The bad old days are back. Cryptography prices are in free fall and nobody is sure where the fund is. Even the powerful Bitcoin has not been spared from falling below $ 6,000, considered by many to be an unofficial plan, and then falling further below $ 5000. What's going on?
Three recent events could explain the current collapse. The first is the announcement of the SEC on Friday according to which the operators of two "Initial Coin Offerings" (ICO) have violated the law by selling unauthorized securities, and must pay fines and refund. As others have noted, this is only the beginning: the Crypto bros have spent most of 2017 hitting the SEC bear, and now the bear is awake and ready to unleash a world of punishment . This development may be enough to scare off some encrypted investors, but it can hardly be a surprise. Anyone paying attention to the regulatory space knew it was coming, and much of the fallout should have already been discounted with the prices of encrypted tokens.
Likewise, it is difficult to see how the Bitcoin Cash fork of last week – a second possible explanation for the cryptic incident – could absorb the market so severely. Of course, the fork has been disordered and has created renewed concerns of centralization compared to Bitcoin Cash. This damaged the price of Bitcoin Cash and probably spread the contagion to the rest of the market. But Bitcoin Cash has always been deceptive and dysfunctional, and the encrypted world has already passed the previous bifurcations, so it's hard to understand how this caused the accident.
This leaves a third possibility: Crypto's investors have been frightened by bad news from Nvidia and Advanced Micro Devices chip makers, who have recently reported a sharp decline in sales for cryptocurrency equipment. Sales declines suggest that interest in cryptography has declined and is unlikely to occur soon. This could explain the cold on the prices of encrypted resources, but it also raises a question of chicken and eggs: that is, the misery of chip makers is a cause of the collapse, or just another symptom of it?
It is possible, of course, that it was a merger of all three events that KO has put in crisis. It would be good news for investors, in a sense, because it would mean that individual shocks explain the crisis and the markets recover from the shocks.
There is, however, a more existential explanation for the collapse: the whole thing is a failure. This is the position of the technical performer Sam Gellman who, thoughtfully series of tweets, points out that the crypt has sucked up $ 30 billion in ICO over two years and has not provided a user base beyond cryptographic speculators. It's been ten years since Bitcoin came out, he says, and it does not have much value to show for it. Needless to say, a lot of people are popping up to refute Gellman but, if he's right, look for investors to keep running for exits.
A version of this article was published in the November 19th edition of The Ledger's weekly newsletter.