Wolf Richter, the CEO of financial firm Wolf Street Corp, recently published a blog post in which he noted that there are currently 1,926 cryptocurrencies listed on CoinMarketCap.com. This is 500 more new digital tokens since early 2018, Richter pointed out. He also mentioned that “this dilution and hyperinflation is worse than all but the worst of fiat currencies.”
“Decentralization”, The Main “Selling Point”
According to Richter, one of the main “selling points” behind most cryptocurrency projects has been that they’re “decentralized.” He went on to describe the promotional language in crypto whitepapers as follows: “[they’re] full of intelligent-sounding gobbledygook and other propaganda promoted in myriad ways.”
He also criticized how “an army of crypto trolls” and celebrities get paid “by the tweet” to promote questionable initial coin offerings (ICOs) and various other blockchain projects. Richter added that cryptocurrencies are “really just a big joke” and people have lost, and continue to lose, large sums of money by making risky and ill-advised investments in digital tokens.
“The Pain Is Real”
The San Francisco-based financial blogger wrote:
The pain is real. And the numbers are big.
This has been evident as cryptocurrency prices continue to decline sharply with “six of the seven biggest cryptos” by market cap (not including bitcoin) “plunging by 78% to 92%”, Richter noted.
Commenting on how the market capitalization of the cryptocurrency market surged past $800 billion in early January, only to drop dramatically by nearly 80% to $196 billion in just 8 months, the MBA graduate said the losses “hit people around the globe, and people in the US got whacked by only a portion of it.”
While noting how Ripple (XRP) price has “collapsed by 92%” from its all-time high of $3.79 on January 4, 2018, Richter questioned why so many people continued to buy cryptos. He wrote:
It boggles my mind why not everyone sold during and after that spike. And why did anyone buy? What were they thinking? That this would continue?
He also mentioned that it has now become “nearly impossible…to unload a major position” because of the significantly lower trading volume. Per Richter’s words, “trying to dump a load is going to cause the price to collapse further.” This was seen recently when the bitcoin price dropped $400 in 90 minutes after a mysterious whale moved over $100 million in BTC to various crypto exchanges.
Richter further noted that:
Of the nearly 2,000 cryptos, there are many that have become worthless and trading volume in them has died down…most of the wealth has already [exited the cryptocurrency market] or was transferred to sellers who took that hated fiat money and laughed all the way to the hated bank.
What remains is a mop-up operation that may drag out for a while, kept alive by some exciting but fleeting moments of hope.
As CryptoGlobe reported, renowned economist Nouriel Roubini has also heavily criticized cryptocurrencies. Roubini, who accurately predicted the 2008 Financial Crisis, said that cryptos have “totally collapsed” because they cannot function effectively as money – a view shared by giant Wall Street investment bank Goldman Sachs that said digital currencies will “not retain value.”