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Bitcoin's Value Plummeted Overnight and No One Knows Why (slate.com)
Jacob Brogan, writing for Slate: While the Western Hemisphere slept, Bitcoin plummeted. Just after midnight Eastern Time on Friday, the cryptocurrency was valued at a little over $15,000, on the digital currency exchange Coinbase. At that point, it was already well below the $19,783 all-time high it had hit the week before. Over the course of the night, Bitcoin began to decline erratically, occasionally spiking but following a general downward trend. Around 9:22 a.m. Eastern, it hit a temporary floor, valued at a mere $10,400. By that point, it had declined more than $6,000 from its short-term peak the morning before, having lost more than one-third of its value. Bitcoin wasn't the only currency hit by a sharp drop. Tech Crunch's Jon Russell reports that most other prominent cryptocurrencies also fell, including Ethereum, Litecoin, and Bitcoin Cash (which is, confusingly, separate from Bitcoin proper). As Russell notes, it's hard to say why this is happening, "in the same way that nobody knows exactly why bitcoin's price has [shot] up from a touch under $1,000 at the start of the year."
It was overvalued and a bubble. Next question?
Bitcoin is no different than Pork Bellies.
Except it makes lousy bacon.
It is very different than pork bellies.
Pork bellies have an intrinsic value. It's food. You can eat it. That gives it a value. Bitcoins, not so much.
I heard an economist during the housing bubble point out that you could rent a house for substantially less than it would cost to buy it. He said we were in real trouble, and he was dead on. The rent value was the real value - the value that reflected its actual value.
Most of us will always pay five bucks for a pack of bacon. So that's its floor as a commodity value. Bitcoin has none.
Some could argue the dollar also has none, but that's another discussion.
There is something you guys should understand about Wall Street (particularly Goldman Sachs a.k.a. The Vampire Squid) getting into the cryptocurrency futures market. You would think on the surface, if you write (or go short) a Gold, or Oil, or even Cattle contract, that you have to come up with the goods when the futures contract matures. However, there is the little discussed option of "Cash Settlement". If you can't meet the obligations of the futures contract, you can simply pay the owner of the contract what those goods are worth in US Dollars. The markets tout this as good thing for all market participants, but in reality, it is a gross perversion of the market in general. It effectively turns your Cattle, or Oil, or Gold market into a US Dollar market.
And now they're doing the very same thing to the BTC market. When people are short BTC futures and have to come up with the goods, they don't have to worry about spiking the spot market looking for BTC. They just have to shell out USD. And the Powers That Be have LOTS of USD to spend on either side of that trade.