Bitcoin Collapses, Chinese Latecomers Get Fleeced

“Capital flight” takes on a bitterly ironic meaning.

The People’s Bank of China announced on Wednesday that it is probing the major bitcoin exchanges in Beijing and Shanghai – BTCC, Huobi, and OKCoin – for a list of violations, including market manipulation, money laundering, and unauthorized financing.

This is part of the PBOC’s efforts to crack down on capital flight, a major escalation from last week, when Chinese officials warned investors – if you can call them “investors” – to be careful with bitcoin. That warning came at the peak of the spike and tipped the whole thing over.

Ironically, China’s many other crackdowns on capital flight have pushed the hapless Chinese, who want their capital to flee, into bitcoin. It was seen as a way of converting their yuan into something other than yuan, which they fear will depreciate relentlessly.

The yuan lost 6.5% against the dollar last year, its worst year since 1994, which is nothing compared to some other major currencies, such as the British pound which lost 16.3% against the dollar, and the Mexican peso which lost 17%. But the Chinese are not used to getting whacked by a depreciating currency. It spooks them.

So the promise of convenient capital flight along with the lure of bitcoin’s semi-anonymity and the hope of quickly doubling their money have just been too much to resist. The rest of the world lost interest in bitcoin after it transferred a lot of money to those that got in early and got out in time from the latecomers that ended up holding the bag when it began to crash in late 2013. It went from over $1,100 to a range of around $250 in 2015. But recently, the Chinese have picked up the baton and in an insane frenzy drove it to $1,140 all over again.

And just in time, bitcoin crashed again. As of Wednesday evening, as I’m writing this, it plunged 14.5% to $772, just in one day. In the five days since its peak of $1,140 on January 6, it has crashed 32% against the dollar. What a crazy spike!

In terms of yuan, it’s even worse: It plummeted 19% against the yuan on Wednesday and 41% over those five misbegotten days!

Trading between the yuan and bitcoin accounted for about 98% of the total market over the past six months, Charles Hayter, CEO of digital currency analytics firm Cryptocompare, told Reuters.

And so the Chinese authorities have trotted out their big stick. Reuters:

The PBOC in Beijing, where officers visited the offices of OKCoin and Huobi on Wednesday, said in a statement that “spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering”.

Separately in Shanghai, the PBOC said it visited BTCC, noting its checks “focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks.”

Hayter of Cryptocompare put it this way: “This is a ratcheting up of the rhetoric from the Chinese authorities – instead of ‘we’re watching’ you, it’s now ‘we’re investigating’ you.”

No one is going to bail out these folks that got in late and are losing a ton of money on their bitcoin bets, or those that tried to catch that knife and got their fingers sliced off. On the contrary. Learn your lesson – that’s what Chinese authorities seem to say with an inscrutable smile on their collective face, same as central banks elsewhere in 2014 as bitcoin jockeys in the US and other countries were losing their shirts.

This episode shows once again that bitcoin, with price fluctuations of 10% or even 20% in a single day, up or down, is not a practical currency that is usable for legitimate commerce, nor will it ever be, despite the hype that one surrounded it.

Sure, just to make a point, there were some legitimate commercial transactions a few years ago that were touted endlessly in the press. But that has since stopped. With these kinds of price variations, forget it. Bitcoin is just an online gambling and wealth-transfer mechanism. And for the Chinese, it has a special additional role: to get their money out of the yuan. But this role too has now been obviated by events, and for many folks, “capital flight” has taken on a bitterly ironic meaning.

The circuitous hidden wonders of “excess reserves” on the Fed’s books have consequences for the US taxpayer. Read…  Fed Pays Banks $12 Billion on “Excess Reserves,” Taken from Taxpayer Pockets

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  104 comments for “Bitcoin Collapses, Chinese Latecomers Get Fleeced

  1. shaba says:

    It is short sighted to say bitcoin is not ‘a practical currency that is usable for legitimate commerce, nor will it ever be, despite the hype that one surrounded it.’

    It is a new asset that no one knows how to categorize. It depends on your use case. Even proponents argue endlessly as to whether it should be a currency or a store of value (see: blocksize debate). All the while it has also been classified as a commodity in other parts.

    My own view is that at its current size (ecosystem and market cap) it is not a currency. It is volatile, still growing and still needing to figure out decentralization, mining rewards, fees as it grows. Also it has not faced the big ‘government ban’ test, although if it is the real deal, it will have to.

    Comparisons are drawn to bittorrent, but in this analysis you must also include the advantages the buzz word ‘blockchain tech’ gives to a multitude of industries. From there, take note that as a public, decentralized, immutable ledger, the ‘blockchain’ cannot exist without a token to secure it – bitcoin. The incentive to mine, and therefore secure the network, comes from the value placed in the token. Currently the network is the strongest to ever have existed by a magnitude of 100x (iirc).

    So I see it as still a commodity; a digital, virtual alternative to gold that gives holders the ability to transfer value with ease across borders and oceans with very little oversight or fee. Or to be just speculatively held due to the depreciating nature (21m in all, minus coin already lost) and the current economic trends, extrapolated into the future (currency controls, war on cash, eventual global crisis play).

    As a baby often wets the bed, it does so with decreasing regularity as it grows and matures. Mt Gox was flushed out, so too will any exchanges running other scams, faking volumes or money laundering. This can probably only help despite the scare.

    There is still the chance that Bitcoin fails, but as a hedge with such significant upside possibilities, learning about it is probably the least one can do. If anyone does buy, remember to secure it outside of a computer or an exchange.

    • shaba says:

      add: this is not to say that at some point in the future, at a much bigger market cap and acceptance by the mainstream (even outlandishly, by governments perhaps) bitcoin cannot act as a currency.

