Published: June 14, 2018 12:19 p.m. ET Also, with the Federal Reserve’s quantitative-tightening operations, there’s the potential for a much bigger dollar spike Voltaire famously said that “paper money eventually returns to its intrinsic value — zero.” His words serve as an inspiration for many precious metals enthusiasts, but if Voltaire were alive today, he very well might modify that statement to cryptocurrencies “eventually returning to their intrinsic value — zero.” The same could be said for the Argentine peso, the Turkish lira and other currencies that have turned into confetti in the 21st century, which is only 18 years old. I don’t have a problem with blockchain as a technology, which I admit is revolutionary; but I do have a problem with bitcoin

BTCUSD, +5.76%

as I believe it is an electronic line of code that is unnecessary in the blockchain process.

It was designed with the idea of creating a global bubble. This bubble has now popped, and it is deflating before our very eyes (see chart).

Read: Here’s why bitcoin is falling — and it isn’t just the Coinrail exchange hack There have been recent stories in the press that huge sell-offs have happened before, but the bitcoin bubble has still managed to reflate. The most notable such bitcoin sell-off and recovery came in early 2014 around the failure of the largest bitcoin exchange in the world at the time, the Mt.

Gox exchange, after it was decimated by hackers. The reason why I think this bubble will be impossible to reflate is that regulators have finally figured out how big traders spoof the bid-ask spreads in order to manipulate crypto prices.

The Justice Department has jumped in with a criminal investigation, and the Commodity Futures Trading Commission (CFTC) is furious at the options and futures exchange CME Group for not having put in place agreements to properly settle its futures contracts, as the exchanges whose prices the CME relies on for settlement values refuse to share the data! (See the June 8 MarketWatch article, “U.S. regulators demand trading data from bitcoin exchanges in manipulation probe.”) Still, I am grateful that the CME launched bitcoin futures contracts, even though it is glaringly obvious that they did so prematurely, because that created a two-way market. Read more from…

thumbnail courtesy of