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August 30, 2017, 05:14:13 AM |
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If you've been around Bitcoin since 2013 and look at the graphs today- it's almost unbelievable to see how the November runup and subsequent crash pales in comparison to what we've seen this year, and more importantly, the past few weeks. Unlike 2013, this recent run has been accompanied by a similarly, if not more, impressive run by altcoins as a whole. What I think is a major contributor to this run is the whole system altcoins are predicated upon: People buy Bitcoin to buy altcoins.
What this means is that in order to jump on board this crazy train, you've gotta get crypto (and sometimes Eth, and sometimes something else) to get your altcoin of your choice. What this means is that just by dipping your toes in altcoins, you've already helped push everything upwards. When I buy bitcoin to buy CounterParty to buy PepeCash to buy Rare Pepes, I'm pushing a lot of shit upwards with just that single Bitcoin purchase. At the very least, you get double purchasing power when you go fiat>BTC>altcoin.
Of course, the flipside is also true- cashing out alts to fiat has a multiplied downward effect on the markets as well. I think, ultimately, the inability or hesitation to cash Bitcoin to fiat is what this entire market run is predicated upon. Let's be honest, it's still difficult to cash out to fiat, at least exponentially more than it is from alts to BTC. Coupled with tax burden associated with cashing out, and going against some of the core sentiments of cryptocurrency, it makes sense why people by and large aren't cashing out.
I think BitcoinCash is a pretty strong indicator towards this actuality. The free distribution of a token currently valued at close to 10 billion did not shake Bitcoin's price. People didn't cash out their free money in favor of a guaranteed, risk free profit- they either held on to it, sold it in favor of another altcoin, or sold it for Bitcoin and held onto it.
So far it's not an issue, as bigger and bigger players are entering the crypto sphere. Microsoft, JP Morgan, fucking Russia are some pretty big entities. But what happens when bigger and bigger presences stop entering the realm? Or less than that- what if these money multiplier purchase slow down? First people will hand their alts back in for Bitcoin as they see the markets slowing down- and then what? Some people are going to inevitably want to cash out (at least a portion of) their Bitcoin, and then beauty of these secondary, tertiary, etc. markets have turned into a nightmare. Many individuals who started this journey 1-4 years ago have already far surpassed whatever ambitions they may have for their portfolios. Plenty of people will be fine with losing out on some profit if it means they can ensure they still keep most of it.
The counter argument to this, of course, is that the increasing in total market value is due to previous undervaluation alongside new and improving tech in the cryptocurrency realm. While it would be foolish not to agree that great strides and progress has been made in recent times, I don't think it's enough to justify the major run.
Take a look at individual currencies and ask yourself if they are worth their current value. I love Pepecash, but is it really worth 8 million? What about it's clone, Memetic? Is that worth more than 2.5 mil? Is Fuck token worth close to 1 mil? Is Dogecoin worth 200 million? What about BitConnect, a fucking ponzi scheme. Is it worth almost one billion dollars? Is Steem worth almost 350 million? (Many speculate that Yahoo overpaid for Tumblr when they purchased it for 1.1bil in 2013).
Ask yourself if you think the coins you look at every day are worth the amount they trade for.
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