Bitcoin Down 70% From Peak In Crypto ROUT | The Kyle Kulinski Show
Why? So? Let me give you some of the numbers here and then well. Watch uh a segment i havent watched yet, but i heard it was phenomenal by matt stoller on crypto and why he thinks its basically a scam. Bitcoin had plunged more than 13 to a low of 17 593 at one point on saturday, bitcoin has now lost more than 70 of its value, since reaching its peak in 2021. Bitcoin peaked at more than 68 000, so it was almost at 70 grand and then it was down to 17 500.. Now, since this article was written, it did bounce up. It was just above 20, 000 um at least last night. I dont know whats happening right now as im talking to you, but it dipped down to 17593. It bounced back up about seven percent to just over 20 000, but i mean these are thats a stunning decline. I mean at one point down 70 from its peak thats. Out of this world, bitcoin fell below 20 000 for the first time since late 2020 in a fresh sign that the sell off in cryptocurrencies is deepening. The price of the most popular cryptocurrency has has plunged more than 13 to a low of 17 593 at one point on saturday, according to the cryptocurrency news site coindesk, this is the weakest level of the most popular cryptocurrency since december 2020, before pulling back up to 18 556 dollars still down 9.2 percent bitcoin has now lost more than 70 of its value since reaching its peak in 2021, bitcoin peaked at more than 68 000 ethereum and other widely followed.
Cryptocurrency has been sliding in recent weeks, took a similar tumble saturday. Ethereum backed ether is down. 74 ether breached 1 000 and dropped almost 19 to 891 dollars, the lowest level since january 2021.. The two bellwethers of the crypto market are both down more than 70 from all time highs. In early november, the overall market value of cryptocurrency assets has fallen from 3 trillion to less than 1 trillion jesus christ, so 2 trillion dollars in wealth gone according to coinmarketcap.com, which tracks crypto prices. As of sunday morning, the companys data showed cryptos global market value, stood at about 840 billion dollars. Reasons why the cryptocurrency market has crashed. Broader signs of stress emerged with last months collapse of the terror blockchain and worsen this week, following crypto lender celsius network limiteds. Recent decision to halt withdrawals thats, not good, adding to the mood crypto hedge fund, three arrows capital, suffered large losses and said it was considering asset sales or a bailout while another lender babel finance, followed in celsiuss footsteps. This week, bitcoin has been pummeled this week after cryptocurrency lending company celsius froze withdrawals and transfers between accounts, while crypto companies started laying off employees. Oh boy, this is not good, it sounds like things are being held together with duct tape and bubble gum. Coinbase announced it had laid off about 18 of its workforce with ceo and co founder brian armstrong, placing some of the blame on a crypto winter. Besides. Besides, companies such as global inc, gemini and blockfi said they would lay off thousands of employees as investors ditch risky assets.
There also were reports that a cryptocurrency hedge fund had run into trouble. The developments had coincided with an equity slide, as u.s stocks suffered their biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of recession. Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation. Higher rates can help bring down inflation, but they also heighten the chances of a recession by increasing borrowing, costs for consumers and businesses and pushing down prices for stocks and other investments like cryptocurrencies thats, really interesting. So, with interest rates going up, theres going to be uh, less investment in speculative assets and as a result of that crypto is getting hammered all right so now lets take a look. Thats whats going on lets, take a look at uh, matt stollers view of the situation. He does, i think, maybe once a week, he does something for breaking points and this one this week was down with the crypto scam. So i havent watched this yet im curious. What he says lets take a look: hi, im, matt stoller, author of monopoly focus newsletter, big and an anti trust policy analyst. Now i have a great segment for you today on this big breakdown. I want to talk to you today about crypto. Now i get a lot of notes from people saying: hey, matt, you hate monopolies, you hate corruption, you should love bitcoin, you should love.
Crypto were fighting against concentrated financial power, just like you are, were just doing it in a different way. Well, with bitcoin prices crashing crypto crashing and a lot of people getting wiped out over the last six months, i figured now is as good a time as any to talk about it. So what is crypto? Why are so many people into it and why is it all collapsing? I think the best way to tell the story is to start with a historical metaphor in the early 1920s known, sometimes as the roaring 20s, a wave of speculation occurred around land in florida. Now this was just after world war, one a war that caused mass disillusionment, millions of americans who no longer believe their government would do anything for them. There was easy money from the federal reserve, few rules on wall street and a raging cultural war that disguised the economic choices of elites sounds pretty familiar anyway. Florida land was the perfect great get rich, quick scheme. For this moment the state of florida looked like the future, but florida was also far enough away from most people in the midwest of new york that investors couldnt easily investigate their holdings, so speculators gambled massively on florida land and the mania became insane just crazy. So to illustrate there was at least there was one speculation sort of specular fervor over land lots in the city of neti florida and neti. Florida was a city which later turned out not to exist.