      • ZD says:

        Good points Shaba.

        I think Bitcoin has been around for 7-8 years but heard about it as far back as 05-06 so to me this cryptocurrency isn’t new. I don’t know how long a currency needs to be available before it’s not seen as ‘new’ anymore. In the scheme of things, i see ‘cryptocurrencies’ compared to ‘currencies’ as more recent (within last decade).

        I do like many of the principles and concepts backing Bitcoin. You only have 21 million (minus the 10-12% already lost) so there’s no option to inflate this currency (crypto) into oblivion the same way the US is doing with their dollar.

        I like how there is no single entity controlling Bitcoin unlike Central Banks/Governments control/regulate all fiat currencies around the world for only the benefit of the ultra-wealthy. Bank runs can take place on currencies but not in BitCoin.

        People ask “what do you get when you buy BitCoin” and it is a good question. The answer i have is cryptocurrency, that employs 256-bit w/SHA and public key infrastructure for security on the exchange, so you’re getting digital assets that function/act like currency without the control or intervention of governments/financial institutions always trying to tax/steal/confiscate your wealth. I ask “what do you get when you buy US dollars” and my response is 45-years of no backing by gold since Nixon nix’ed the usd/gold standard in 1971, which has since lost 98% of it’s value to gold. All currencies in the world are ‘fiat’ and not backed by anything.

        I think Bitcoin will keep going and always have a cloud over it mostly because big government and central banks don’t like the fact that they can’t control it – for the average user this should make them realize it’s more empowering to use.

      • wratfink says:

        Bitcoin seems to be a pyramid scheme and an energy sink. It takes tremendous computer power and electricity to mine a coin anymore. Only a few miners can afford the cost. I believe most of the miners are located in China where the cheapest electricity is.

        I have read that around 7500 coins are mined daily using the equivalent of three times the daily electrical use of NYC.

        What a waste of energy. Unsustainable. At least when you mine precious, you have something more than computer digits to hold on to.

        • Mike R says:

          I’ll use Bitcoin, when I can buy a Starbux Coffee with it. Or a McDonald’s BigMac. Until then, its garbage speculation. Bitcoin ONLY exists due to the bubbles and excesses in EVERYTHING ELSE. What people are missing, is that fundamentally, the FED has single-handedly destroyed all possibility of risk assessment in every asset class on this planet. So something like Bitcoin, or these crypto ‘currencies’, are a symptom of excess, and someday we will look back on them, just as we look back on the Tulip Mania in the Dutch Golden Age. We’ll also say yeah, remember when the Dow went to the absurd level of 20,000, when it should MAYBE be at 2000 ? And when US Debt was an absurd $20 trillion, and the notional value of derivatives was over $1 Quadrillion ? And when cars are costing $50,000 to $70,000, with Tesla’s at over $100,000 ??? The intrinsic value of these vehicles, in getting you from Point A to Point B, is absolutely no different than it was in 1970 when you could buy a perfectly nice and brand new vehicle for $3000. We’ve ridiculously grown ‘accustom’ to living so far beyond our means, and sychophanting off of credit, that we have lost all sense of the intrinsic value of anything. The existence of Bitcoin is merely a symptom of the underlying problems of $100’s of trillions of accumulated global debt, that will never ever be re-paid.

    • Anthony says:

      There is no such thing as an alternative to physical gold.

      I can move my physical gold anywhere in less than an hour, from Singapore to London or New York and still it remains a physical asset I own. Not zero’s and ones, not digits in a ledger, but hard solid physical gold bars.

      And it can never go to zero, although any and all other assets can and do in time including every fiat ever printed.

      Bitcoin has zero intrinsic value. None

      • Bob says:

        I believe the value of gold and bitcoin in is peoples’ minds. Minds can change. Gold has had value for many centuries, and this mitigates the risk somewhat, but in this digital age electronic currency makes sense and is inevitable, just like any other technology advance. If government abuses electronic currency with NIRP, that is a separate matter than can be controlled in other ways. Society can simply take away the Fed’s power to conduct QE. Just providing an opinion.

        • Frederick says:

          Yeah right Gold and Silver have been money for five thousand years and suddenly they are just going to stop being that Not going to happen and Bitcoin is a ripoff that can be neutralized rather quickly by limiting internet access

      • Kent says:

        The fiat U.S. dollar has never gone to zero. They will always have value to pay taxes.

        • FK says:

          U.S. dollar may not go to zero but it will definitely buy less and less as time goes. It may not take long for a dollar to be what a penny is today – something you don’t mind throwing away.

        • Valuationguy says:

          Your statement is somewhat naive considering EVERY fiat currency which has ever been attempted in history has failed at one point or another…being replaced by a new currency. You assume that the current gov’t will continue forever (despite increasing populism and instability and radicalism).

          I certainly don’t think the US dollar is going to fade overnight….but if you compare the current dollar to what it can purchase twenty years from now….it will be an effective zero…based on fiscal and monetary projections.

          Value of the dollar is directly linked to the confidence that people have in the gov’t (and the banks supporting it). This is why the Euro is in dire straights. No one really supports the un-elected bureaucrats in Brussels and the various national gov’ts which comprise the Eurozone are revolting against the current one-sided policies which benefit Germany at the expense of everyone else.

          While the EU was a great plan to centralize power and asset-strip without having to pay the consequences until later… is NOW LATER…and any failure to keep Italy’s (or Spains…or France’s) banking system from taking down the rest of Europe will strip the EU of any credibility and confidence it has.

          The U.S. Dollar actually benefit from this in the short term as people move money out of the EU but the cycle eventually crashes back as new gov’t structures and currency (ies?) appears…and the capital flows reverse (i.e. flee the dollar).

