Bitcoin Price Is Holding Up Despite Regulator Action

It seems incredibly to me that bitcoinBTC
is holding up as the U.S. regulators are clearly intent on choking crypto to death.

It might sound harsh but it is obvious that U.S. authorities are circling the whole “industry” with a view to at least driving it underground or at best crushing it into a pocket of confounded, regulated to death niche financial service.

It is understandable with the amount of criminal activity that swirls around the blockchain, without a day passing that untrammeled and ruthless scammers and hackers get away with record breaking felonies. There have never been bank robberies on the scale of crypto hacks. So you can see the point of view of governments when they see it as being better to throw the baby out with the bathwater than risk the out of control rise of a mutant financial monster.

As crypto lovers we tend to look away from the dark side and see the revolutionary potential, but the vested interests see both sides and like neither.

It might sound unlikely that the US government would conspire to kill an industry until you read Operation Choke Point.

The following businesses were marked for financial termination by the U.S.

You can empathize with quite a few of these sectors being squished, but coin dealers, firework sales, dating? Operation Chokepoint was shuttered when it was outed and is no longer in place. (Yeah right!!!)

When you read about the details of chokepoint you can see the exact same behavior under way with crypto. The idea is to slice and dice the activity out of the mainstream economy where starved of financial access it can only wither away.

Blockchain will survive but it is remarkable, with crypto banned in China and being squeezed to death in the U.S., that bitcoin is still in the $20,000s not sub $10,000.

Here is the chart:

I am not a bull but I can recognize the below analysis:

So I am not a convinced bear.

Silvergate (SI), a bank aimed at facilitating crypto activity and a key player facilitating on and off ramps in crypto, is teetering but apart from a 5% correction it has not tipped BTC even below $20,000. Even a bear has to admit that looking at the price action and the chart it is not looking as bearish for bitcoin as you would expect.

This in itself is mystifying.

I suspect it is the industry itself that is supporting the price and that outside of the parallel universe of the blockchain, the real world price of bitcoin is the price represented by the Greyscale Bitcoin Trust price, which is about half the price of bitcoin on a crypto exchange. Two different worlds, two different prices. Such disparities have existed before in bitcoin in Zimbabwe and Korea and there is always a good reason.

That’s not an arb I want to play myself because the counterparties are so fragile, but for the extremely brave it–and we–are there to be had.

The crypto world is extremely different from the equity domain, so it makes perfect sense in a way that both hold different values for an asset accessible and not accessible to investors in different ways.

This might sound unlikely but money often does unintuitive things.

Rai stones were the currency of the Yap Islanders. They had to canoe for many miles to an island of rock to mine their money. Rai stones were rock discs with a hole in the middle. If a returning canoe sank, the sunken stone was still considered an asset and valued.

You can guess those Rai stones had a different value to those onshore and they certainly did to the European sailors that showed up.

They of course sailed their ships to the rocky island, loaded up and inflated the Rai stones into oblivion by trading them with the Yap Islanders for whatever the sailors considered valuable.…. but that’s another story.