The sharp rally in BCash in anticipation of the November 15th hardfork was not troubling, but the fact that it went into backwardation confused me, at least for a while and made me hesitant to be an aggressive seller.
Normally backwardation is a long term bullish indicator providing an opportunity for holders of the commodity (or crypto) to sell for cash and purchase the futures picking up the difference in arbitrage while maintaining the underlying position.
But a hard fork in THE CRYPTO WORLD changes the picture entirely. The BCash sold on the cash market is not the same BCash bought on the futures because after the fork the futures will reflect only half of the split.
I pretty much figured this out but just how it would be handled was unclear until Bitmex announced it today.
Bitcoin Cash Hardfork Policy and Impact on BCHZ18
BitMEX Policy Bitcoin Cash is expected to conduct a hardfork upgrade on 15 November 2018. There are two competing…
Essentially if there is a split the futures contract will reflect the Bitcoin ABC side of the split and ignore the value of Bitcoin SV.
So the backwardation is really a phony backwardation. The difference between BCash on the spot market and BCash of the Dec futures reflects what traders believe the value of Bitcoin ABC will be and the backwardation (the discount of futures to spot) is what traders believe the value of Bitcoin SV will be.
Crypto is always presenting the market with new situations . . . with no accurate names for the new and unique events . . . so the best I can come up with is to call this a furked backwardation which seems to be a very accurate description.
This hard fork is clearly distinguished from the BCash hard fork. Since Bitmex is one of the few exchanges that is exclusively on The Bitcoin Standard, Bitmex traded all BCash drops it received for bitcoin trader deposits and distributed the proceeds to its clients.
In this case there is no such windfall because Bitmex accepts no BCH deposits, and is exclusively on The Bitcoin Standard. The result is Bitmex must choose one side of the fork or the other. This is the consequence of competing standards that wannabe Hayek’s Standard, but fall short because they don’t meet the only criteria that counts . . . the longest chain with a limited supply and proof of work.
Competition in currency standards is not currency competition. Currency competition occurs on Hayek’s Standard.
And Hayek’s Standard is The Bitcoin Standard because bitcoin is the longest chain with a fixed supply and proof of work.
CURRENCY COMPETITION VS PSEUDO CURRENCY COMPETITION . . .
In the Crypto World of there is a concerted effort to paint Bitcoin Standard Bearers as opposing free markets and…
What does all this mean?
It means its a big mess and because it is such a mess, do not be surprised if the hard fork doesn’t happen at all. If it does happen it is possible that the Bitcoin ABC fork is badly mis-valued. But even if its not, the fundamental flaws of BCash are being exposed.
The sharp rally was in anticipation windfall gains on a deeply flawed monetary model. BCash is such a fundamental cluster furk, even Roger Ver seems to having second thoughts. And yes, Roger, we will welcome you back in the fold when you realize your error.
Unfortunately, Roger Ver thinks he is an economist and has led countless of his sheep astray proclaiming BCash is really Bitcoin. And that BCash is efficient cash when both Bitcoin and BCash are a shitty substitutes for cash, just as physical gold was shitty cash under the Gold Standard.
Bitcoin Cash will come, but the Real Bitcoin Cash will be centralized and built off chain and will likely be a free service offered by competing banks . . . and it won’t be BCH. . . it will be on the Hayek Standard, which is The Bitcoin Standard.
Do not be surprised to see BCash sink to new lows . . . and slowly drift into nothingness . . . never to rise again.
I remain short Ethereum and BCash . . . with a very small long spec Bitcoin position . . .
The mystery remains on just how the Exthit (pronounced with a lisp and wreak wrist) will effect Bitcoin . . . we have a long way to go . . . if Bitcoin is dragged down with the collapse of THE CRYPTO WORLD . . . it will be present a wonderful opportunity for the wise and prudent to dollar cost average. . . . and be fully positioned before the world recognizes a new age of The Bitcoin Standard has dawned.
PS: Since posting this shorty Tone Vays landed an interview with Craig Wright. This is a must see video, Tone even got banned from live streaming on You Tube for it (which is unfortunate because I was planning on making my debut on live stream with him today). Craig Wright is planning to destroy BCH. I don’t think he can do it but it promises to be a very entertaining shitshow to watch.
PPS: I have been watching an excellent series by World Cyrpto Network. . . I don’t even know the name of this young man. . . but he is worth watching!