          By 2032…the U.S. dollar will be undergoing the same dying trashes as the Euro.

        • joe says:

          I guess you don’t follow history to much, as every unbacked fiat currency in the history of finance has become worthless.

        • Kent says:


          When did the dollar go to zero?

        • d says:

          “Not worth a continental”

          research that a bit.

          before you scream to much, about US currency never going to zero, or collapsing.

      • Tim says:

        Because it is physical you cannot move your gold from London to New York in less than an hour. You need to put it on an airplane or in a boat and there are costs to doing that. If you are talking about gold certificates, you are incorrect because gold certificates are only partially backed by physical gold – in some cases there is only 1 ounce of physical gold for every 100 ounces of gold certificates. Good luck collecting on that.

        • nhz says:

          I guess he is talking about a gold vaulting service like Bullionvault. In that case he is basically correct, you can sell physical in London and buy back physical in New York if you want. Of course there is some time and cost required for the transaction but it is relatively painless, unless there is total chaos in the whole banking sector and even temporary placing your gold sales proceeds in a bank account is risky or impossible ;-)

    • Nicko says:

      Why risk losing half your capital? I’d take a dollar denominated off-shore account from a reputable bank any day of the week. At least you know where your money is, and there’s a human on the other end looking after it.

      • Frederick says:

        Yeah I had “humans” looking after my stored silver at Northwest Territorial Mint last year and then I read that they were declaring chapter 11 Seems the human who owned the place liked everyone’s precious metals alittle too much so I’d be very careful trusting any humans to watch your wealth Are you listening Jon Corzine?

    • Wolf Richter says:

      >>> “It is short sighted to say bitcoin is not ‘a practical currency that is usable for legitimate commerce, nor will it ever be, …”

      Bitcoin has been around for over 7 years. How many more years does it need to get its act together as a usable currency? Normally, if a product doesn’t work after a few months, it’s pulled.

      >>> “It is a new asset that no one knows how to categorize.”

      It’s NOT new: It’s over seven years old. It’s NOT an asset: it’s an online betting mechanism that is traded between betters, and can be exchanged back into real currency at the current price.

      However, blockchain technology will have many uses. And to its credit, bitcoin made everyone pay attention to it.

      • d says:

        “However, blockchain technology will have many uses. And to its credit, bitcoin made everyone pay attention to it.”

        And thats the Important part the big entity’s are investigating.

        Blockchain to replace swift??

        Bitcoin itself is even more manipulated than gold, And has more fraudsters involved in it.

        All those peopel screaming buy gold, are BIG sellers, at a slightly higger price.

      • Rogerton Crumpets says:

        Until yesterday’s ‘crash’ anyone who ever bought a bitcoin at any point probably made a good return in it.

        To call it a betting system or gambling system is going a bit far.

        I agree with where you’re coming from, but so far anyone buying BTC at any point without reacting to frenzy buying or panic selling (stupid people) is doing very well indeed.

        Is now the time it flips and goes to crap? Who knows.

        But while almost all fiat are being undermined, and paper Ag and au are being printed to oblivion too, it’s only reasonable to expect btc to track inverse to those fiat currencies ‘worth’

        If you’d concerted just 1% of your monthly incone since 2009 into btc you’d be retiring today, even after the latest crash.

      • JB says:

        for a friction less peer to peer payment system it is
        unrivaled . But useless if the valuation doesn’t remain
        somewhat stable/constant .

      • Mike R says:

        Blockchain technology has a massively huge weakness. All’s I need to do is pull the plug on your electricity, and poof its gone. I’ve forgotten more about the energy markets, and our nation’s power grids than most people will ever know, and trust me when I say, that our current power grid is so dangerously vulnerable, and fragile, that it would take more than $10 trillion just to bring it back to its state of reliability back in the 1980’s. Once we have lost our access to coal, and once we go below the threshold of power of coal generating at least 30% of our total consumption, our power grid will become so unstable, that you will all either have your own generator at your home if you want your lights on for more than just a few hours, or you will be getting very used to candles.

      • shaba says:

        Wolf, you’re assuming that Bitcoins purpose is to be a currency from day 1.

        My point is that what Bitcoin is depends on your perspective. Before anything else it is software. But some see it as a currency, albeit one that is admittedly volatile and unreliable but one that can change the financial system, bank the unbanked and take control back from CB’s. Others see it as a commodity (digital gold), others as a SoV.

        Right now it is a commodity, a highly speculative one. If it survives it may morph into a SoV that operates outside the system, not controlled by the NIRPers, cash banning governments of the world. Then, maybe at a big enough market cap and acceptance, it may be usable as a currency.

        It has been pronounced as dead and a failure literally hundreds of times.

        And it is plenty more than 7 years old. The different aspects of Bitcoin have been around for much longer (hashcash etc), but all being combined together in a workable way, yes 7 years.

        Whether you think it is a scam, purely speculative or the best thing since sliced bread doesn’t matter. Bitcoin survives and the software continues operating, providing an immutable, decentralized public ledger capable of transmitting data over the most secure network in history.

    • Tom Bombadil says:

      Thank you Shaba for the thoughtful analysis. I bought a hardware wallet and invested what is really a token amount in Bitcoin. It could go away completely and I won’t be out much more than a couple of good meals out on the town. While I am more of a spectator than speculator, I am cheering for Bitcoin growth and maturity.

    • Intosh says:

      Bitcoin as of now is already broken because the network is been monopolized by a couple of big players. It is not truly democratic and decentralized anymore. So people don’t really trust it has a currency — they will not hold on to it as a store of value. So it is left to speculators and gamblers which just fuel volatility. It’s a vicious circle.

