After another negative press release this morning, the major cryptocurrencies fell towards crucial support levels. According to a Zerohedge article, quoting CNBC, Japan’s chief regulator launched a probe of crypto-exchanges, prompting the largest to halt new account creation, thus sending the crypto market considerably lower.
The press release stated that Japan’s largest crypto-exchange, Bitflyer, needs to make improvements to its business model, especially in regards to anti-money laundering. While the press release had a negative impact on the crypto market, it will likely not be a big issue going forward. So, the cryptos may recover and shrug this newest downturn as just more FUD… Fear, Uncertainty, and Doubt.
Or, the crypto market could continue lower towards crucial support levels.
Today, Bitcoin fell 9%, to a low of $6,100:
Crypto investors need to understand that there aren’t too many assets that fall 9-10% in a day. However, Bitcoin is actually holding up better than the other cryptos. For example, Litecoin was down more than 13% today. For cryptos to be taken seriously, they cannot continue to experience this sort of daily trading volatility.
Now, some of the Crypto-Aficionados are saying that the cryptos are being manipulated by the POWERS-THAT-BE. Well, I thought one of the key reasons to own cryptos was due to them being decentralized… thus not subject to manipulation. However, all assets can be subject to manipulation, even by the “Whales” who control a large percentage of Bitcoin. So, manipulation can push prices higher or lower.
Regardless, it seems as if the crypto market will experience more selloffs in the future as the largest bubble in history continues to deflate.
I say this because even with the positive news releases on the crypto market, (SEC ruling that Ethereum was not a security), the crypto prices continue to trend lower. Thus, the negative press has more of negative impact on the crypto market than the positive news. We can see this taking place in the following charts.
I started warning about Bitcoin and the Cryptos late last year in my article, SELLING OUT OF PRECIOUS METALS & BUYING BITCOIN… A Very Bad Idea. At the time, Bitcoin was trading at $8,000, on its way to $19,000. Since its peak at the end of 2017, Bitcoin has fallen nearly 70%. Today, it fell to a low of $6,100, but the critical technical level is $6,000:
Bitcoin has fallen below its previous low of $6,468 on March 26th. The last time Bitcoin was trading below $6,100 was last year on Oct 16th. While $6,000 is the next key support level, the important psychological level will be $5,000. If Bitcoin falls below $5,000, it could head back towards $3,000 quite quickly. Not only would this be bad news for Bitcoin HODLers, but it would also be detrimental for the Bitcoin miners.
However, it is possible that Bitcoin could shrug off this bad news and move higher for a while. But, I doubt this would last long as the overall trend seems to be lower.
Now, even though Ethereum is experiencing a big selloff today, it has a bit more breathing room to reach its next key support level. Etheruem is now trading down 11% at $470, but needs to drop below $400 to puncture its key support level:
As we can see in the chart, the Ethereum price touched $400 three different times. Well, the price was actually $360, but I am just using $400 as a key psychological support level. If Ethereum falls below $360-$400, then its next significant level would be $200.
The third crypto that is very close to a critical support level is Litecoin. At it’s low today, Litecoin fell by more than 13% to $83. This is extremely bad news as Litecoin’s key support level is $80;
Litecoin is closer to its key support area that Bitcoin or Ethereum. Currently, Litecoin is down 72% from its high of $300. If Litecoin falls below $80, then it could quickly fall to its next support level of $50. But, as I stated, nothing goes down in a straight line. So, the entire crypto market could experience a correction higher for a while.
Another major crypto that is also very close to its key support level is Ripple. Ripple, was by far, the biggest bubble in the group. At its peak, Ripple touched $3.00 and is now trading at $0.50… 83% lower:
I highly doubt Ripple will ever surpass its previous high of $3.00. If you were lucky enough to purchase Ripple at a fraction of a penny in 2017 and sold it anywhere above $0.50, you did very well. However, if you continue to hold onto Ripple as it falls back towards a penny, you have my condolences.
Now, I want to make something perfectly clear. I am not anti-blockchain, but I am anti-bubble. Yes, it is true that some of these cryptos could survive and be around in the next 5-10 years, but I don’t have a lot of faith in highly complex technical systems when the world is getting ready to hit an ENERGY BRICK WALL.
