What happens when a store of value is manipulated? It no longer becomes a store of value. You know how this story will end.
From Andy Kessler in The Wall Street Journal:
Meanwhile, lo and behold, around the same time as that letter, Tether temporarily stopped creating any more currency. That might explain bitcoin’s quick mid-January price drop from $42,000 to under $30,000. If fraud is uncovered, look out below.
Normally I wouldn’t care. Bitcoin is nothing, it’s vapor, a concept of an idea. Transactions using bitcoin are few and far between. It’s not a store of value—anything that drops 30% in a week can’t play that role. But we get Bloomberg Wealth stories saying: “Newbie Bitcoin investors tell us what inspired them to buy at record prices.” A lot of folks who can’t afford it may get hurt badly. Robinhood curbed some crypto purchases on Friday.
So all crypto eyes are on mid-February. The power of the subpoena is strong. I have no insight into what New York’s attorney general will find. She might close the investigation and go on her merry way because there’s no crime, or uncover a fraud that could make Bernie Madoff look like he was stealing from a lemonade stand. We know what happens to bubbles when the hot air runs out.
Action Line: Read more about what happens next with bitcoin, Google, and the cryptocosm here. Make sure if you want a store of value you own something that reflects your wants.