Yesterday I talked about Captain Hindsight, and how easy it is to be helpful after an event.
As I said, many people make careers out of simply saying what people should have done in any given situation.
I related this to Eoin Treacy’s big idea about how bull markets end.
Contrary to perceived wisdom, Eoin has discovered that bull markets see a sudden and sharp increase in prices before the inevitable crash.
I thought it was an interesting idea, because he isn’t saying there won’t be a crash. But he is saying that before the crash is a short window of opportunity to make massive amounts of money.
In all the bull runs he studied, there is a steady build, then a “moment of doubt” where prices start to crash, and then a steep “melt-up” before the inevitable collapse.
This is a pattern Eoin has traced in every major bull market of the last century, from the 1929 crash, to the Japanese stockmarket of the late 80s to the dotcom bubble in the late 90s, they all followed this pattern.
If Eoin is right, what we saw in the markets yesterday, with many tech stocks losing double-digit percentages, would coincide with this “moment of doubt”.
If you’re already a subscriber to Eoin’s Frontier Tech Investor service, you’ll know all about this pattern, he devoted this month’s issue to it.
And if you’re not, look out for an email at 2pm today where he will explain this idea in more detail.
When two tech millionaires go to war
And it’s not just stockmarkets that are crashing. At the time of writing, crypto has lost 30% of its value in the last seven days.
Most people attribute this to a war between two maniacal crypto millionaires, Roger Ver and Craig Wright.
They had a falling out and decided to hard fork Bitcoin Cash to settle their disagreements.
Bitcoin Cash, which was already a lesser fork of bitcoin, then split into two more lesser forks with ridiculously complex names: BCHABC and BCHSV.
The two opposing sides reportedly not only tried to make their new coin “win” by devoting all their money and computing power into securing their fork. But they also actively attacked their competitor’s fork.
I’ve even seen reports that each side began liquidating their own bitcoin holdings in order to fund this computer-power war (or hash war, as it’s called).
And some believe that’s why we are seeing such a huge crash in crypto prices right now.
Personally, I think Eoin’s analysis of the situation is more accurate.
For the last few weeks in his Exponential Investor Premium videos he has been showing that bitcoin’s relative calm was simply just an explosion waiting to happen.
He said himself that explosion could happen in either direction, and he wasn’t sure which. But he was pretty sure there would be an explosion.
So, while many crypto enthusiasts are blaming the capitulation on the Bitcoin Cash wars, it’s much more likely this was just normal crowd behaviour. The Bitcoin Cash wars were merely the trigger.
I’ll be channelling my best “Captain Hindsight” over the next few weeks to try make some sense of what we’re seeing in crypto right now.
With that in mind, here was my reply in an email thread with Paolo Cabrelli and Sam Volkering this morning about the overnight crypto crash:
Maybe I am deluded. But if I hadn’t just bought a new camera, I would have put another £500 into Eth and IOTA today. As I said, if prices are still smashed a week Friday, I’ll probably put a few hundred in.
I simply can’t see this tech not being instrumental in the futures of so many industries, companies and lives.
All assets will be tokenised. Data will become decentralised to stop hackers and Facebook shenanigans. And the IOT: driverless cars, transport, energy supply, etc. will all run on crypto – probably IOTA.
And that is all completely discounting if any crypto-currency projects succeed or not.
Until next time,
Editor, Exponential Investor