    • economicminor says:

      How can it be an asset when it only exists in cyber space? To my mind it is purely a cyber speculation.. If I can’t put in $10 today and get out $10 tomorrow or it grows to $12 something is seriously wrong with the algorithms that created it..

    • Lee says:

      Bitcoin is an interesting concept that will ultimately fail as it depends on having a secure, robust system that ensures all holders will have the ability to convert their holdings into ‘something else’.

      By now everybody should have enough common ‘cents’ (that is where it will end up) to understand that once any part of the system is removed the value will go to zero.

      For example, the exchange gets hacked – oooooooops, and the holders get zip. The exchange goes belly up and oooooooooops again. Holders get wiped out.

      Access is denied to the Internet or a government confiscates the ‘digital’ block. OOOOOOOOOOOOOOOPS again.

      This sort of action happens all the time over many asset classes and Bitcoin is no different.

      Another example here from Australia. Last year a big retailer went belly up. Up until that day they had been selling gift cards. The value of those gift cards went to zero.

      How about physical cash?

      Just look at India for the latest example. What are those bills going to be worth next year?

      What about good old Australia?

      What happened when they converted from the British pounds/shilling/pence system to the dollar system?

      Well you can still convert the old money to dollars (if you have enough………..), but what about all those postage stamps that were issued by the then owned government post office?

      You used to be able to pay for gas and electricity with them.

      Now many of them are basically worthless. You can’t sell them, you can’t use them, and the government made a killing off ordinary people.

      (As an aside you can’t use postage stamps for sending registered letters overseas now. You have to use a pre-printed Australia Post envelope.)

      Repeat again for all the countries that converted to the Euro system.

      In the current environment there really aren’t that many assets that one can use to really safeguard your wealth from a government or from a decrease in real value.

  2. Nik says:

    Aloha Friends…in a lot of my readings I have found even the Traditional Banking Systems Worldwide are looking at ‘Block-Chain’ technology for Cost-Saving and Security…..Applications,aloha and thanks for reading

    • walter map says:

      You could have included a link:

      Ultimately any currency requires official support and the support of an underlying economy, and unless Bitcoin acquires these it can only fail, sooner or later. At present it’s essentially a digital poker chip.

      • Ross says:

        If you had a casino chip, and the casino went out of business, how much could you get for it?

        But a gold or silver coin is always fungible world wide, anytime.

  3. J C says:

    What goes up, must go down. I never bought into Bitcoin. I am with them in spirit, but I do not have faith in their system. It is created out of thin air too like Federal Reserve and backed with nothing. Furthermore, one is running a treasonous act because the governments has the seigniorage like the King in feudal ages has the sole and only right to print money. I would rather play currency trading than investing into Bitcoin.

    • Frederick says:

      I agree with you JC and I can’t see how the gots of the world are going to allow the competition for much longer China seems to be getting the ball rolling as of late

  4. Nemo says:

    Digital currencies such as bitcoin might be most useful as a way to get around currency transaction fees and limits.

    If you buy bitcoins in one currency and then immediately sell them for another currency, you are in effect doing a currency exchange without any hassle from governments or garbage fees from banks.

    The only risk is that a flash crash will occur exactly when you make the transaction – but that risk exists for any currency exchange. This is actually probably quicker and safer than conventional means of currency exchange, and the lack of government monitoring at the moment makes it essentially tax-free and fee-free.

    This, of course, is exactly why banks will get governments to outlaw these things as “inherently criminal”, even if all you plan to do is lay on a foreign beach and pay the guy who brings you booze in his local currency.

    Only those who own the bitcoins for more than a few minutes assume a significant risk of loss of value.

  5. OutLookingIn says:

    Bitcoin is nothing more than a de facto digital currency.
    Thus yet another fictitious form of wealth, with a computer system as its counter party.
    “Bitcoin is just an online gambling and wealth-transfer mechanism”.
    Those who extol its value of utility, are caught up in a web of make believe. They fervently hope and believe in its promise and most likely have skin in that game.
    Another name for getting “fleeced” is getting skinned.

    • nhz says:

      irrespective of the potential promise of the technology it seems the market has decided about the fate of Bitcoin: 98% yuan trading means it is now basically only used for Chinese capital flight and money laundering. Still growing? Don’t think so, all other use has apparently become almost irrelevant.

      It is useful as a means by which a small US elite can fleece desperate Chinese gamblers, that’s about it. Sad that people still haven’t learned from the major problems at various Bitcoin exchanges in the past years.

      Well, you can always put your money in (foreign) real estate because history of the past 30 years has shown that Western governments protect most of the small speculators in RE (like ‘homeowners’ with a maximum mortgage), and the RE gains have been far bigger than the temporary losses – safer than Bitcoin ;-)

    • Agree 100%.

      To add to your post, only a little, Bitcoin and all other blockchain
      thingies — depend on a robust, secure and fully-functioning network. Perhaps we might call that the internet as it now stands.

      We are one CME ( Coronal Mass Ejection ) , or EMP ( Electro-Magnetic Pulse ) , or perhaps, if the DEMs can be believed, one Russian Hack against the internet infrastructure — any of those — away from, “where oh where can my BitCoins be?” .

      Read the following as many times as necessary until you see how fragile Bitcoin really is :

      I shoulda bought a ton of BitCoins when they were a penny, or a nickel, or a dime, at most. Purely as speculation. Say a hundred bucks worth. Stupid loser me. Paying anything pricier than that means that the buyer needs to read about the solar storm again.

      Telegraphs, for gawd’s sake, TELEGRAPHS ! A solar storm brought down telegraph systems !

      DUH !


      • walter map says:

        “Read the following as many times as necessary until you see how fragile Bitcoin really is”

        The same could be said of most of the global financial network, which is largely electronic. Such a disaster would make gold bugs insufferably smug.

