This is what it takes to get crypto to zero

Dit is er nodig om crypto naar nul te krijgen

Based on the magazine cover indicator will crypto be all right?!

The magazine cover indicator? Yes, time slices do tend to be dramatic on a financial topic, and that tends to be at and around bottoms and tops. This is the most famous from 1979. That was on the eve of the great bull market 1981-2000.

Something about stocks and inflation, as you can see. How do we know that? Therefore, do not assume another blistering bull market, or a big crash, should the broad stock market break out of the current bear market or not. Years of plodding, drizzling and sideways is also possible.

The Economist: how to implode bitcoin

Now has The Economists another crypto story and that is interesting. You may also be surprised that although bitcoin and the other coins have fallen sharply on the FTX debacle, there is certainly no crash, implosion, sell-off and large exodus.

And that with a possible systemic crisis in the wings! In principle, monetary and fiscal authorities therefore do not lift a finger, unless there is contamination to the ordinary world threatens. The Economist looks at what it would take for crypto to implode to zero. Because you can… if you have $10 to 15 billion.

Read along, it’s a technical story:

Major chains and a handful of Ethereum-based tokens, like stablecoins, account for about 90% of cryptocurrency value. Big businesses have been built on top of this world, including exchanges, investment funds and lending platforms. To take out crypto entirely would require killing the underlying blockchain layers.

They could either give way first, kicking the stool out from underneath everything else. Or the industry could unravel from the top down, layer by layer like a knitted scarf. Knocking the stool out is extraordinarily hard, and the current high value of bitcoin and ether makes it even harder.

To attack a blockchain and shut it down requires gaining 51% control of the computational power or value of tokens staked to verify transactions. The more valuable the tokens, the more energy it takes to attack a proof-of-work chain, like Bitcoin, and the more money to attack a proof-of-stake chain, like Ethereum.

The security of these chains—as measured by the amount someone would have to spend to attack them—is now in the region of $10bn to $15bn. It would require either a government or an extraordinarily rich individual to mount such an attack. And even if Elon Musk was so inclined, he seems a little busy.

The conclusion:

Crypto’s reputation has been undermined before. It has collapsed in value repeatedly throughout its lifetime. Although fewer people will use crypto as a result of the ftx collapse, it is very hard to imagine the number will be small enough to take its value to zero.

Bubble out

In short, a systemic crisis and a straight line down towards zero is not very likely. The Economist says so himself and the prices on the offer are proof: the reputation of bitcoin and the rest has already taken a lot of beatings in recent years, but the herd cannot simply be chased away.

Nevertheless, especially the long logarithmic graph of bitcoin seems to indicate less and less enthusiasm. The fact that many believers have remained irreverent is one thing, but new souls must be won to give the prices momentum again. The big question, of course, is whether that will happen.

Implode or again to the moon: A night candle scenario is also possible. I secretly think about that myself. I don’t think the big herd and the regular financial world are going to go anymore all inclusive after all this, but surely there remains a church. Until a new generation comes to the fair with a new toy?

And then we start from the beginning again, like now crypto, my generation once with dotcoms, the railways at the end of the 19th century and so you automatically end up with South Sea Company and the mother of all nonsense assets and bubbles: tulip bulbs.