The Real Problem With Bitcoin – Max Keiser

‘I think this is really interesting because Michael Saylor is at an interesting point in his Bitcoin experience. He’s now going through with anyone who’s been in this space for, like, 11 years. I started buying it for a dollar. I’ve been through three halving’s. I’ve been through four, maybe five, 80% corrections. So Michael is having his first big cream pie in the face of the volatility everyone experienced with Bitcoin at some point.’

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 About a week ago, in an interview with Bloomer, popular Bitcoin advocate Michael Saylor made a list of things that would make Bitcoin a stronger and better asset class. He mentions challenges like unregulated crypto exchanges, the vastly unregulated stablecoin industry, and the lack of no-wash trading rules as the issues that are impeding Bitcoin’s exponential growth. In an interview with Anthony Pommelino, another Bitcoin advocate and former host of the Keiser Report, Max Keiser, reacted to Michael Saylor’s list. Keiser describes Saylor as a Bitcoin newbie who was getting his first taste of Bitcoin volatility in the face. While he agrees with the few Saylor points, Keiser notes that most Saylor solutions will open the cryptocurrency industry to unsuitable regulation and completely weaken the decentralized status of the crypto ecosystem. Keiser also speaks about the Bitcoin revolution. He mentions that, unlike in the US, citizens of less developed countries are more readily accepting and appreciative of Bitcoin’s rare qualities and are more likely to lead the revolution. We will now take you to Max Keiser’s interview.

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 Keiser begins by reacting to the first item on the Saylors’ list, which is the lack of a no-wash trading rule. A “wash trade” occurs when a trader or investor buys and sells the same Security multiple times in a short period to deceive other market participants about the asset price or liquidity. In Saylor’s interview, he mentions that wash trading activities in the crypto market allow traders to harvest losses and gains in a way that cannot happen in the traditional equity market. Here is Keiser’s response to that and the issue of 20x leverage that is offered by many crypto trading platforms and exchanges. 

‘The wash sale trading rule I would give that, you know, a shot. I’m fairly ambivalent about that. It’s like, “Yeah, that would be kind of nice.” But I mean, he’s trying to avoid this hyper trading that’s going on where people are trading without any cost whatsoever into kind of the fastest moving market. I’ll say coin. I don’t know, I mean altcoin, and there’s a tremendous amount of social media where you see hyping of a meme coin. So, there’s no penalty for that mass of meme coiners out there to just jpg into a new one. There’s no tax penalty either. So bringing in a wash sale rule would theoretically put a buffer between those kinds of murmuration, as I call it. So I guess it’s okay, but you know, you’re opening the door to regulation.

So I’d put a caution light there because Michael is a newbie. It wasn’t long ago; you could get a 100x leverage over there at bit max. So, 20x leverage is moving toward a saner environment than 100x. But I mean, obviously, that kind of leverage is not consistent with the kind of guardrails. That should be in place for the average retail investor. So having access to that, it’s almost guaranteed you’re going to get wrecked. It really turns platforms like Coinbase and others into more like casinos. I’ve called them casinos before, unlicensed casinos, and so it has that element to it where you’re really putting up a penny and you’re gambling on 100 on the 20x or 30x, and as you know, that type of trading is almost guaranteed to be a loser.

So I mean, he’s right in terms of that kind of existence of, you know, a casino operation going on. He’s correct again, it opens the door toward regulators, so that’s that would be the downside. He’s correct; it opens the door toward regulators. So, that would be the downside.’

 To his list, Michael Saylor also spoke extensively about the other over 19,000 cryptocurrencies that are often compared to Bitcoin. As a Bitcoin Maxi, it is expected that Saylor would have such opinions, especially after we’ve all witnessed how the terror collapse affected Bitcoin and the overall crypto market. But how does Max Keiser, another Bitcoin Maxi, feel about other cryptocurrencies? Let’s get back to his interview.

‘As I’ve said before, that would come under the heading of either relatively or absolutely centralized versus Bitcoin, which is uniquely decentralized. Additionally,a case can be made by applying the Howie test that everything that’s not Bitcoin would be an unregistered Security right. It also brings about the question about Senator Lu in her bill that she’s trying to get through congress, talking about applying some regulations to “quote-unquote crypto” and she does things like equates Ethereum and Bitcoin, calling them both commodities, which I think is false. I mean, you can make a case that Bitcoin is a commodity like gold, but clearly Ethereum is an unregistered Security, without any doubt whatsoever.