Oh so, eventually the bubble popped. We had a lot of tears and litigation and a great depression. Okay, so with that metaphor, lets talk crypto. What are cryptocurrencies well. Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have some sort of intrinsic value. The organizers of these leather ledgers call these markings bitcoin or ethereum or other names based on the specific ledger. The ledgers have slightly different technical characteristics, but theyre. Not those differences are not that important thats it thats what they are theres no magic, its, not money, though it has money like properties and sure the technology behind the ledgers is kind of neat. But crypto is a movement fundamentally based on energetic storytellers, who spin fables about a few utopian future to come and use this kind of neat ledger technology as part of that story. So perhaps the most important storyteller is crypto billionaire sam bankman freed one of time magazine 100s time. Magazines. 100, most influential people of 2022. hes been profiled by the wall street journal bloomberg the new york times he intentionally has sort of crazy hair and he wears shorts and a t shirt to brand himself to politicians and regulators is goofy and friendly worth between 10 and 20 billion dollars these days now, thats, not all i mean crypto, is sort of sitting in a larger context. Fueling crypto is cheap money from the federal reserve, which has printed seven eight trillion dollars over the last 10 years and until recently had dropped interest rates to near zero thats a lot of cheap money going around that you can borrow and speculate with now because of The actions of federal officials like ben bernanke, which is, is talking right here.
People borrowed cheap money and they gambled on all sorts of assets from old sneakers to magic. The gathering cards to financial scams called spax to unprofitable firms in the stock market. Private equity. Yes also crypto. Now the fed is really important, theres, a reason that elon musk was worth 20 billion before the pandemic and was worth 340 billion dollars late last year and its not because tesla was selling more cars its because the fed pushed up asset values during a pandemic everywhere. So in this context, cryptocurrencies are like the florida land that no one ever intends to use. It has value in the moment it is traded, but only because theres, a collective belief that it has some intrinsic worth and because people are gambling over everything. Someone is willing to buy the crypto assets just like they were willing to buy the florida land, even though theres really nothing there. Okay but thats, not all theres, also a politics behind crypto and that politics is actually pretty similar to the politics of this show. Its populist bitcoin was created on january 3rd 2009 right my understanding and ill. Let matt respond in a second obviously, but my understanding was that its more libertarian than populist, you guys tell me what your perception of crypto has been, but in my experience most of the people who are very into crypto. Are you know the previous error ron, paul types um and look its an interesting thing, because you know i often said i 40 of the time im exactly with ron paul when it comes to war when it comes to civil liberties um when it comes to the Drug war, you know, i agree with libertarians 40 of the time and thats more than any other republican or or other flavor or variety of conservative, and i, in my experience, people who are really into crypto kind of stem from that thought.
Process ein rand, decentralization uh ron, paul, maybe milton friedman um, but maybe im wrong. Maybe there is, you know a little bit of a populist flavor mixed in there as well right in the middle of the bailouts and inscribing the code of bitcoin itself. Is a newspaper headline about bank bailouts now its not actual populism, its sort of a a weird kind of sort of inverted populism, but the theres a theres, a broad questioning of the legitimacy of our existing order and crypto. Proponents believe that the existing financial regime is a collusive arrangement between large banks, supported with government power and thats. How they got so much support is that they were pointing out actual problems with our system and they point out problems with the fed. They point out how the economy is effectively rigged. The big banks are uh, screwing, everybody and getting bailouts and those are powerful arguments. But you know theres a little twist at the end which is like, and we have the answer and its crypto and you know they think the blockchain and the fact that this is decentralized is revolutionary, but really as matts gon na probably explain here its like you. Just created basically a new currency thats like totally unregulated, so what you think theres no issues with a totally unregulated currency or with complete decentralization, because i agree – centralization has many problems, but the idea that decentralization doesnt is beyond absurd. Their view is that money laundering, tax evasion, criminal activity and fraud are fine as long as you want an insider in the system and the federal reserve and other government institutions will not only stop corrupt insiders, but will subsidize and bail them out if necessary.