Our highly complex technological infrastructure takes a great deal of energy to maintain. Unfortunately, we are running up against the limits of our energy sources right now. Besides the fact that the cryptos are still in the process of deflating from their bubble highs, we will not have the energy to maintain an advanced cryptocurrency system in the future.
I posted this chart on the “Fragile Nature of Currencies.” I highly recommend you understand the fundamental reason to own physical gold and silver to protect your wealth in the future as they are the strongest and most durable currencies in the world:
Even though a gold coin can wear its face off after 35 years of use, the coin can be remelted and minted into a new coin for another 35 years. However, the typical Federal Reserve Note only lasts eight years on average and the servers that run the Digital Banking system only last four years. With the average Bitcoin miner lifespan of 2 years, we can see that a Gold Coin, versus all others, is the best quality store of value.
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JP Morgan said it best:
“Gold is money. Everything else is credit”.
There is no free lunch. I have over the years, watched high flyer’s come and crash, disappearing without a trace. Many will say gold is boring and blah, blah, blah, on and on. So I will stick with the tried and true, thank you very much.
Money is physical gold and silver. Paper and digital currencies have a temporary and illusory value, including cryptos. They are all somewhere in the process of failing. We return to gold and silver money (and receipts therefor) because that is all there ever has been, is, and ever will be.
Agnostic
Well said.
I wonder if Andy Hoffman has any nails left on his hands?
Rodster,
Good question. Unfortunately for Andy, his CryptoGoldCentral.com website traffic has fallen seriously into the toilet: https://www.alexa.com/siteinfo/cryptogoldcentral.com.
Now, my traffic has also declined for several reasons, the EU GPDR guidelines didn’t help… LOL, but should be recovering over the next few months.
steve
Finally some good news. I hate that crappy Andy “the weasel” Hoffman!!
Andy Hoffman was chased off the financialsurvivalnetwork.com website for being a weasel. He lost all credibility after pimping gold and silver, then did an about face and went all in on cryptos and started badmouthing PM’s. Andy’s famous last words were “trust me, when I tell you”. Sure Andy, whatever you say man, we believe you !
I was a leading part of that chase. And I’m proud of it!!!
That’s so ridiculous. If you bought bitcoin when he turned bullish on bitcoin and bearish on PM’s — you’d still be sitting pretty even after the drop from 20k to where it is now.
I wish I took his advice while wishing for the day PM’s go parabolic. (not going to happen anytime soon IMO)
Crypto guys are starting to sound a lot like PM bugs.
Everything is a manipulated conspiracy on the way down and they will never call the top cause of greed or to get the suckers buying in at the top.
Goldnsilver,
There is a big difference between Crypto guys and PM investors. But, I don’t want to get into it. However, the only assets worth owning in the future are Gold and Silver.
steve
I agree! I think there are only two types of gold “investors”. The first are the gold going to 10k, and they will cash out rich (they are the suckers who missed out on the bitcoin pump and are just jealous)
Then there are the long term value holder gold accumulators.(i.e what SRS promotes) They are more pragmatic and I fundamentally agree with and have allocated part of my savings buying some phys accordingly!
Anyhow, the two guys above are pretty clueless. You can still be short term bearish on PM’s, but then be long term bullish on PM’s.
IMO crypto is where it’s at if you want to speculate any actually make money, while slowly accumulating PM’s over the long run for the safety net.
I personally have all my mad money fund in cash waiting for Bitcoin to bottom. From there I am just going to load up and ride the next wave while still accumulating my regular long term allocation of PM’s per pay check!
I also think it’s a bit silly / misguided animosity towards Andy. When he promoted physical gold and silver (he always hated the stocks) for miles franklin, he was the director of promotion…
So if you are going to call someone two faced for doing their job, then quitting to go all in Bitcoin before it ripped up to 20k — you are just fooling yourself and need a serious reality check.
Gold is good. Silver is gold on steroids. -paraquote Jim Sinclair
Silver and platinum are the speculative parts of my collection. Platinum and gold are compact value, and silver is very-near miner-cost-of-production. Useful speculative metals are copper and lead, with jacketed bullets, copper plates, electrical transmission line as long-life end-items.
