TL;DR: Number go down. At the time of publication, cryptocurrency prices are tanking, bleeding, whatever adjective you want. It’s bad, real bad. What’s worse is no one knows why. With relatively slim volume, markets can be especially humbling as bigger players enter and exit positions. This is a great time to consider basic fundamentals when it comes to cryptonomics.

Number Go Down! Cryptocurrency Markets Bleed

You’re going to read and hear a lot of theories as to why. The US’s first regulated, physically settled Bitcoin Futures exchange, Bakkt, launching recently is a main culprit for theorists. A Chinese whale seems always to blame. Tinfoil hats are glistening in the tears of those who see ghosts of Satoshi Nakamoto nefariously selling off previously hidden holdings. Facebook Coin Libra and world governments’ monumental pushback is getting some play among those groping for reasons. Heck, there’s even a connection being made to Trump’s possible impeachment.

The post hoc ergo propter hoc fallacy is among the most seductive. Something happens, and then something happens after that something happened. The most recent happening, then, must be the cause of that latest happening. In a causal world, that makes a lot of sense. And, for sure, something caused crypto prices across the board to fold in unison.

When approaching a billion dollars in liquidity (more like $700K) being sucked out in a short period of time, the mind races to find answers, patterns. So far, I am paying closest attention to Bryce Weiner of alt.market and fanmix and his pet theory. Weiner is that rare combination of being on the hopeful side of cryptocurrency while retaining skin in the game alongside a healthy amount of skepticism.

Mempool Watcher

He’s a mempool watcher, and believes there to be a connection between its clearing and the BTC price. I’ll let him explain. “Here’s what happened to the Bitcoin price,” he snarked. “A bunch of people moved coins to market and dumped them all at once. If you’re clever you’ve already noticed the mempool cleared BEFORE the dumps started. So let’s play adversarial market thinking.”

He posits how banal the Bakkt rollout was on Monday, and so if the idea is to lure institutional finance into the crypto game they need to feel smart and that they’re buying at a discount. Weiner reasons, “you gotta give the sharks some chum… crash the price. Bakkt volume is looking to be over 4x what it was on Monday. But *why* would you want institutional money in Bitcoin? Because as soon as the sharks have gone into a full frenzy as BTC drops below 8k (yet to come), they set up bigger and bigger short positions. … and then the Tether printer fires up, and we hit 15k.”

Wall Streeters shorting get slaughtered in such a scenario. And if there’s been a constant lesson in crypto speculation, it is how those who drone on about holding until death and buying the dip are usually the ones selling. “Watch for a spike in Bakkt short positions,” Weiner continues. “‘Decentralized’ market manipulation in order to pwn Wall Street. Boy oh boy what some [law enforcement officers] wouldn’t give for a FISA warrant right now I bet.”

Bellows Filling a Balloon

Weiner is also keen to monitor BTC maximalist excuses for the sudden downturn exactly none of them predicted. The Store of Value (SoV) narrative has taken on near-religious creed at this point, and so it will be interesting to see how this dump is spun, considering all the hype leading up to more institutional investment. BTC maxi “theory requires Bitcoin to operate as a bellows filling a balloon, sucking in all of the available wealth on the planet through cycles of ever increasing greed,” Weiner stressed.

The dream for some in that camp is to become the new wealthy elite out of sheer coveting of Number Go Up, “where enough of the world’s fiat wealth is consumed by public cryptocurrencies that it begins to diminish the impact of the buttons and levers of Keynesian legacy finance,” he explained. “That process started with CME, but it isn’t real until it’s on the blockchain, and that’s where Bakkt starts to matter. The reasons why that’s important are as esoteric as my hollow earth theory, but suffice it to say it’s what maximalists believe matters.”

What I appreciate about Weiner’s conjecture is that he’s aware of post hoc ergo propter hoc, and asks readers to test him out. He assumes as BTC goes so does the rest of crypto, or at least he’s implying that in a way. Fair enough. History tends to record that as true. But a return to the fundamentals, while watching mempools and narratives and ecosystem sharks, is what is in order going forward.

Nearly every so-called stablecoin is in positive territory, and nearly every deemed-viable cryptocurrency is double-digit red. History has also shown that’s not permanent, and seeing as how cryptonomics is still young, figuring itself out, at the very least we’re beginning to understand cryptos have different use cases, different emphasis. So long as projects remain true to their value proposition, a rationally-leaning market will reward it if that vision indeed provides value. And perhaps that could be one benefit of mature traders entering ecosystem speculation. They’ll be less-inclined toward ideology, purity tests, hype, and more focused on fundamentals.

CONTINUE THE SPICE and check out our piping hot VIDEOS. Our podcast, The CoinSpice Podcast, has amazing guests. Follow CoinSpice on Twitter. Join our Telegram feed to make sure you never miss a post. Drop some BCH at the merch shop — we’ve got some spicy shirts for men and women. Don’t forget to help spread the word about CoinSpice on social media.

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.