Bitcoin Takes it in the Shorts (Op-Ed)

It’s a new year and a new crop of obituaries for bitcoin, following a dramatic price decrease over a 48-hour period starting in the wee hours of January 13, almost immediately following a dire warning by ex-Wall Streeter George Samman in this very publication a few days earlier predicting such a collapse was necessary to find the bottom of the current bear market and that the recent price declines were far too orderly. Samman is the co-founder and ex-COO of BTC.sx, a service that lets users short bitcoin (among other financial leveraging instruments). How convenient. 

It was a well-written article with charts, graphs and even a cartoon, it was retweeted more than 250 times – and, in my opinion, it helped foment the very panic he predicted: a run for the exits (mainly by newbies; it has been noted in forums that there has been virtually no selling from the sizable bitcoin holdings at addresses known to have been the earliest of adopters when prices were in the pennies). 

On Wednesday, Samman wrote a second article saying we still hadn’t found the bottom and that the blood in the streets was not yet red enough. This time, there were enough buyers – and those who recognized the shorter’s methodology of maximizing fear at the bottom of the “fear and greed” cycle that drives most markets (and was reprinted in Samman’s initial column).  I personally pegged the bottom at US$150-175, so if this is indeed the end of the carnage, then I’ll have predicted the bottom three years in a row, calling it publicly at US$70 in 2013 and US$275 in 2014.