Viva PonziCoin!
The question is, “how far in the future” are we talking? Waiting another 5-10 years isn’t a smart thing to do. While I do agree with you on a lot of theories, time is a very important part of the investing equation.
Most people don’t have money to invest until they’re in their 40’s. So a guy that bought metals 10 years ago and has to wait another 5-10 years is seriously burning crucial time. I think it’s best to watch trends, whether they will survive or not is really not the question…
Screw cryptos. Frigging scam!!!
According to Bix Weir, cryptocurrencies were made in a series of supernova explosions billions years ago that can not happen again anywhere in this spacetime configuration.
Bought a few ripples a few months ago, sold them, just for fun. Lost 20 €. Crazy lottery, the casino always wins. Blockchain is good for transferring value, blockchain in itself is not the value. Its the transmission. Well where’s the value then? Its all about perception. There’s no anchor, just belief. And indeed, the volatilty is amazing. Like a priest sending you a whats app message he is in Wisconsin while you’re in the church already in your home town, 800 miles away. But don’t worry, next week he will send you a new message of his whereabouts. In due time this will go for fiat currencies too.
“Yes, it is true that some of these cryptos could survive and be around in the next 5-10 years, but I don’t have a lot of faith in highly complex technical systems when the world is getting ready to hit an ENERGY BRICK WALL.”
Great point, how the hell are you going to mine cryptos on your high end Nvidia graphics cards with limited or no power.
I was looking at a chart Gail Tverberg posted in her latest blog. It shows that global energy supplies is as follows and doesn’t seem like a long time:
BP provides reserve data for oil, natural gas, and coal. It also calculates R/P ratios (Reserves/Production ratios), using reported “proved reserves” and production in the latest year. The purpose of these ratios seems to be to assure readers that there are plenty of years of future production available. Current worldwide average R/P ratios are
Oil: 50 years
Natural Gas: 53 years
Coal: 134 years
https://ourfiniteworld.com/2018/06/22/eight-insights-based-on-december-2017-energy-data/#more-42919
I never got on the BTC/crypto bandwagon. While I understand the masses’ frustration at being trapped in a central bank controlled fiat system and wanting a decentralized system, I suspect that the meteoric rise of the cryptos, and their recent stumble, reflects the attitudes of millenials and others who think that no one has to do any work any more. You can just trade cryptos on Dave’s X-22 or V the Guerilla Economist’s site with crypto cowboy, or CryptoZ without having to do any work!
Who in hell is going to grow the food, transport it, run the public utilities, perform sanitation and waste disposal, run the trucks, drill for the oil, keep the infrastructure maintained? No, it is not glamorous work but it is vital to our survival!
Back to energy. Interesting that OPEC agreed to 70 mbpd increase, but choked on Trump’s request for 100.
Some countries like Nigeria claim they are maxed out at their current rate. Why? Lack of supply, lack of finance, or lack of drilling equipment and transport, or are they calculating the rate to keep oil priced in a narrow range?
I was surprised that Trump made such a demand (100mbpd increase). If fracking is going so well in the Permian, the claims of lack of “pipe width” limiting transport notwithstanding, then why this blatant demand for more oil from OPEC?
TPTB will never tell you we’re about out of gas. However, as you’ve puzzled together the world needs more oil..not just more oil…but cheaper oil. The “pipeline limits” of the Permian is just the excuse needed to explain declining oil output. In this Bloomberg article, they claim new oil fields are coming online in New Mexico and West Texas that rivals Ghawar in Saudi Arabia. In my opinion they are lying to obfuscate our energy reality.
https://www.bloomberg.com/news/articles/2018-06-21/unfracked-oil-wells-growing-as-permian-pipeline-scarcity-worsens
Depends on when you got in cryptos. Kind of like everything else. JM Bullion gladly accepted my Bitcoin for a 100 oz Ag bar. That was at $2500. Letting the crypto money ride for now.
So glad to read more articles again soon. You have spoiled us with your content. As I said before, best part of the week is a Steve article.
Look out, the states are gonna start taxing online PM purchases soon. Better buy up now or pay another 10% on top. OUCH! Another fine ruling by the Supreme Ct.
