There's nothing like the sucker-punch thrown by a writer. Maybe "sucker-punch" is an exaggeration.

Here's David Fickling writing for Bloomberg:

Let's say the bitcoin bubble has just burst.

From its peak of $4,921 earlier this month, the digital currency is already down 16 percent at $4,076. Over the next two months, imagine it continues to slump to barely more than half its peak valuation. After a brief recovery, the price slides again, until by the start of 2020 it's dropped by another third, to below $2,000. For 20 years it then languishes around that point, never to recover its September 2017 levels in inflation-adjusted terms.

Does that vision of the future show that digital currencies have no place in an investment portfolio, or that they do? The answer is worth pondering, because that's the trajectory gold followed after its peak in January 1980.

To make his point, he included this graphic (click on it to enlarge):

Which is deflating if you're holding Bitcoin. According to this view, there will be no Bitcoin rally, not even if there's a Zombie apocalypse and the only way to get silver bullets is on the dark web.

The last paragraph of Fickling's story:

In principle, the biggest advantage of digital currencies is they have no connection to anything that's happening in the real economy. In reality, the two are intimately connected through that most powerful of conductors, investor sentiment. Only if that changes will virtual money really be able to bite off part of gold's domain.

So there is hope. Investor sentiment might change. Someone might find a use for Bitcoin other than ordering pizza laced with rat poison for someone who needs to go away. Which is basically what JP Morgan Chase's Jamie Dimon said:

The bears are having a field day.

Meanwhile, at the Grand Hyatt in Hong Kong, Bitcoin's unlikely evangelist, John McAfee, was in an altogether different frame of mind. (McAfee's company is responsible for those annoying pop-ups that demand payment for securing your computer.)

He was addressing the Shape the Future conference, which was breathlessly reported on (I know, this is no Bloomberg, but hey, it's all we got):

McAfee had perfectly captured the crypto enthusiasts’ sentiment. Blockchain technology has begun to erode governments’ control over money and will continue to do so. These governments have responded by lashing out in a form of crypto inquisition that parallels the American prohibition. We also learned that many bitcoin exchange executives were not allowed to leave China amidst the recent regulation rulings. Surprisingly, McAfee’s comments did not encourage fear, but inspired a strong sense of community among the crowd. He walked off the stage to a thunderous applause.

They said "thunderous", not "desperate". So I'm taking that as a bull signal. Not a signal that it's bull, but a signal that bulls are running. Or maybe both.

But, before the bulls run too far ahead, there's the ever-nearer event called the "November hard fork" to negotiate.

The usual frantic disagreement is underway. From

September is almost over, and the Segwit2x plan to hard fork the network’s block size to 2MB is approaching quickly. Because time is running out the topic is once again heating up, as some New York Agreement (NYA) signatories have removed themselves from the list, with arguments between users and industry members continuing to escalate.

Translation: The sheepdog is finding it harder and harder to corral the chickens.

Among those leaving the building is Wayniloans ('an online peer to peer lending platform based on bitcoin technology. Wayniloans INC was founded in 2015 and is based in Buenos Aires, Argentina').

According to Juan Salviolo, Wayniloans co-founder:  

On Wayniloans part of our business is achieved thanks to bitcoin, and in May we agreed to a sentence to reach consensus for the good of the ecosystem. This sentence was later changed to a longer agreement without our notice, and it was known as the New York Agreement (NYA). At the time we didn’t know that existing developers wouldn’t support it, or that most Latin American bitcoin users, our customers, would view it as a contentious proposal.

See? A sentence! One simple sentence was changed and Latin America walks away! And Bitcoin is weaker! The power of market sentiment! The weakness of sheepdogs! The strength of chickens!

Which brings us back to Fickling's point. The connection between Bitcoin and the real economy is sentiment and therefore, ipso facto, prima facie, mutatis mutandis, sentiment is the sole driver of value.

At the moment, sentiment says Bitcoin might end up like gold, forever drifting sideways into the gloom of mediocrity. In the meantime, looks like a buy ... ?

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