Bitcoin Can’t Fight Against Government Oversight Forever

The last time I wrote about Bitcoin (BTC) its price was fighting to hold $8,000 per coin. The previous time its price was fighting to hold $9,000 per coin. Today it’s fighting to hold $7,000 per coin. And losing.

It should be obvious to even the most HODL-y crypto-bull that the air is going out of this market. As of April 2, the total value of the crypto-coin market was $264 billion. That’s roughly the market cap of Walmart Inc. (NYSE:WMT).

At the start of the year the value of the cryptocoin market was being compared with Facebook Inc. (NASDAQ:FB). Facebook has also seen better days.

Worldwide Crackdown on Bitcoin

The fall of crypto began as an Asian story, as the cryptocoin boom began as an Asian story. Asian regulators, especially in China, have turned their backs on it. They see it as enabling crime and money laundering.

China is fine with cryptocurrency existing, so long as it gets to control both the market and the profits emanating from it.  In the context of global financial authority this is not an extreme position.

This is also not what crypto fans had in mind when they got in. Last year, the talk was all about how crypto was going to replace government, take away its ability to manipulate the money supply, and deliver unshakeable value based on a technology that limited supply. If your crypto is government-controlled, what is its advantage?

Yet this is what the world is now moving toward, a global regulatory regime China now supports.

The crackdown by regulators has gone as global as crypto. Indonesia and Bangladesh have banned it as a payment tool. The Bank of England now calls crypto a threat to global stability.

In the U.S., the Securities and Exchange Commission wants its entire range of regulations applied to cryptocoins and coin offerings. The IRS wants all crypto transactions reported and is demanding its cut of the profits.

The whining of crypto-bulls that all this will backfire is getting the reaction from governments that Democrats have to Trump tweets. No more fear is the message, the fight is on.

Can Crypto Come Back?

Perhaps nothing better illustrates the fall of crypto than the fate of Cardano (ADA), a cryptocoin designed to compete with Ethereum (ETH) for the wallets of Japanese investors. Coins that were worth $1.22 in January are now down to about 15 cents.

The best performers are those that brag about being useful to criminals. Monero (XMR) has just been cut in half since the start of the year, from $350 per coin to about $170.

Bitcoin boosters trumpet every upward move but ignore the downdrafts, pounding the table for “innovations” that are meaningless to the average person.

Bitcoin bulls now talk about the “long term,” about “patient investors” now being attracted to the platform. They’re still selling that bridge to Brooklyn.

The mainstream press, which was always skeptical of crypto, has taken to laughing at crypto-buyers.

Meanwhile, former bulls are laughing at their own naïveté , blaming other peoples’ scams for crypto’s fall, and continuing to attack regulators they insist will lose their power in the new cryptocoin future.

The Bottom Line

The bottom line is that crypto hasn’t yet hit its bottom.

The rhetoric of crypto boosters about taking the power of money away from government was funny at first. The cryptocoin boom of 2017 caused governments worldwide to treat it as seriously as a heart attack.

Their crackdown has now begun, and while crypto may weather it, you don’t want to be there until it proves it can.

Dana Blankenhorn  is a financial and technology journalist. He is the author of a mystery novella involving Bitcoin, The Reluctant Detective Saves the World,  available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story, nor any cryptocurrency. To follow the value of cryptocurrencies bookmark https://coinmarketcap.com/

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