        • Niko says:

          “Such a disaster would make gold bugs insufferably smug.”

          Only until the hoarders of lead showed up to take their gold.

      • Mike R says:

        A lot less than a solar storm, could easily bring down our entire power grid for weeks on end. I worked for utilities, and know how fragile our system really is. Catastrophies are avoided on a near daily basis. In the energy sector for 32 years. You all know nothing if you don’t know how unsecure our power truly is. If major sections of the grid, covering multiple states were to lose power for more than a week, 10’s of millions would simply die. We are SOOOOO naive as to how reliant we are upon electricity, and how fragile the system actually is. Under Obama, he not only destroyed the coal industry, but he has literally gutted the nation’s ability to ever recover from grid wide black outs. Utilities have been living on borrowed time now for more than 20 years, with next to no investment in the basic infrastructure, only introducing natural gas generators that are utterly useless, when the grid goes down. They are also far less stable and have next to no inertia like coal fired steam turbine power plants. No utility will ever again want to take on the risk of putting in multi-billion dollar coal plants, and nukes are entirely out of the question, so there is no replacement for this grid stabilizing inertia to keep power at 60 HZ. ISO’s around the country are playing with fire on this every hour every day.

        • Coaster Noster says:

          Obama never came close to “destroying the coal industry”. The switch to natural gas came in 2002, that is what is decimating demand for coal. George Dubya Bush, at it for six year prior to Obama.

        • night-train says:

          Seems to me that the increase in the availability and deliverability of natural gas took steam coal’s market. Not Obama, unless you believe that he was a big supporter of the oil and gas industry, which I have been assured that he wasn’t.

          But never ever, and I do mean never, let facts get in the way of blaming Obama for something. It just wouldn’t be making America great again.

  6. Jaco says:

    I listened to Hugo Salinas Price in an interview over two years ago absolutely knock the shit out of bitcoin – and boy did he turn out to right

  7. Jip says:

    People who think commerce can operate without legislation are deluded. Bitcoin has not been legislated and therefore will not be legitimate until it is if at all.

    • Kent says:


      The US Dollar says on it’s face “This note is legal tender for all debts, public and private”. It can always settle any exchange between American citizens and is fully backed by the assets and productive capacity of the United States and its people. Because the federal government of the United States legislates it to be so.

      Bitcoins are like gold or underwear. A commodity that is valued in the big dog currency: the US dollar.

      • d says:

        “Bitcoins are like gold or underwear. A commodity that is valued in the big dog currency: the US dollar.”

        Should read

        Bitcoins are like gold or underwear. A highly volatile and unstable commodity, that is valued in the big dog currency: the US dollar.

      • Rocky says:

        As we will start to see the following weekend the “full faith and credit” of the United States will accelerate it’s illegitimacy.

        Capital flight from Mexico and China will quickly overvalue the US dollar. The inverse relationship between gold and the dollar will reverse.

        Later, when the US debt skyrockets (because Trickle Up tax policies pilfer our tax revenues) look for Bitcoin to be perceived as a viable alternative.

        The inverse relationship between gold (GLD) and the dollar ($USD) will snap reverse, giving investors a big opportunity to cash in on the upcoming failing US empire.

        History guarantees it 100% of the time.

        But I’m not Trump, oops, I mean God. My timing could be wrong. At least train your children to watch for it.

        If only I could set a limit buy order four years out, I might be able to buy Trump Tower with the proceeds.

  8. Nicko says:

    Easy come, easy go?

  9. Edward E says:

    I meant to say something about Martin Armstrong’s wise (warning) about Bitcoin last week but there wasn’t a good place to put it.

  10. Greatful again says:

    Capital really wants to leave China. Not a good sign for them. It seems like there’s also a certain amount of human flight going on as well.

  11. Cyrus says:

    That’s what I meant when a few days ago I said a large percentage of the Chinese live to gamble. I bet it wasn’t just about capital flight; a lot of them saw bitcoin going up, and decided they can double and triple their money in a matter of days and weeks.

    This relentless gambling attitude puts others in danger as well in a global economy. I’m guessing a few in China have read about the Dutch Tulip mania.

    The last few years, central bank criminals have turned fools and speculators into winners and intelligent people to losers. So, when I see gamblers losing their livelihood, my response is “pass the pop corn; I’m enjoying the show.”

    • Bob says:

      Cyrus, it is refreshing to see something happen based on fundamentals. If pure gamblers are rewarded more than 50% of the time, we’ll all quit our jobs to become useless gamblers. I can’t wait until the stock market pops, so gamblers are eradicated and prudent investors return. It’s crazy when government creates artificial incentives for people to spend everything now and not save for your retirement, kid’s education, potential job loss, etc.

      • Cyrus says:

        Exactly; I was always taught to be investor, not gambler; but the last few years has been a mockery of real investors.

      • d says:

        ” If pure gamblers are rewarded more than 50% of the time, we’ll all quit our jobs to become useless gamblers. I can’t wait until the stock market pops,”

        All business transaction’s with any realistic margin contain an element of risk. A “Gamble”

        FX/ Stock trading with out strong risk management, is gambling just like any other business transaction.

        Bitcoin however is pure speculative gambling, as there are no real fundamentals beyond herd action guiding or driving it.

        Various entity’s have been prosecuted, and are still being prosecuted, and convicted for fixing FX. We Knew. When they were doing it, It was topical in all the private FZ forum’s. We simply could prove it. Then.

        As BTC has no basic fundamentals, you cant see the fix, till way to late.

        Be interesting to see what comes of the chinese political investigation’s. I feel they are more interested in FX violation’s, than Speculative Fraud, aka “Market Manipulation”.

