Just When Bitcoin Bulls Thought It Couldn't Possibly Get Any Worse, Steve Bannon Showed Up

Bad news crypto fans...
Author:
Publish date:
Updated on

As you're probably aware, Bitcoin is in a tailspin.

CryptoBannon

Everyone's favorite make-believe internet money is down a truly harrowing ~33% since May and has fallen some 20% over the last four days alone, with the latest blow to confidence coming from research which reinforces the notion that Tether was at times used to manipulate prices. Crypto fanatics are well-versed in the Tether story. Suffice to say it's just another crypto rabbit hole and when professor John Griffin and co-author Amin Shams (of "Manipulation in the VIX?" fame) dove down it, they found this (from the paper's abstract):

Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies. The flow clusters below round prices, induces asymmetric autocorrelations in Bitcoin, and suggests incomplete Tether backing before month-ends. These patterns cannot be explained by investor demand proxies but are most consistent with the supply-based hypothesis where Tether is used to provide price support and manipulate cryptocurrency prices.

Again, that's just the latest in a string of unfavorable news.

For instance, when last we checked in on Bitcoin and cryptocurrencies more generally, the DoJ was launching an investigation into possible spoofing and wash trades.

About a week before that, we took a truly hilarious look at one Wences Casares and his startup Xapo, which is building cold storage facilities in decommissioned Swiss military bunkers in order to warehouse some $10 billion worth of Bitcoin. That stash is protected by -- andI shit you not -- fingerprint scanners equipped with pulse readers designed to deter would-be thieves from accessing digital riches with the amputated limbs of their rightful owners. (I don't know either -- ask Pete Najarian.)

In that post I pointed out the obvious, which is that the hype around Bitcoin is dying. To wit:

To be clear, the financial world’s fascination with Bitcoin and cryptocurrencies more generally has waned this year, in part because folks tend to become disenchanted with something when it plunges by some 60% in the space of a couple of months, as Bitcoin did following the early December euphoric highs when folks were whipping out the old plastic to finance cryptocurrency purchases after falling for the hard sell over Thanksgiving dinner.

That assessment was borne out weeks later when notorious bull Tom Lee watched in disbelief as the Consensus rally he predicted didn't pan out. Here's what Oanda's Craig Erlam told Bloomberg this week:

Things have changed for Bitcoin and the crypto space. There doesn’t seem to be as much hype, or positive news. Every time we get a negative news story now -- after a period of consolidation -- we don’t see bullish sentiment come in to support it. It’s almost as if people are waiting to sell it.

Yes, "it's almost as if people are waiting to sell it."

Which is what generally happens when "people" begrudgingly come to the conclusion that they were duped into "investing" in something that wasn't ever real in the first place.

And so here we are, with Bitcoin sitting at roughly $6,600, down a cool 65% from the December peak and everyone is "just waiting" on the death knell.

Enter Steve Bannon.

You remember Steve, right? Of course you do. Steve has failed at everything he's ever tried to do and let me tell you what: when Steve crashes and burns he goes H.A.M.

Let's take a brief trip down memory lane and recount Bannon's trials and tribulations (and this just covers the last two years, which means it doesn't count the time he tried and failed to endear himself to the Hollywood elite that he now claims to despise).

Steve Bannon is a man who refused to distance himself from accused pedophile Roy Moore, whom Steve touted as the first of many batshit candidates he was planning to run in his ill-conceived “war” against the GOP establishment this November. Thankfully, that “war” was stillborn after voters (narrowly) decided that pedophilia was a bridge too far (even for Alabamians) when it comes to Senate seats. So if you’re a Republican, Steve Bannon is a cancer. Who loses Alabama to a Democrat?! How is that even possible? I don’t know, ask Steve Bannon, “brilliant” political strategist.

Let me tell you who else should hate Steve Bannon: Donald Trump. And the reason Trump should hate Steve is because Steve called Trump’s son a traitor, a comment that prompted a scathing rejoinder from the President himself last year, just months after that same Trump kicked Steve out of the White House, a White House that Steve basically ran during the first couple of months of this administration. Who gets fired from a White House they’re basically running? How is that even possible? I don’t know, ask Steve Bannon, the “great manipulator”.

Hell, Steve Bannon even got booted from BreitbartAndSteve was Breitbart. Let that sink in -- he got himself fired from the online equivalent of a supermarket tabloid that he ran! How is that even possible? I don’t know, ask Steve Bannon, media “mogul”.

Basically, anything Steve Bannon touches turns to shit, which means if you're a Bitcoin bull dodging prospective coffin nails, just about the last thing you want to hear is this (via The New York Times):

Stephen K. Bannon, 10 months removed from the job of chief strategist to President Trump and five months after his ouster from the arch-conservative news site Breitbart News, is betting that Bitcoin and other cryptocurrencies can disrupt banking the way Mr. Trump disrupted American politics.

He has had private meetings with cryptocurrency investors and hedge funds where he has discussed working on so-called initial coin offerings through his investment business, Bannon & Company. And in his first interview on the topic, he said he had a “good stake” in Bitcoin.

In a small gathering of academics at Harvard University this spring, he even floated the possibility of creating a new virtual currency, the “deplorables coin.” The name is a nod to Hillary Clinton’s description of Mr. Trump’s supporters as “a basket of deplorables.”

Yes, Steve thinks maybe he'll launch his own cryptocurrency called "deplorables coin". I guess "Nazi Coin" was already taken.

As the Times goes on to note, cryptocurrencies are perfect for Bannon. They play well with Steve's penchant for hitching his wagon to anything that's anti-establishment, and on top of that, they can be massively profitable, something that plays well with Bannon's massive fortune (because nothing says "populist champion" like a net worth in excess of $20 million, right?).

“It almost seems like a natural progression for a man who gained prominence by shoveling out unfounded conspiracies to now shilling complex technology and financial instruments to an unsophisticated investing public,” Colin Platt, a cryptocurrency researcher and adviser told the Times, for the piece linked above.

But again, the problem for crypto fanatics is that Bannon is poison. There are already questions about whether white supremacists are turning to Bitcoin after being cut off from the usual funding channels, and you can be absolutely sure that if Bannon ends up becoming a prominent figure in the space, those questions will resurface.

And look, if you don't want to believe me when it comes to the contention that Steve Bannon might be bad for Bitcoin, just ask the world's foremost authority on all things Steve Bannon ... Steve Bannon (again from the Times):

Mr. Bannon won’t reveal very much about his cryptocurrency plans — he worries that the controversy that comes with his name could have a bad impact on projects just getting off the ground.

For once, I'll concede that I agree with Steve.

Nothing Führer.

Wait. Sorry. I meant "nothing further."

Related