TL;DR: The consummate baddie, China and its avowedly communist government, is once again the principal focus of BTC maximalists keen to find an excuse as to why the world’s most valued cryptocurrency by market capitalization price tanks, presumably taking every other coin along with it. And while the Asian giant should not be discounted altogether, the Number Go Up crowd’s favorite foil is wearing thin in light of alternative cryptos’ innovation realities as they relate to BTC’s Store of Value narrative.
BTC Store of Value Maximalists Blame China for Price Downturn
For a solid two days, BTC maxis quieted. Weird six-figure price calls, seemingly always around the corner, muted as the coin dumped below $8,000 and then through $7,000 before resting slightly above that latter number at press time. When the smoke cleared, its dominance by market cap inched above the high 60s, and prices broadly looked to be recovering at least for the moment. BTC’s liquidity on exchanges remained strong.
The Great Whale theory has come and gone, however, in terms of price dips. Calm before the inevitable return storm to $10,000+ cheerleading have all but subsided, and only a few brave souls cling to HODL and Buy the Dip just-so stories as per The Script. It’s only a temporary set back, as they’re fond of assuring, also dampened. This time feels different.
Before anyone gets too confident or warms up their grave dancing a jig on BTC, it’s important to note no one understands crypto. No one. It’s a mantra important to internalize. For better or worse, the ecosystem, while for sure open to gaming and manipulation, is too complex to ultimately steer. It can be shoved and knocked around, but there are enough different, compelling, competing businesses and projects for little more than nudges to occur.
Parts of the Community Refused to Make a Trivial Change
Instead, nascent cryptocurrency speculative markets might be maturing. Metrics aren’t ripe enough yet to prove that thesis exactly, but many analysts believe investors as a glob tend toward utility, even by accident. And a coin stuck in 2016 with regard to innovation, earlier depending on the developer you’re chatting with, is theoretically less able to match what others are offering pretty much by definition. The Network Effect cum Store of Value is BTC’s lone, objective proposition relative to other cryptos, and it looks to be slipping.
Furthermore, this latest crash was not supposed to happen. BTC maximalists were sure not too long ago all of this was a distant memory, left in the dust of naysayers. So when BTC skid below a $7,000 bottom recently, taking with it the Store of Value apology, the mainstream media wires were sure to find a familiar horse to set upon. “Bitcoin slumped to a six-month low on Friday,” Reuters gasped, “after China’s central bank launched a fresh crackdown on cryptocurrencies, warning of the risks entailed in issuing or trading them.” That too wasn’t supposed to happen. China reportedly is now embracing blockchain technology, right?
OpenBazaar’s Chris Pacia put a finer point on the matter. “You need to remember how the ‘store of value’ meme came to be in Bitcoin to begin with,” Pacia reminded. “Parts of the community refused to make a trivial change to the block size which would have preserved utility and had zero negative effects. This rendered the system largely useless. Hence SOV.” First came the purge, then the excuse. First they shot the arrow, then maxis painted their bullseye around.
None of That is Happening
CoinText’s Vin Armani fleshed-out Pacia’s contention, agreeing “it must be remembered that the Store Of Value narrative is predicated on Lightning, or some other 2nd layer solution for transacting at scale, actually working. The point was that the BTC chain would be an institutional settlement layer. None of that is happening.”
Maximalists in the price collapse fallout have at once tried to resuscitate enthusiasm for a big run, the inevitable coming of Number Go Up, while trying to take a Devil May Care attitude at the same time. A once compassionate BTC maxi went straight Social Darwinian, “Remember, now is NOT the time to try to convince people to buy bitcoin,” he scolded. “They don’t deserve it. They are meant to buy tops (when the herd thinks it’s ‘safe’) and have their mettle tested.” Another, playing Good Cop, tread along party lines, claiming, “Now is a great time to buy Bitcoin: Never look back price is $6.1k. Mayer Multiple is currently 0.77 (best long term results achieved when accumulating under 2.4). Realized price $5.7k. Halvening in 6 months. Fear is prevalent. Buy and HODL.” Much more familiar territory.
All of this part of why CoinSpice is focused more on the peer-to-peer electronic cash side of cryptocurrency. Speculation is great. Degenerate gambling is fun. Both serve a vital purpose. For value, real and lasting, to take place in the realm of currency, utility must first make itself known. That’s not in lieu of settlement layers nor unit of account but in conjunction with them. People using cryptocurrency, preferring to be paid in it, appreciating its cash-like and hard money properties, spending it, saving it, building with it is what is likely to give crypto substantive, lasting value. Placing faith in mere faith itself smacks of magical thinking. Peer-to-peer electronic cash projects are not immune to price talk, of course, but they’re also not sitting on their hands, blaming China.
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DYOR: CoinSpice is your home for just spicy crypto things. We’re not affiliated with any cryptocurrency project or token. Each published piece is intended for information purposes only, not investment advice and not in the hope of impacting speculative markets. There are plenty of trading sites and coin-specific advocacy journals out there, we’re neither. CoinSpice strives for rigorous accuracy in our reporting. Information presented here is contingent usually on a host of factors, and the ecosystem moves fast — prices change, projects change, and at warp speed. Do your own research.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.