A Rational Rationale for ‘Cryptocurrency Panic’

Many journalists have been predicting a grim end to cryptocurrency trading beginning from the moment the advent of blockchain technology became a popular way for ordinary people to mine and trade cryptocurrencies. The old financial elite in organisations such as Goldman Sachs have been issuing ever more threatening statements about a wider crypto-clampdown in the western countries where the technology was initially pioneered, in spite of the fact that blockchain has now gone international in the fullest sense of the word.

With reports that the US Securities and Exchange Commission (SEC) is “investigating” cryptocurrencies, many have adopted the conventional wisdom that cryptocurrencies may simply be removed from the market in a volatile fashion through an ‘unholy’ alliance between western deep state bodies like the SEC and Wall Street.

There is however a far more realistic interpretation, albeit one that is hardly ever explored. Wall Street mostly ignored or outright dismissed the first generation of cryptocurrencies as a ‘fad’ or an irrelevant phenomenon and as such, few in traditional financial markets made any money during the initial crypto boom.

Now that countries ranging from Venezuela to Russia are creating their own state-sanctioned cryptocurrencies and with entrepreneurs in South East Asia looking to begin issuing cryptocurrencies backed by a gold standard, cryptocurrencies have matured in such a way that even their early detractors cannot ignore the progress of the so-called second generation of cryptopcurrencies.

Anyone who has ever had to haggle with a used car salesman knows that if one wants a good price, you talk the car down, point out its faults or general undesirability. Then if the haggling experience still isn’t satisfactory, one walks away, stating that one might be better off buying another car or perhaps a motorcycle or horse.

At such a time, the used car salesman might run after you agreeing to dramatically slash the price in order to get a sale. This mentality is pervasive not only when it comes to looking at an old Toyota but also when it comes to stocks, shares and to an extent, even commodities. If one wonders why the big Wall Street traders are talking cryptocurrencies down, this is because this tends to lower the market value of well known cryptocurrencies like Bitcoin.

Once the price of such cryptocurrencies bottoms out, those on Wall Street who missed the crypto boat the first time around, will dig into their already deep pockets and attempt to buy low and then price younger or low net worth investors out of the market. This is one of the dangers of any speculative market. People and organisations with big enough public megaphones can turn their forecasts into reality.

It is wise to remember that there is never any ideology when money or finance is concerned. Ideology is just the cloak and dagger technique used to mask the cold calculations of those who follow the bottom line in any scenario and in any country. Even in China, for example, it is not that Chinese officials are afraid of or perplexed by cryptocurrencies. China simply has very strict laws about taking unauthorised sums of money out of the country, as the market socialist system revolves around the re-investment of nationally produced wealth back into the national economy. In this sense, China is treating crypto-markets no differently than it treats any other market.

Likewise, Wall Street is not treating cryptocurrencies drastically differently than it treats any trend in investment that the ‘old boys’ missed the first time around. They’re trying to crash the price of Bitcoin and other cryptocurrencies in order to allow themselves to get onto the crypto investment ladder that they missed the first time around.

If all is fair in love and war, it is all the more unfair when it comes to making a financial investment. One is wise not to be fooled by the naysayers who are simply out for a piece of the crypto pie.

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