If This Latest Bitcoin Pump-N-Dump Is Like The Last One Then Prepare For $1000 Bitcoin

A scientific study shows Bitcoin has been manipulated since 2013, and if this current ramp follows suit, get ready for Bitcoin to collapse in price to $1000…

There’s a new scientific study out showing that “one single actor” (i.e. trader/group of traders) was likely responsible for manipulating the price of Bitcoin from $150 to $1000 in just two months.

Here’s some highlights of the study:

  • Suspicious trades on a Bitcoin currency exchange are linked to rises in the exchange rate.
  • A single actor likely drove the USD/BTC exchange rate from $150 to $1000 in 2 months.
  • Trading volume on all exchanges increased greatly on days with suspicious activity.
  • Unregulated cryptocurrency markets remain vulnerable to manipulation today.

And an Abstract:

To its proponents, the cryptocurrency Bitcoin offers the potential to disrupt payment systems and traditional currencies. It has also been subject to security breaches and wild price fluctuations. This paper identifies and analyzes the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired. During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.

Notice what happened after the 2013, 2-month ramp:

(hat tip to Dan Popescu for the chart)

That was nearly a 100% long, drawn out retracement after the two month spike. Ouch.

Now for the latest ramp, pick your price-point and/or pick your time-frame:

If going off of price point, the ramp clearly can be seen building up from $1000, which if Bitcoin retraces the ramp, we’re staring down a $1,000 Bitcoin price.

If anybody wants to queue off of the more parabolic rise from Mid-November when Bitcoin was toying with $6000, retracing the move would bring the price of Bitcoin down to $6000. The problem with that starting point, however, is that are people just going to HODL (hold it, don’t sell)?

What about those who bought as &19,000 and are already down $7000 as of today? Are they going to just hold and hope?

Are they going to lose another $6000 from here ($12,000 – $6,000) assuming the “best case” scenario?

Final thoughts (in no particular order and not all-inclusive):

  • It’s not currency because it’s inefficient, can’t support enough transactions and the transaction fees are too high
  • It’s not a store of value (because it’s lost value from $19,000, but even if it gained, it’s too volatile and does not have long enough history to be shown a store of value)
  • It’s becoming more regulated by the day (which the initial point was it was “outside” the system)
  • It can and is hacked all the time
  • It can and is manipulated

So, exactly, what’s the point of Beanie Babies Bitcoin other than pure speculative euphoric mania a la Tulip Mania?

Sorry. No offense to beanie babies. I mean, they’re a thing: In a survival situation you could slice open the fabric, pull out the stuffing, and use it as a fire-starter, all prepper style, or you’re plane went down and you happen to find yourself the lone survivor on a deserted island with just a beanie baby, you could name it “Mr Beanz” and be-friend it to keep your sanity.

Or myriad other things Beanie Babies can do that Bitcoin can’t.

Oops. Wait – Bitcoin does have one thing that Beanie Babies can’t do: Have a second successful pump-n-dump to lure in the dumb money after the first one in 2013!

Stack accordingly…

– Half Dollar