KanawatTH
I had said in articles since March 2021 that when Bitcoin (BTC-USD) traded above $60,000, government regulation and central bank digital currencies would hurt the industry. This week took a step closer to ending the decentralized dreams.
The IMF introduces its Unicoin currency
Just over a week ago, the International Monetary Fund held its annual Spring Meeting, where the Digital Currency Monetary Authority (DCMA) announced the official launch of a new central bank digital currency (CBDC). The Universal Monetary Unit (UMU), or Unicoin, will be able to transact SWIFT-like cross-border payments outside of the traditional banking system.
In my final sell warning above $60,000, I talked of CBDCs and that Bitcoin and other cryptos were possibly a trojan horse for introducing traceable, programmable digital money.
Another analyst to follow on this has been famed forecaster Martin Armstrong, who also said back in 2021 that the IMF was working on a digital currency to dominate the world’s currency. His thesis is that this one-world, centralized digital currency is a precursor to a world of less monetary freedom- not decentralization.
In Martin Armstrong’s article, “The Bitcoin Delusion, he says:
“The whole blockchain was the perfect creation of a totalitarian state. They can trace everything”.
Darrell Hubbard, executive director of the DCMA, touted Unicoin’s superiority over sovereign forms of money, saying:
“Unicoin offers the best of both worlds between a cryptocurrency and a CBDC. As a crypto asset, Unicoin adopts monetary policies to ensure it sustains its store of value stronger than any fiat currency…”.
This brings us neatly to the next headache for crypto bulls…
EU Parliament brings the first sweeping regulation
The European Parliament on Thursday passed a vote by 529-to-29 in favor of its Markets in Crypto Asset (MiCA) regulations.
The new rules mark a significant step toward the implementation of global crypto regulations and are likely to be followed by tougher laws in the United States. Among the new rules from the EU are measures to clamp down on money laundering, market manipulation, and false advertising.
However, there will also be stricter rules over Initial Coin Offerings (ICOs) and the ability to trace transactions above 1,000 euros. The rules would not apply to peer-to-peer transactions but remove a big chunk of crypto’s Universal Selling Point, which was decentralized money and freedom. The EU will now trace all transactions over a measly 1,000 euros that are sent to an exchange. In order to receive the desired approvals to operate in Europe, exchanges will have to hand over their transaction details. It also paves the way for tougher taxation on crypto. The press release added:
“To counter money-laundering risks the European Securities and Markets Authority (ESMA) should set up a public register for non-compliant crypto assets service providers.”
Another headache for Bitcoin in the EU laws is also something I spoke about in 2021. The EU press release also said:
“To reduce the high carbon footprint of crypto-currencies, significant service providers will have to disclose their energy consumption”.
Bitcoin is obviously not a service provider but politicians in Europe have wanted to ban the energy-intensive proof-of-work (PoW) mining that BTC uses.
Bitcoin has been resigned to a trading vehicle
The reality for Bitcoin, in my opinion, is that it is now a trading vehicle that was hyped as a decentralized savior of world finance. Crypto has failed as a store of value, failed as an inflation hedge, and the broader industry has failed to avoid the same behavior of greed, manipulation, and abuses that its founders were said to despise.
In my opinion, we lurch toward a future where Bitcoin is becoming largely irrelevant but its supporters are unable to see where we are going with regulation, etc.
Bitcoin now moves up and down with random news cycles and is increasingly manipulated by whales and futures positioning. An article from CoinDesk on the latest dip highlights the confusion about what the coin is meant to represent:
While the sell-off didn’t appear to stem from any fundamental reason immediately, an unusually large sell order on crypto exchange Binance and an unexpectedly high U.K. March inflation figure of more than 10% may have influenced market sentiment.
I actually report on the weekly trading moves and called the push to $30,000 but I have no desire to hold the coin beyond the short term. The price of Bitcoin rallied hard in 2023 with tax-loss harvesting and a big short squeeze but it has stalled once again.
The reason for the consolidation is that there is zero interest beyond small, speculative investments. Warren Buffett recently likened Bitcoin to playing roulette and said it has “no intrinsic value”. His statements don’t go down well in the crypto world but let’s get real. Buffett would be one of the first to know if an institutional push into crypto was coming.
Another example is that investors even ignore the comments of the CEO of America’s largest investment bank Jamie Dimon who calls Bitcoin a “pet rock”.
“I think all that’s been a waste of time and why you guys waste any breath on it is totally beyond me,” he told CNBC.
Conclusion
Bitcoin bulls have had a bad week with the introduction of an IMF CBDC and the approval of the European Union’s new crypto regulations. We are edging closer to centralized, traceable digital currencies and BTC is also a sitting duck for its energy usage. The weekly ups and downs of BTC are speculative and investors should see that regulation is there to support, but also stifle the industry’s growth. There is a very, very slim chance of Bitcoin hitting $100k and even that would only be a 5x investment opportunity. China has been opposed to a decentralized currency with its digital yuan, the IMF believes it can beat sovereign fiats with Unicoin and the EU will trace all of your transactions in small amounts for tax. In my opinion, Bitcoin has lost its USP and is now only used for trading.