  12. SoberMoney says:

    Human flight is brewing in America these days too. The Trump “Alt-Right” Kleptocracy is creating a new travel and tourism investment sub-sector called “ExPat Relocation Services”.

    I’m also looking into investing in heavy construction firms getting contracts to built the wall between Canada and the US – to keep Americans out.

    Instead of fleeing, my personal preference is that California, Oregon, and Washington secede from the United States and the multicultural East Coast states create their own new country as well.

    Any state where a majority of women voted for Trump and Pence must be cordoned off as a potential health hazard due to the contagion of some unknown form of mental illness and self-degradation.

    Oh, yes, Bitcoin! It’s like Fake News but instead Fake Currency.

    Btw, wasn’t the Truemp press conference hilarious – if it wasn’t so pathetic?

    • Petunia says:

      I voted for Trump and think all the Hillary voters were delusional. Concerning the press conference, I loved it.

      Keep up your Trump bashing, it is only confirming that we are on the right path.

      • walter map says:

        “Hillary voters were delusional.”

        Says the True Believer. They weren’t voting for Hillary. They held their noses and voted against your candidate because they realized he was an irreversible fatal error. HRC was at least survivable, but he was not.

        No logical argument can change your mind because it simply doesn’t work that way. Maybe once he’s bankrupted you. Depends on just how impervious you are to reality.

        • RD Blakeslee says:

          This forum (very unusual on the web and to its credit) has been relatively free of tit-for-tat a hominem commentary.

          Give it a rest, walter!

        • Smingles says:

          @RD Blakeslee

          “This forum (very unusual on the web and to its credit) has been relatively free of tit-for-tat a hominem commentary.”

          It’s only been free of tit-for-tat because prior to his orange eminence coming around, most of the ad hominems were overwhelmingly against liberals… of which there seems to be more around now. Don’t kid yourself. Go pick any archived article from a year ago and the random snipes against liberals, the left, progressives etc. happened all the time. Boo hoo.

        • Chicken says:

          To misunderstand a man’s purpose does not make him evil or confused.

      • Petunia says:

        I always lean towards giving people the freedom of choice, whether it’s education, abortion, or vaccines. I trust that people know what’s best for them.

        If the liberals weren’t so invested in worthless identity politics, they might get a better perspective on what the other side is really thinking. I did not vote for Obama either time, but I did understand why he won. Most people weren’t voting for the social policies, he was the first vote them all out outsider candidate. Trump is the second attempt at the vote them all out outsider candidate. The reason I feel somewhat invested in him is not because I’m stupid, but because after him perhaps it’s the deluge.

    • Chicken says:

      Perhaps you’re upset b/c crony elites are on the run like the common criminals they are.

      • Smingles says:

        “Perhaps you’re upset b/c crony elites are on the run like the common criminals they are.”

        Perhaps you haven’t been paying even the slightest bit of attention?

        Steve Bannon, senior advisor, Goldman Sachs
        Dina Powell, senior advisor, Goldman Sachs
        Anthony Scaramucci, senior advisor, Goldman Sachs
        Steve Mnuchin, nominee for Treasury Secretary, Goldman Sachs
        Jay Clayton, nominee to chair SEC, lawyer at Sullivan & Cromwell (Wall Street firm) who represent… you guessed it, Goldman Sachs
        Gary Cohn, Chief Economic Advisor, Goldman Sachs

        Anthony Scaramucci on Trump hiring so many Goldman Sachs execs: “I think the cabal against bankers is over.”

        You think they’re on the run? LOL. The swamp gets deeper, my friend.

        • Petunia says:

          It’s more like rats jumping off a sinking ship. If you squint you can see them all heading for the exits. While some here still have confidence in the markets, that doesn’t seem to be the consensus where it counts.

        • walter map says:

          “It’s more like rats jumping off a sinking ship. If you squint you can see them all heading for the exits.”

          And if you open your eyes you see that top administration posts are anything but ‘exits’. They’re entree to the highest levers of power.

          I find it astounding that your ‘logic’ persuades you to believe that the cure to corporate totalitarianism is to hand over the government to a collection of corporate totalitarians.

          How do you put out a fire? Dump kerosene on it?

          And what exactly does this have to do with Bitcoin?

        • SoberMoney says:

          Trump did drain the swamp. And all his Cabinet picks were lurking at the bottom, waiting for some egomaniacal dybukk that would give them credibility again.

          These Cabinet losers are truly like our Bitcoin discussion here.

          They apparently only have value if you have a vested interest in their worth. In Herr Truemp’s case, it is the pilfering of the public coffers for private use.

          “Socialize the costs and privatize the profits” – the new mantra of faux government service.

        • Petunia says:


          Were you living in America when the Clintons passed NAFTA and Obama passed NDAA? Both are financially and politically oppressive for the working class and protect the elitist interests, so much for progressive politics.

          Bush one didn’t have the nerve to pass NAFTA, and Bush two didn’t have the nerve to pass NDAA.

        • Chicken says:

          “Anthony Scaramucci”

          You probably mean this Anthony Scaramuchi:

        • walter map says:

          “Walter, Were you living in America when the Clintons passed NAFTA”

          WaPo says Bush I negotiated and signed NAFTA. Sorry.

          Bill Clinton was certainly a supporter of NAFTA who pushed approval through Congress. But it was negotiated and signed by President George H.W. Bush. Moreover, more Republicans than Democrats voted for the deal, as the trade pact was vehemently opposed by labor unions . . . Clinton had supported the pact during the presidential campaign but said he wanted to negotiate side agreements with Mexico concerning enforcement of labor and environmental laws.

      • walter map says:

        “Perhaps you’re upset b/c crony elites are on the run like the common criminals they are.”

        Crony elites, by definition, are anything but common criminals.

        Neither are they on the run. They’re making the last preparations to take over the country and gorge themselves on it.

