold bars. (Assuming the Nazis did indeed do that and it’s not just a movie trope.)
Actually it’s not too surprising. Latin America embarked on their own war of independence against Spanish Colonial rule just like the US Revolution. The Latin wars of Independence were from 1810-1826.
Yet after Independence, they continued to strike their new gold and silver coinage based on continuing the old Spanish Colonial denominations and the same weight & purity of gold coins. These were the Escudos and many continued to be made for nearly the next 50 years (1870’s).
Same with the silver (Reals) although in some cases that became debased in the 1830’s.
Who is making these bitcoins? Many entities from the most trusted countries in the world. China and Russia. Great hodling value.
Do you know what I find amusing about Bitcoin and crypto? People are so polarized about it. People are either crypto believers and can admit no wrong about it and will run from the room screaming if you criticize it(hmm, much like triggered leftists in this regard) or they hate crypto, consider it fool’s gold and it’s buyers delusional crackpots. There are no balanced voices that weigh all sides of the debate and give you honest analysis and data. It gives me the idea that something about the rise crypto is intimately linked to the political environment in which it was birthed.
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