Meanwhile, the rest of us have to live with foreclosures high interest rates on credit cards, high fees for middlemen in every aspect of the economy, student loans and so on and so forth. And how could you disagree with that critique, you cant, so if you, you know, if you toss kind of allegations at crypto, oh this is fraudulent. Theyre like well! So is everything in finance? How dare you, but whereas the liberal, democratic response that is true, that is exactly what they say. You know thats. What i believe in is to have the government create rules for markets. The crypto response is to building non government currency technology to root around this corrupt political order. Thats, a good ass point isnt it, and this is framed in the name of consumer choice, as in the state shouldnt, be able to boss you around and tell you what you can do with your money and neither should banks after all, its your money and anyone. Anyone who doesnt buy into this idea is inherently defending a set of collusive bailout friendly institutions that we sometimes call liberal democracy. Okay, so thats the politics of crypto theres, a theres, a reasonable point behind it, its not one i agree with but thats what a lot of people who are into it think the thing is whats become clear in this crash. Is that absent rules absent this liberal democratic order that these these uh this movement disdains crypto, is just an entirely unregulated financial system prone to the same kinds of cheating, fraud and collapse in the existing order, at least really in the in the pre 1930s unregulated financial System so twitter, for example, is full of stories like this heres, a customer of coinbase, one of the largest and most quote unquote, credible crypto exchanges and he cant get his money out.
Now. Banks will rip you off with fees, theyll charge, you something you dont. You know overdraft fee or whatever, but you get your money, not crypto exchanges, not having rules sounds great until it doesnt, okay and the culture of of around crypto, while sort of spouting lots of words like freedom and and uh and liberty is not good. Heres michaels, michael saylor, the ceo of a firm called microstrategy and sailor, is a or briefly became a bitcoin billionaire now watch this clip and youll see sailor, get crazier and crazier and more and more obviously trying to pull people into a scam. The only use of time is, how do i buy more bitcoin, but take all your money buy bitcoin then take all your time figure out how to borrow more money to buy more bitcoin, then take all your time and figure out what you can sell to buy. Bitcoin and if you absolutely love the thing that youre that you dont want to sell it go mortgage your house and buy bitcoin with it and if youve got a business that you love, because your family works for the business its in your family for 37 years And you cant bear to sell it mortgage, it finance it and convert the proceeds into the hardest money on earth, which is bitcoin. If you dont hear sirens going off as you watch this, if there arent red flags everywhere, then i dont know what to tell you dog youre a mark.
So what i would say is use all your time to acquire bitcoin finance entities and weaker currencies to buy bitcoin or educate yourself on why this makes sense, if youre not sure and then educate everybody around you. You know if youre working for a company. This reminds me of an onion headline that came out recently, which was something along the lines of um crypto bro wishes. A few thousand more people told him. It was a scam because a lot of people were like bro like look out. This is sort of questionable and a lot of the times they just plow forward got a hundred million dollars in the treasury. You ought to convince the ceo and the board of directors to convert the treasury to bitcoin thats. The most accretive thing you can do thatd be worth billions to them that that guys in, like an opinion leader in this space – and you can see that is a mix of of a cult and a ponzi scheme right. Okay, so thats the culture of bitcoin, thats, thats writ large, the culture of crypto and bitcoin and crypto are slightly different, but im lumping them in together because theyre, not that different um. Okay. Now the thing is is recently: the price of bitcoin has collapsed and theres a reason for this. Its not just you know, a speculators got tired. It was that it was prompted by the failure of two major crypto institutions, because there are no rules.
The first was something called terra luna and the second was something called celsius. The specific details arent that important, but both had similar dynamics, teraluna and celsius, promised depositors or buyers a ridiculously high return on their money, something like 18 20. A number thats, obviously too good to be true, and they said: oh, this is completely safe, then uh, then they lent out that money to speculators and those speculators bought bitcoin and other cryptocurrencies and and drove the price of those cryptocurrencies up. I im, you know, you know whats going to happen next right. The federal reserve, which has been you, know, juicing the gambling for for a decade, uh recently started pulling back from supporting financial assets in the last six months. Theyve the fed has been like. No things are going to go down now, so the price of bitcoin started to drop. What happens when theres lots of people who borrowed money to speculate well day, camp, the speculators? Cant buy pay back their loans, so buyers of either tara, luna depositors and sells in celsius got wiped out because those entities didnt have any money. They said. Oh your moneys. Totally safe, it turns out it wasnt. This is an old fashioned bank run before deposit insurance, um and the collapse of these institutions had another knock on effect, and it meant that speculators, couldnt borrow and so bitcoin fell even more. This is how an unregulated financial system unravels and there are more institutional blow ups in the crypto world to cop since late last year.