        What would you like to say about Bitcoin?

    • Frederick says:

      I left in 2014 got tired of the hamster wheel and the ridiculously high cost of living Much happier now and so glad to be expatriated I know of a lot of others who have similar plans There is a great big world outside the continental 48 believe me and life is good :)

      • RD Blakeslee says:

        Where are you?

        There are unfashionable (thank the lord) places in the U.S. where tranquility can be found.

        • SoberMoney says:

          Do you mean safe white Christian suburban gated communities within urban areas that have been gentrified again racial diversity and minority crime?

          I lived in one of those areas once.

          In reality it was a neighborhood with a high incidence of privileged alcoholism and OxyContin addiction riddled with infidelity and disillusioned American Dream rage because their cheerleader daughters got pregnant with the high school football quarterbacks.

          At least ex-pats can hear another language regularly and see skin colors and cultures that are in touch with the real world.

          So RD, where, domestically, would that be?

    • Lee says:

      Sounds to me like you are one of those new people in the USA: “a fake person” – created by the looooooooney left.

      You know, like that actor that recently berated Mr. Trump about ‘running the country’ when in fact Mr. Trump is still not President.

      And by the way, the US President does not ‘run the country’, he governs. A dictator runs the country or tries to do so by ignoring laws, like your buddy, obama, did.

  13. Petunia says:

    Those of you who think the block chain is so great should keep in mind, what the banks like about block chain technology is that transactions cannot be reversed(in theory). If you lose your tokens too bad, even though you can see who took them. Bitcoin was always a scam, but I do think digital money will have a larger user base.

    • d says:

      “what the banks like about block chain technology is that transactions cannot be reversed(in theory). ”

      The iPhone couldn’t be hacked.

      Israel proved different.

      Blockchain Is a computer program. Ultimately, simply random like 256 and 512 bit encryption. Both of which have been successfully broken

      Throw enough cpu and memory at it, with enough brain, and it will be reversible

      Any computer system, or code is hack-able, the issue is, how do we do it, and not get detected, for how long.

      Ie stuxnett.

      In the end they got caught, after how long, and how much damage??

      • Petunia says:

        Stolen Bitcoins are easy to detect. The immutability makes the transactions irreversible, which is the biggest failure of Bitcoin. You can use any Bitcoins you steal. Nobody has to hide.

        If you could keep any money you stole from a bank, would you bank there?

        • I only follow this peripherally, since I decided early that bitcoin wallets cannot be made secure.

          I have a further question, and I imagine that I know the answer :

          If uncle Adelbert, the family hoarder, dies — and he has an old Pentium computer with Windows 2000 on it — in which there is a wallet with 10,000 bitcoins, which were bought cheaply in the beginning of bitcoin time . . . .

          Well, I am wondering if the genius nephew, Dilbert, junks the computer without investigating its contents — and the wallet, its contents and its access method are lost forever — are the bitcoins assigned to the trash-bin of the universe ? Lost forever ?

          I suspect they are.

          Old dollar bills, or Morgan dollars, or double eagles can be lost — and then found many decades or centuries later.

          Interesting difference, isn’t it ?

          It is also interesting that the nitwit told the world about his find, instead of choosing silence. TAX-FREE SILENCE !


        • Zd says:

          I’ll be honest and say i don’t entirely understand all technicalities within Bitcoin however thought you could get assistance with the exchange you deal with (coinbase, etc.) that would look at the comprimised vWallet and track their path in relation to the blockchain (digital ledger) in attempts to find where they went, however assume there can be limitations.

          I figured a compromised vWallet means someone got a hold of your private key. I don’t know all the in’s and out’s of PKI, but when the bitcoins are transferred to another vWallet, the thief would send it to a new vWallet (with associate public key), and use the private key to transfer all bitcoins, but that information in the private key changes to reflect new ownership of the bitcoin/s. I assume this can be tracked (to a point) on the blockchain. If the vWallet resides on another exchange (which it probably wouldn’t) that vWallet could be seized/frozen? I imagine the thief would keep those bitcoins in a vWallet off-line on his computer or another hardware device. I assume once the private key is compromised – it’s lost but leaves an auditable trail up to a certain point…the point where the stolen bitcoins are held in a vWallet or other hardware device off-line.

          I’ve heard of something called bitcoin mixing in order for thieves to not have it traced back to them.

        • d says:

          “If you could keep any money you stole from a bank, would you bank there?”

          You need to think this through it may not say what you intended.

          Why would you not bank there, as long as they guaranteed to replace any of your funds that were stolen.

          The coins are irrelevant

          The technology behind the chain, is what I was talking about.

  14. Chicken says:

    It seems obvious Bitcoin is a capital flight mechanism devised by, or for, crony elites. It’s probably the very same wealth that was stolen by globalists, from developed countries.

  15. Christoph Weise says:

    Bitcoin is generally useful for short-term transactions in regulated markets that can not be performed otherwise. Bitcoin can hardly be a store of value because of volatility and uncertainty. I find it difficult to imagine a larger amount at risk in Bitcoin for an extended period and I have never met people that would be willing to take such a risk.

    • Intosh says:

      That’s why it will likely never become a true currency. Those who keep bitcoins in their digital wallet for an extended period of time are the speculators.

      Cryptocurrency is a technology similar to a network protocol, as such, it represents nothing in and of itself, and therefore has intrinsically no value. It will be used as a mechanism to transfer and track ownership of real value (i.e. real currencies, goods, services).

      People keeping cryptocurrency in their digital wallet is like someone storing some random binary files on their computer — it has no intrinsic value. For the entity to have value, it needs a supporting context. In the case of a binary file, the context would be knowledge of its format/encoding rendering the bits into information, thus giving the file meaning and value. Cryptocurrency needs such context but using it has a currency prevents it from having such context — it irreconcilable a contradiction.