So Gary Gensler over at the SEC kind of pushed back against all this and said, “Hey, lady, stay in your lane.” You don’t know what you’re talking about, which, I think, is the correct response. But when the cross-collateralization issue that he’s getting at is really the crisis du jour, I would say that because of what we saw with Terra Luna and all these other DeFi coins, that they’re manufacturing that yield, from kind of cross-collateralizing and putting money to work into other DeFi coins, and these other DeFi coins are generating returns by creating coins out of thin air, I mean, by definition. That’s a Ponzi scheme. So a lot of that DeFi return is just cross-collateralizing into new situations that are creating coins out of thin air and rewarding early coin rewards, etc. of unregistered Securities. So, that’s definitely an issue. And here I think that this is definitely a regulatory issue where this definitely requires regulatory enforcement and you see these things, for example, the in with Luna. These guys are definitely getting into big trouble. I believe they’re completely prevented from leaving South Korea. They’re being held by the police.

So you know this is definitely an issue. So I think with that, you know, he understands that this is what’s keeping the lid on Bitcoin at the moment: you’ve got hundreds of billions of dollars, you’ve got people like Sam Banks, freed over at FTX, who’s become a king maker by creating these enormous kinds of cross-collateralized market-making unregulated situations where price discovery can’t take place. This is something that people talked about a couple of years ago. They said Bitcoin will experience the same problems as gold has because there’s no good price discovery in gold because of all the derivatives, and so Wall Street can decide what the price of gold should be, not the market. And what Saylor’s pointing out is that we’re seeing this now in Bitcoin. You’ve got derivatives or DeFi that are creating price discovery for Bitcoin and it’s blocking it from a more natural price discovery. So I think he’s got an excellent point there and this is definitely in the wheelhouse of the SEC. They definitely should be enforcing it in this case, and they’re being lacking. It’s unclear why the SEC is being lacked.’

 In his interview with Saylor, he stated that the issue of the thousands of unregulated crypto tokens is worsened by wildcat banks, which enable GameFi practices offering unsustainable yields, such as what happened with the terror implosion last month. The MicroStrategy CEO also talked about fear and ignorance among Bitcoin investors. Without a doubt, many Bitcoin investors still don’t have adequate and extensive knowledge of the blockchain network, bitcoin copy trading and the technology behind it. It’s nothing but green and red candles and levers, but Bitcoin is so much more than that. One need only listen to people like Michael Saylor and Charles Hoskinson to see just how much the world needs this technology. Here is Keiser’s reaction to Saylor’s statement about wildcat banks and the fear and ignorance in the market.

‘You’ve got these, what he called “wildcat banks.” They’re doing this with these big platforms and their interrupting price discovery. So, in a way that’s manipulative and fraudulent, it’s the perfect opportunity for the SEC to step in and enforce the rules. Well, adoption is definitely tied to understanding Bitcoin, and we know that the more you learn about Bitcoin, the more of a maximalist you become. Nobody who learns about Bitcoin fails to become a maximalist. People who really don’t take the time to learn about it are left in the camp of a no-conner or a sceptic. But on this point, I think what he’s missing is the global nature of Bitcoin. So in the U.S, which has the US dollar, and it has a much different culture, and the financial markets are in a much different place, this is a bigger problem to get through to people who are bombarded with so many things are happening in the financial space and the way that’s changing, you know, I look at how, for example, gambling has become legalized on platforms that we didn’t really have even a few years ago, but if you look around the world, places like El Salvador, the global South, places in Africa, the need for Bitcoin is so great that the learning curve is very fast. They just get it. There’s a need for it, and that’s where you’re going to see the growth. You know, Bitcoin is really very much going to be the global south making a move on the global north. You’re going to see the changing of the guard. The central banks, including the Federal Reserve Bank and the Bank of England, and European central banks are going to be usurped. They’re going to be overtaken by this Bitcoin revolution, and it’s going to come from these other countries. It’s not going to be led by the United States.’

 Max Keiser and Michael Saylor are both Bitcoin Maxis, yet it is understandable that they both have different opinions about these valid issues. Saylor runs a public company and is bound by and familiar with certain rules that are not yet of paramount importance in the crypto industry. On the other hand, Keiser has been in the cryptocurrency industry longer and is not bound by those rules, which explains why, unlike Saylor, he is more opposed to regulation. What do you think about Max Keiser’s interview?

[This article is a transcription of a video made by Savvy Finance]

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