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Author Topic: FUD Roundup: G7, China, Terrorists, Oh My!  (Read 225 times)
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November 20, 2015, 09:16:32 AM

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The recent trend downward is being blamed by traders on numerous factors. Lately, it's chique to point to news articles that are promoting Fear Uncertainty and Doubt (FUD) and blame that for the negative market sentiment.

It's difficult to say how Bitcoin markets respond to news. During the turmoil in Cyprus( ) and the Greek economic crisis ( ), bitcoin was incredibly volatile. When a correlation this strong is observed, it's hard to discount it. But often times good news leads to price declines, or bad news leads to price increases, or the market just doesn't respond at all to news.
Confusing right? Well, FUD is part of the game in bitcoin trading, and knowing how to wade through it is a skill that one constantly has to sharpen.

Even in cases where you would think it's clearcut, like governments cracking down on bitcoin, the effect on price is nebulous at best. See the Russian statements on banning which did nothing to curb the recent bullrun ( ).

So what do we make of these stories that ISIS is using bitcoin ( ) and even has a $3M address -- which may have been a pure fabrication ( ), or that G7 wants to regulate Bitcoin, or other related FUD in China?

First you have to acknowledge that Bitcoin is going to be volatile no matter what. It's a small (in Wall Street terms) market that is quite decentralised in the fiat-exchanges, which leads to many frictions and dislocations. There are technical and fundamental influences in the market which are constantly at battle over where the price direction will be going.

The main lesson here is: relax and take everything in context. There have been anti-bitcoin FUDsters and dishonest Bitcoin news sites that like to promote clickbait hysteria in order to generate traffic. It's important to always ask: what are the facts? The headline speculation is one thing, but what are the FACTS?

In this latest round of bad news dumps, the facts are extremely light. The G7 news was based on a confidential source who told Der Spiegel ( ), and the German Ministry won't confirm or deny any details. So for all we know it was one small agenda item out of many, and the angle with which they approached it may have been more balanced than one can think, especially when US FinCEN is showing signs of really "getting it" ( ).

The ISIS bitcoin connection is based on an unprofessional report by a no-name information security company ( ) trying to position itself as an anti-ISIS hacking group. There's no real evidence presented, and anyone who knows the limits of blockchain analysis knows their conclusions are laughable.

And finally, China FUD! The classic bitcoin FUD. They're rumored to have banned bitcoin at least a dozen times ( ) after the run-up to $1000 in 2013. This time around, it's focused on devaluation fears and other problems which have actually been bullish for Bitcoin, Arthur at BitMEX has done a fantastic job analysing this ( ). In this case, the "FUD" is that China's stock market is back and interest in Bitcoin will just wane.

So everyone who isn't accustomed to the news atmosphere in Bitcoin needs to just take a deep breath and realise that FUD has always been out there, and bitcoin always bounces back.

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