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The Big FUD

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Welcome to The Block. I’m Jeremiah Lewis, a crypto-enthusiast and early adopter. This is a weekly ema
 

The Block

January 17 · Issue #10 · View online
Weekly curated #cryptocurrency news and commentary.

Welcome to The Block. I’m Jeremiah Lewis, a crypto-enthusiast and early adopter. This is a weekly email digest comprising one or two short topical essays followed by a manageable collection of curated links.
If you know anyone who’d be interested in this kind of content, forward this email, or they can subscribe here. I love feedback, so don’t hesitate to email me.

The Big FUD
Source: Bloomberg
Source: Bloomberg
It’s that time of year, when the world falls in love, and fears of an Asian clampdown on cryptocurrencies loom. Bitcoin fell to under $10,500 (Update: as low as $9300 as of 10:30am Eastern Time) on fears of further restrictions on cryptocurrency trading in South Korea, and in China where rumors of additional tightening against mining are pushing speculators to look to other countries for a home. Turns out, governments don’t like their citizens to throw themselves into the irrational exuberance phase of a market without some kind of regulatory controls. 
Though those fears may be overblown, at least in South Korea, where rumors of a ban have been floating (and then sunk, and then clarified) and a recent petition against cryptocurrency regulation garnered over 200k signatures (and they can’t seem to get enough of it in Japan).
Bitcoin has always been the tide the raises and lowers all boats, so it’s not surprising that we’re seeing similar price action with other cryptocurrencies. FUD (Fear, Uncertainty, and Doubt) has washed over the entire cryptocurrency market, pushing alt prices down by as much as 26% (in the case of Ethereum). Blood is in the water and the sharks are circling.
But are there other factors at play?
The Lunar New Year Cycle
Asia still dominates in crypto-trading by volume. Not coincidentally, every year good Asians spend lots of yen, yuan, and won on presents and travel for family and friends for the Lunar New Year. This is the largest mass migration of people on the planet. So what does it mean?
The Lunar New Year selloff is an annual event that hits markets hard, resulting in a significant exit from crypto positions back into fiat. Indeed, this has occurred the last four years, regular as a fortune cookie with a pithy saying inside.
Source: Reddit
Source: Reddit
Bitcoin Futures Come Home to Roost
This theory might be BS or it might be the Ghost of Bitcoin Futures coming to warn us all about the dangers of Scrooge-like hoarding, or something. (Isn’t Christmas still 342 days away??)
CME and CBOE had roughly 23 thousand coin contracts on January 16. CBOE is connected to the Gemini exchange, and ten thousand coin futures makes up nearly 2/3 of the 24h exchange volume. However, the actual expiration is today, 1/17. Not everyone waits to cover the contracts, which could have induced a flood of contract sales, leading to a huge sell wall.
If this theory is true, we should expect another 20% dip today, ending just before the 4pm Eastern close. But this assumes the cash volumes on a single exchange are enough to push the market down this much, which seems unlikely.
The Dip Is the Knife, or the Knife Is In the Dip
Between widespread new regulation concerns in South Korea, China, Germany, France, and Russia, the influx of institutional and new/weak money, the proliferation of random and useless tokens, and the Lunar New Year, this crash is waking and shaking crypto-speculators (ie, your next door neighbor) up in a big way.
There’s a saying in trading: “Buy the dip.” There’s another saying as well: “Don’t try to catch the falling knife.” While prices are plummeting, it’s best to stand by and wait for a correction before buying. That way you can potentially avoid getting stung by the knife. But as always, there’s opportunity in chaos.
Unless you’re a trader, there’s very little here you need to do. The key here is not to panic like everyone else. Wait for the dip, and then buy. After all, even the St. Louis branch of the Fed thinks there may be something to this crazy cryptocurrency after all.
Or you can just sit back and watch as $100 billion of fake imaginary internet money goes spiraling down the drain.
Links of Note
Inside the world of Chinese bitcoin mining
Korea's Bithumb cryptocurrency exchange grew so fast it triggered a government raid
Beyond the Bitcoin Bubble
Bitcoin fever hits US real estate market
Whistleblower Details Big Bank’s Plans to Prohibit Employees Owning Bitcoin - Bitcoin News
Bitcoin miners have extracted 80% of all the bitcoins there will ever be
And the last Bitcoin will be mined sometime in 2140. Hopefully we’ll see cryostasis innovation catch up with cryptocurrency technology so we can all be frozen and woken up in time to see the last coin mined.
Researchers find that one person likely drove Bitcoin from $150 to $1,000
5 Notable Women in the Blockchain and Crypto Industry!
And speaking of notable women….
Japan has a new cryptocurrency-themed J-pop band
0 to Pro Crypto Trader: Your Ultimate Guide to Bitcoin and Altcoin Investing
And if the following isn’t demonstration that we’re in the crazy part of the hype cycle, I’m not sure what is.
Kodak Stock Jumps 125% on 'KodakCoin' Cryptocurrency
Wrap Up
That’s it for this week. Thanks again for reading. If you find this newsletter useful and interesting and you think someone else would enjoy it, please forward it to them. You can always subscribe or read back-issues here.
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