Cryptocurrency – A transfer of wealth unlike anything we’ve ever seen

Conor Maloney

June 14, 2018

The Bitcoin transfer of wealth is a much-discussed event that raises the questions of if the market will pick back up and what it would take for that to happen.

It’s no secret that a lot of people got burned getting in on Bitcoin at $20,000 at the beginning of this year. Generally speaking, someone has to lose out on a trade down the line in order for someone else to profit – in this case, the crazy bull run that saw Bitcoin crash through the surface of the moon and come out the other side allowed many of the currency’s early adopters to cash out at the all-time high as new investors eagerly bought their holdings in a bid to get in on the action.

This created many crypto-millionaires and even billionaires in a space already densely populated by big players known as whales. Some of those lucky/smart adopters cashed out and stayed out, while others bought back in to join the whale pool – it’s estimated that less than 1% of investors control 35% of the total supply of Bitcoin, leaving them more than capable of mass manipulating the price of Bitcoin, altcoins, and related financial instruments such as Bitcoin securities.

The US is launching a probe into huge levels of manipulation that are only now coming to mainstream attention, and the head of research at Blockchain Dr Garrick Hileman confirmed that “A number of these larger holders do communicate with each other, they know each other, they take stock of market activity.”

When moon-lambo?

This question is as difficult to answer as it is grammatically incorrect, and the jury’s out on whether Bitcoin can rise to $20k and beyond, although financial analysts who are themselves invested like execs from Pantera Capital and Fundstrat have predicted prices in the tens of thousands in the coming years.

An interesting point to make is that the early adopters were true believers. Bitcoin back in 2008 – 2014 was a crazy thing to invest in to most people, much more so than today. The people who were intrigued by it were tech enthusiasts, libertarians, anarcho-capitalists, and other subsets of people who believed that the currency was the answer to freeing humanity from the yoke of the upper class and allowing people to store and exchange value in privacy and without government intrusion.

A lot of those people are pretty damn rich now, although not all of them HODL’d hard enough, with one early Bitcoin dev even buying two Papa Johns pizzas with what would eventually become over $80 million worth of Bitcoin. A lot of them are rich, and perhaps many others are disillusioned – Bitcoin has not been the transformative force that many expected, although it’s not done yet by a long shot.

Used primarily as a speculative asset and heavily manipulated by super-wealthy investors enriching themselves with criminal and fraudulent tactics, the currency is in some ways less appealing than fiat. Many have an issue with the apparent corporatization of Bitcoin at the hands of the Blockstream company, while many of those who support Blockstream are often busy fervently screaming at Bitcoin Cash supporters instead.

A project aimed to democratize wealth, and promote financial and social equality, and break the monopoly of the traditional finance industry has evolved into a manipulated and arguably quite centralized currency that according to some is either to be absorbed by traditional finance or shoved into the corner by regulators.

So how can the project grow from here? Will investors who got in at $20k ever be able to cash out profits? Will the distribution of wealth ever equalize?

Analysts agree that the market is highly unpredictable and volatile, even moreso than the traditional stock market. It’s possible that Bitcoin will rise again, and based on past behavior it certainly has done time and time again. Bitcoin has been declared officially ‘dead’ in the media over 300 times and counting, only to grow exponentially every time.  The limited supply and increased public awareness of Bitcoin are seen as factors that will inevitably contribute to growth.

However, as the saying goes in the trading world past behavior is not an indicator of future performance (hey, they’re traders, not word… magicians).

Things are different now from how they were before when Bitcoin was an underground movement. Major institutional investors have joined the game and as we’re starting to see, the value of the currency is manipulated making it more difficult for ordinary people to get a fair deal.

However, manipulation can only go so far. The market is notoriously skittish, with huge dips smashing things up when a particularly FUDworthy news story hits the front pages of the international crypto outlets or even Reddit, but that works both ways.

There’s only so much good news that Bitcoin can take before it starts to show in the market as well, and recently there’s been a tonne of it. While regulatory issues have created market concerns, the introduction of Bitcoin remissions, stock exchanges working with Bitcoin trading apps, more and more merchants and financial institutions dealing with Bitcoin and other cryptocurrencies, it seems like only a matter of time before something has to give.

If the price is being held down by scheming manipulators, I get the feeling we’re about to find out just how long you can keep the lid on a boiling pot that’s about to blow. Whether the market decides to go u, down, or inside out is never a sure thing, but put it this way – I’d hold off on selling all your for a little while longer if I were you.