  16. NotSoSure says:

    When will we see the following headline: “San Francisco/Bay Area/Silicon Valley Real Estate collapses. Chinese/etc latecomers get fleeced.”

    • Rocky says:

      When Trump tweets about it!

    • Nicko says:

      If a corrupt Chinese official/businessman/investor loses 50% of his/her ill-gotten gains in a RE venture….what is really lost? One, they get to keep their visas and financial connections, and two, they can always steal more money from the motherland. They can’t lose….unless of course they get nabbed by their government.

      • Lee says:

        If you get to Australia take a look at one of the Chinese Real Estate Newspapers here.

        Full of ads for businesses that don’t make much money, if at all.

        One way for for Chinese to get into Australia. Doesn’t matter if they make any money or not. As stated one way to get the visa and just a cost of ‘doing business’

  17. RD Blakeslee says:

    A SoberMoney, re places of domestic tranquility in the U.S: “Do you mean safe white Christian suburban gated communities within urban areas that have been gentrified again racial diversity and minority crime?”

    Not at all:

  18. JayTe says:

    Wow, I like your site but your statement about bitcoin has to be one of the most shortsighted things you’ve ever said. It’s a bit like saying that because people in Zimbabwe use the USD as a way of maintaining their wealth, that because the Zimbabwe dollar fluctuates wildly against the USD and the Zimbabwe central bank takes action to prevent people from exchanging the Zimbabwe dollar to USD that it’s the USD which is the problem!?!

  19. chris Hauser says:

    i’m kinda fond of goods and services people need, and the businesses that provide them.

    shhhh, don’t tell anybody.

  20. economicminor says:

    What IF the next war is fought with EMP?

    As that would render a country like the US that is so reliant upon the Internet and Cloud storage helpless.

    Bitcoins would no longer exist anywhere. Neither would your accounts in the US banks when you have given up paper statements… How could you even prove to the FDIC that you had money in ABC Bank?

    Here is a link to an article I read today that is very interesting. It is about the dollar and our monetary system. Written in Mexico and documents the history of the dollar as reserve currency and what would happen during either a trade war or when Trump tries to bring home jobs.. His take is that the US has to run a negative trade balance or world trade collapses.

    I am not smart enough to know if this is all correct but it registers in my mind that it is.

    • d says:

      “What IF the next war is fought with EMP.”.

      Currently. Are not all Large working EMP weapon’s, still nuclear reaction based??

      “I am not smart enough to know if this is all correct but it registers in my mind that it is.”

      The US can not shift from deficit to surplus in 4 years or 8, and not cause global mayhem.

      Long term it can shift to Positive/Surplus and still be the reserve, sterling was like that, for some time. Long ago.

    • @economicminor

      “What IF the next war is fought with EMP?”

      I am no expert on any of this, merely conversant. I believe that I have read from authoritative sources that all things micro-processor-dependent stop working under certain kinds of EMP attacks.

      The internet, and your computer, and your bank accounts, as you say.

      YOUR CAR ?

      Sophisticated fly by wire jets ?

      And, god help us, “driverless” cars and trucks ?

      Add to that all internet connected devices, like my sophisticated HP printer, your refrigerator ( I would not want an internet-connected refrigerator at all ! ! ! ) and microwave.

      All of your “I” thingies ( Iphone, Ipad, Ipod, etc ) none of which I will ever own, Luddite that i am !

      And of course your cable and cable stations and super-duper ultra HIGH-res “smart” TV, Blue-Ray player and gaming and sound system.

      Oh, and I forgot : THE ENTIRE ELECTRIC GRID as a poster so succinctly noted above.

      Just attempting to list all of the things that an EMP war would put out of service — TO ME — guarantees that an EMP attack is in our near future.

      Stone age, anyone ?


      • RD Blakeslee says:

        It is possible to order one’s life to be RELATIVELY unaffected from such an attack for some months.

        A cistern for water, propane and firewood for heat and a diesel generator for power with several hundred gallons of fuel on hand.

        It’s not as stark as outright survivalist practices, still not most folk’s cup of tea, but I personally rely on it.

        • Petunia says:

          Your plan wouldn’t hold up in a catastrophic flood. See New Orleans or Baton Rouge for catastrophic failures of all systems.

        • d says:

          solar and wind generators alog with anything else electronic is also not effeted by EMP if they are shut down and power drained at the time of an EMP event.

          Israelis have proved this with electronically equipped tank’s.

        • ZD says:

          I just exchanged all my bitcoin for an army of mallard ducks running on treadmills and hamsters running on critter cage wheels all attached to my electrical systems in order to survive the next EMP attack.

  21. Gian says:

    So Bitcoin miners sold fantasy money for fiat currencies, based on the fear that fiat currencies will lose value and perhaps crash in the near future! I wonder what these “miners” did with all this fiat currency they took in exchange for fantasy money, minted out of thin air? Same can be said for sellers of precious metals. They tell us when the dollar crashes and is worthless, gold will be worth $5,000 (that’s DOLLARS) per ounce. Although the dollar is worthless, it is still the standard by which gold is and apparently will be valued. Damn that pesky little dollar, just can’t seem to shed it.

  22. RD Blakeslee says:

    @ Petunia: “Your plan wouldn’t hold up in a catastrophic flood. See New Orleans or Baton Rouge for catastrophic failures of all systems.” – Petunia

    Of course not. Suitable location is essential part of “The plan”.

    remember, my first post on this subject in this discussion (supra) said:

    “…There are unfashionable (thank the lord) places in the U.S. where tranquility can be found.”

    I have published my location (repeatedly, ad nauseum?) previously.

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