Most crypto pumpers bind blockchain and a coin. The value is in what can be done with blockchain, it does not need an embedded coin. I would only touch crypto if forced to do so due to lack of confidence. Like crypto or not, a swing from 400 to 20k back down to 7k will take a long time to digest so it is not going anywhere anytime soon. So many bag holders above current price. Add to that starting from square 1 with security on the exchanges and governments discussing what regulations might be needed and it is hands off for me.
Bitcoin & the fraud cycle:- https://www.ineteconomics.org/perspectives/blog/jim-chanos-cryptocurrency-is-a-security-speculation-game-masquerading-as-a-technological-breakthrough
Anybody else grab some platinum at its 15 year inflation adjusted low last week?
It may be an even better buy than silver right now.
Production cost is averages $1000 an ounce. Spot is $870
Silvers production cost is somewhere between $10 and $15. Spot is $16 to $17
There’s a whole host of other factors as well.
I read the link to Gail Tverberg’s article, and of course I’ve read many other articles over the years. I really can’t see how anyone can deny that we are headed towards some kind of inflexion point in the next 1-3 years.
I’ve adopted Steve’s mantra that GNP can only increase with a corresponding increase in energy consumption. I don’t think that China and India can increase GDP at anything near the rates they have in the past. Something’s got to give. Both countries have done miracles, but there are physical limits in the universe.
I don’t believe China’s past claims of 8% growth, but even if they were true, the world’s largest oil importer can’t keep raising energy use 8% every year from here on out. That is, without military action.
Anyways, with silver prices they way they are, if you readers out there aren’t buying at least one roll of Eagles a month (about $13/day), you are absolutely crazy.
Crypto’s mobility gives it value – with economic instability and political crisis brought on by extreme changes, crypto allows you to conveniently store and transport wealth across borders.
Just because cryptos go down, doesn’t mean gold and silver go up. Gold and silver are not the inverse of cryptos.
Just as they are not the inverse of the dollar. You guys thought there was a one to one relationship between dollar creation and gold and silver going higher. That turned out not to be the case. The relationship held for awhile, but then it broke down as people traded in their gold and silver for dollars, and the powers that be authorized unbacked paper smashes on the gold and silver price.
So, you see, gold and silver hit their dollar highs in 2011, never to return for 7 years. And now, with no momentum, there is no way for gold and silver to rise again. All the air has been sucked out, nobody believes anymore, and people would rather go into real estate or stocks, which are supported by the powers that be, creating an infinite upward movement in those assets.
Remember Neo from the Matrix after meeting the Architect. He says, the prophecy was a lie. It’s the same with gold and silver, the prophecy of them going higher was a lie.
I really like how Steve frequently ties financial issues of the day back to the core issue that the world is facing, from which many if not most of today’s financial issues derive: energy, or lack thereof. Steve says “we are running up against the limits of our energy sources right now”. In another article I read today, speaking at the OPEC meeting, the chief executive of the UAE state run oil company said that the world needs another Iraq or North Sea sized oil field EVERY year to keep track with projected demand. That oil does NOT exist. And this UAE oil exec knows it. He might as well have just said “we’re screwed because we’re out of oil”. Knowing this, seeing clearly what is coming in terms of energy shocks and oil shortages, how could any rational person put their money and trust into web-based “investment” tokens? Guys, when the lights go out, hard assets that you hold and possess is all that will matter or be worth anything.
Gail Tverberg responded to a comment made on her most recent blog. She said that a common misconception is that cheap oil consumption is related to heating our homes and fueling our cars.
But cheap oil is what first goes into building our homes, our roads, our bridges, our infrastructure, our hospitals, our cars, planes, our appliances etc. Then it gets filtered down into our transportation delivery system. Most people would be shocked if they knew that pretty much everything we use has fossil fuel inputs. Without cheap fossil fuels we couldn’t provide enough food to feed close to 8 billion humans on this planet.
