By Amy Castor and David Gerard
- The bills are coming in for the Christmas spirits. Have you signed up yet? Here’s Amy’s Patreon and here’s David’s Patreon. Don’t forget to ask for a couple of “Bitcoin: It Can’t Be That Stupid” stickers when you do!
With all these gutted crypto buyers, there are plenty of convenient entrails for divination just lying around. So it’s time to channel our inner Maren Altman and see what the blockchain tells us will happen in 2023!
Our 2022 predictions were right about almost everything — except when we underestimated the power of human stupidity.
* within acceptable margins of error
How we did for 2022
These were David’s predictions, though he didn’t stick his neck out much:
- Bitcoin: “Think of the dumbest thing they could possibly do. No, dumber than that.” We point at the whole of crypto since May 2022 to show how correct this one was.
- Actual dollars in the cryptosystem were already running low by the end of 2021. The bubble popped in May, and retail went home.
- Miners were already getting stuck with unsaleable bitcoins. Our August article outlining the collapse of US bitcoin mining continues to play out as we described.
- Cryptocurrency is still made of ass to actually use, but that was never going to change.
- Nobody managed to invent an even dumber new magic bean than NFTs. Human stupidity, you failed us!
These were Amy’s predictions:
- “Bitcoin has not suffered a stupendous crash yet, but the conditions are ripe for a crash — loose regulatory oversight and a lack of real dollars in the system.” The great collapse, when it finally came, played out even more spectacularly than any of us could imagine.
- After growing 388% in 2021, stablecoin companies would feel the heat from regulators. TerraUSD imploded in May, and U.S. Treasury Secretary Janet Yellen had to explain Terra-Luna to Congress the day after it collapsed — and promised more regulation right there and then. The Financial Stability Oversight Council (FSOC) report in October is uncompromising.
- NFTs were the shiniest new crypto grift in 2021 — but all crypto grifts have a limited lifespan. Crypto bros would need to come up with a new way to lure in dumb money. But they weren’t able to in 2022. They lured some in with mining, but that was the last of the dumb money.
- Regulators would tighten the noose on the NFT market. In May, the SEC announced that it was doubling the size of its Crypto Assets and Cyber Unit to focus on NFTs, as well as on DeFi, stablecoins, and exchanges. [SEC; Bloomberg] In June, the DOJ indicted Nate Chastain, a former OpenSea executive, in what was the first NFT insider trading case. In October we learned that the SEC is probing Yuga Labs to see if Bored Ape Yacht Club NFTs themselves — as well as ApeCoin — are unregistered securities offerings.
What’s ahead — our predictions for 2023!
Everything that started happening in May 2022, when Terra-Luna blew up, has yet to finish playing out. None of this is over yet, at all. Crypto companies have no real money, and they all know it — everyone is comprehensively screwed already. In 2023, we’ll keep seeing them all go belly-up one by one. FTX going down will continue to wreck everyone who thought of themselves as still solvent.
The crypto industry is a bunch of drunks holding each other up, putting off complete collapse for as long as they can in the hope that some miracle will save them. Crypto companies will keep buying up smaller companies to cover holes in their accounts — bigger and bigger shells to hide the pea-word.
Investigations into FTX and Celsius Network will continue to reveal shocking discoveries, of the sort that were revealed in the wake of the QuadrigaCX collapse. Even worse than we’ve seen so far.
Either Binance or Tether is likely to go down in 2023. More likely Binance. (But then, we thought Tether would definitely go down by December 2017.)
The same guys who created FTX ex nihilo will try to spin up another crypto futures exchange out of nowhere to replace FTX. Laundromats gotta launder. Wintermute was cued up for the position, but they may be even dodgier than the FTX crew.
The bitcoin price is going down further. We don’t see any prospective new buyers putting actual dollars into the system any time soon.
The Pax Dollar (including Binance USD) and USDC stablecoins — backed by the only actual dollars in the cryptosystem — will likely be substantially drained in 2023. This may or may not be done in an orderly manner.
US banks that saw a huge opportunity in the slightly off-white cash market are going to be closely inspected by the regulators, and are likely to be placed under extreme constraints or even shut down.
The remaining positive public perception of cryptocurrency has been completely destroyed, and it’ll stay that way. “The future of finance” will increasingly be associated with frauds, scams, and amateur con artists like Sam Bankman-Fried.
The public is pissed and legislators are pissed. Regulators are taking their chance for action while they can. The SEC will be more aggressive in its enforcement actions — pretty much every token on DeFi is an unregistered penny stock by US rules, and always was. The CFTC and Department of Justice have already started making arrests for DeFi market shenanigans, such as the bust of Avi Eisenberg just after Christmas. Market manipulations were always illegal — but the laws are finally being enforced.
Crypto still hasn’t come up with anything stupider than NFTs. But you know they’ll keep trying.
Image: UK newspaper astrologer Mystic Meg has never — as far as we can find — made predictions about anything so foolish as cryptocurrency.
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Happy New Year, David!
Thanks for all your efforts in this which is now nearly done.
We’re not done yet! We have lots of court cases to follow!
Indeed. Thankfully, at last, after far too many years watching grifters and fellow-traveler “artists” pursuing such harm …. we do have many to watch.
Thank you, Amy, for all you’ve done — I hope your year had an auspicious opening as well!
What I’m worried about a bit is the unknown extent of crypto penetration within traditional investments, directly or indirectly. Because there definitely is some. The CDPQ and that teacher’s pension fund in Ontario only became visible because of the Celsius debacle.
Just how much internet theme park money is sitting in our retirement funds because some dumbasses decided it would be cool to dump other people’s money in it ? Is there an estimate ?
I think it’s not a huge amount, but yes, some numbers would be nice.