The aggregate value of crypto has dropped from between two and three trillion dollars to less than a trillion dollars, but but theres room to fall, bitcoin is still twice as expensive as it was before the pandemic. You know you the as the fed continues to withdraw support. Theres, a theres, a lot of money to be lost still, but frankly, a lot of people are are going to be hurt and thats sad. But i cant wait for this collapse to happen. It is a good thing that crypto is falling apart, because, ultimately, the goal for the big investors behind crypto im, not the people who are just involved and maybe made a little bit money or lost a little bit of money, but the people who are really behind It venture capitalists like mark andreessen billionaires like sam bankman freed, is to get favorable regulation in place before the big crash. So they can get bailouts from the state and they were actually starting to which, by the way, flies directly in the face of the ethos of crypto. The idea of, like oh, the systems so with the fiat currency and the fed and the bailouts and its nonsense. And theyre not looking out for regular people, and then they turn around and theyre like trying to gain political power so that when the hits the fan they can get a bailout. This is really astonishing stuff. This is a great job by matt stoller here to succeed.
Bankman freed had bill clinton, tony blair and andrew yang as guests for his crypto conference, held in the bahamas last year. Trying to gain political power by going to the chief priests of neoliberalism, at least in terms of bill clinton and tony blair yang, is a slightly different case, but um theyre theyre playing the game here lets get some internal power so that, if the hits the fan, We get protected and thats, not all senators. Cynthia loomis and kirsten gillibrand have been key advocates to have the federal commodities regular. The regulator instead of the more hardcore securities and exchange commission regulate the industry. There was some scary stuff about about fed accounts in there as well, like kind of hinting at possible bailouts theres, even a blockchain caucus in the house with such members as uber partisan, democrat eric swalwell on the left and the trumpiest trump republican lauren bobert on the Right, ultimately, the end game is to let crypto firms get access to taxpayer support through the federal reserve, landing facilities or other forms of government assistance. That takes these billionaires, who have their billions in crypto, and it turns them into actually something useful which are dollars now. People sometimes say: oh crypto, you know what backs cryptos just believe, but what backs the dollar thats just belief too. No, the american government backs the dollar through a lender of last resort facility, taxing authority, deposit insurance and a strong economy. That makes a lot of stuff.
Crypto is actually backed purely by belief and belief only lasts as long as prices go up. When belief goes, you need the u.s government to bail you out. Bankman freed and his people know this, and they are trying to get government backing for crypto as quickly as possible. He has spent 30 million dollars in politics just this cycle to buy power within the democratic party and says he may spend up to a billion dollars in 2024, just in politics and one of his business, not a partisan thing. One of his business partners is a big spender on the gop side. They theyre. Just these guys are cynics and business people. They divide it up. They said you take the republicans. Well take the democrats. Okay. So if this crash hadnt happened, when it did bangman freed would likely have succeeded, the momentum was on his side. The regulators were coming to like him. So were politicians. Maybe he still will win. Maybe he wont its going to be much harder now that people have seen the downside of crypto, but either way this story, like the florida real estate story, will end in tears, but hopefully it will end soon, thanks for watching this big breakdown wow all right. Well, that was that was strong. That was powerful. Look, everybody should have known. Something was up as soon as nfts became a thing i remember watching it. It felt surreal it felt like i was in a dream or something its like.
You have a shitty picture of a cartoon ape and its selling for 400 000, and you think this is a safe investment. You think this isnt speculative, you think this is, you know somehow real. I mean i just again red flags all over the place as soon as i saw that stuff, and there were so many people online who were all in on it. But then you learn and you realize like wait. It has to be evangelical by its nature or the value plummets, so people need to buy into that mindset and talk about youre, an idiot if you dont understand this because thats the way that these things that they have that theyve acquired, can keep their high value And so, but it was still crazy to watch it unfold where people would insist you you know, nfts are the future and whatnot, and then you see all of these celebrities got involved with crypto and nfts, and it was its just. It had such a snake oil sales feel to it, and you know i think uh stoller is doing a great breakdown here and with the changes coming in the economy, its about to get real ugly but hey. Maybe it is true that its a bright side that this guy didnt get enough political power so that he would eventually get a bailout. He maybe came up just short of gaining that political power so that now, when crypto goes down, you know there wont be another version of 2008, except this time, its not just going to wall street its going to crypto billionaires.
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