In a recent article Steve posted, he put up a chart that should terrify everyone. In 2016 there was around 2.4 billion barrel of new oil discoveries and demand/consumption was 25.1 billion of oil. The 15 year average of oil discoveries was around 9 billion barrels of oil and the discovery numbers have been trending down for quite some time. That’s what will produce the energy brick wall.
https://www.resilience.org/stories/2018-06-24/opec-production-increase-shows-its-still-fighting-u-s-shale-oil/
“OPEC does not want prices to reach levels that would actually make the tight oil industry’s cash flow positive.
You read that correctly. The industry as a whole has been free cash flow negative even when oil was over $100 per barrel. Free cash flow equals cash flow from operations minus capital expenditures required for operations. This means that tight oil drillers are not generating enough cash from selling the oil they’re currently producing to pay for exploration and development of new reserves. The only thing allowing continued exploitation of U.S. tight oil deposits has been a continuous influx of investment capital seeking relatively high returns in an era of zero interest rate policies. Tight oil drillers aren’t building value; they are merely consuming capital as they lure investors with unrealistic claims about potential reserves. (Some analysts have likened the situation to a Ponzi scheme.)
To demonstrate how unrealistic the industry’s claims are, David Hughes, in his latest Shale Reality Check, explains that expectations for recovery NOT of proven reserves, but of UNPROVEN resources are exceedingly overblown.”
Those who bought Bitcoin above 12000$ going into the history , maybe in 200 years They going to see their money back.I think ,that a lot of money gone into wrong investment instead going towards gold. That was good trick from Big Banks. Bitcoin holders should be very worry by now.
Very negative article on cryptos here: so it means cryptos are going to have a huge rise from this 24th june sunday lows.
Want to place a bet in escrow on that?
I am poor so no money to bet but yes a huge rise, maybe a dead cat bounce but a huge rise from sundays lows surely.
You do realize that you and the other crypto pumpers have been coming in here for months claiming that these shitcoins will go to infinity. And in the meantime they went from a bubble top of $20,000 all the way down to $6,000 in six months. Any sane person would call that a collapse and the end of a hysteria. There are exactly zero signs showing that the prices will go up. Please, stop pumping this shit. And least your fellow pumpers had the decency to stop coming up with braindead reasons why these shitcoins are gonna go to the moon… Bitcoin will go down to $2,000 before the year is out. And then it will continue lower for years. Cryptos are done. They were never worth anything and as the fools who bought into the mania realize this, the price will continue collapsing. Empty promises, lies, and fraud — that’s all cryptos are and have ever been.
I do not make any long term forecasts on cryptos quotes. I just contemplate that as soon a bearish article is released on this blog, a huge bounce is happening next.
Steve pretty much nailed the top of this bubble. He actually called the top early, I believe around $14,000, so people had a few days to cash out based on that call. You and your buddies who were trolling the comments about cryptos were wrong. I have yet to see one crypto troll to admit that it was a bubble and they were foolish and wrong. No, instead you will be calling a $500 bounce that lasts two days a huge rally.
Also, on a personal note, you come here making claims about finance and at the same time you say that you are very poor? I mean, haven’t you made a fortune on cryptos? Come on!
good discussion on bitcoin fallacy on Hedgeye: https://app.hedgeye.com/insights/65447-bitcoin-webinar-w-erik-townsend-3-big-things-you-missed?single_item=true
Did anyone looked into Hedera Hashgraph? https://www.youtube.com/channel/UCIhE4NYpaX9E9SssFnwrjww
Seems to address energy waste problem of bitcoin, among other things. Tnx!
(I know, gold & silver is money and rest is a credit)
About Bitcoin: I did some back-of-the-envelope calculations on limited data and found that the electricity cost of bitcoin is about 10% of its value. This or a larger cost would of course be unsustainable for an alternative currency. A lower cost would lead to excess production of bitcoin. It would be interesting to see a solid analysis of this side of the coin. Maybe this has been done already but I haven’t seen it.
FACT:
Last year BTC was $ 2500 NOW it’s $ 6,600
Last year Gold was $ 1250 NOW it’s $ 1,250
Last year Silver was $ 16.00 NOW it’s $ 16.00
Last year the Dow was $ 14,500 NOW it’s $ 14,500
Hmmmmmmmmmmm
Ooops meant Dow 24500 point is all those assets are equal from were where they were last year except BTC which is up 260 % but crypto is failing?