Coinbase Pauses Bitcoin SV Withdrawls-Was the Pinball Game of Cryptocurrency just ‘Tilted’?

By Stan Szymanski

Late in the day on Tuesday, Seeking Alpha reported ‘Coinbase pauses Bitcoin SV withdrawals’.

Seeking Alpha went on to say:

…’Coinbase Global (NASDAQ:COIN) has paused withdrawals of Bitcoin SV (BSV-USD) Tuesday afternoon as the cryptocurrency exchange investigates “difficulties in transaction processing,” it said in a post at 3:40 PM ET.’…

If Coinbase is halting withdrawals of Bitcoin SV for an undetermined period for difficulties of an origin that is clear as mud, what does that mean? A cyber attack? An Electrical outage? Employee day off? Or is it part of a systemic financial problem?

I watched an interview with Bob Moriarty of 321Gold today. One of the shocking revelations that Bob mentioned is that more money has been lost in the Cryptocurrency space than was lost in the entire debacle of the sub-prime crisis of 2008. That is a significant statement.

Just to be clear, Bitcoin SV is #47 on Coinbasemarketcap, not Bitcoin proper, if you will. The site dcforecasts.com describes Bitcoin SV as such: …’Bitcoin SV (BSV) is a cryptocurrency which was created after another cryptocurrency named Bitcoin Cash (BCH) experienced a hard fork. Even though it was introduced a little bit prior to the fork, the blockchain of Bitcoin Cash has split in two competing coins – Bitcoin ABC (Adjustable Blocksize Cap) and Bitcoin SV (Satoshi Vision).’…

If crypto has lost more capital than was lost in the Great Recession then it certainly stands to reason that we may be on the cusp of a true liquidity crisis. In a true crisis of liquidity in a market, there is –no bid– for the financial instrument in question. In 1987, on the NASDAQ many market makers just walked away from their posts. As Investopedia states:

…’In the wake of the 1987 crash, when some market makers refused to pick up their phone’…

In 2022, what happens when there are no human beings involved; just computers/algorithms that do what they have been programmed to do and behind the curtain there is not enough liquidity to satisfy standing withdrawal requests? It may be that it is the same as in the old days when someone would bump the pinball table with their hip when the game wasn’t going so good for them and the ‘Tilt’ light would illuminate, all other lights would go off, the sound would stop, the flippers became unresponsive and the game would be over.

At this point, if Bitcoin SV went away, in a vacuum it might not matter much. But a lot of people own it because of it being a spin off of Bitcoin cash. But we know that when one asset fails it can cascade to others. Will crypto exchanges soon stop withdrawals of other crypto assets? With all of the other surrounding weaknesses, is the crypto market reaching that point of insolvency just as the US stock market did in 1987? Back then it took the Federal Reserve greasing the wheels of the markets to make them operational again by flooding the system with money. Who is going to bail out all of the individual exchanges of crypto? Some crypto exchanges are in the US and many are not. Even if the US crypto exchanges are bailed out, what happens to the price of Bitcoin/crypto when the rest of the world is insolvent?

Is it possible that the problem is with the most popular ‘pair partner’ of Bitcoin SV trades/exchanges? That would be Tether. Back in early April I wrote ‘Cryptocurrency Tether Is Not A ‘Stable’ StableCoin And Will Collapse Crypto’. A month after I wrote that piece, Tether ‘broke the buck’ and proved that it was anything but stable.

Perhaps all the bank insolvency in China, along with the lack of liquidity in the Chinese Real Estate market has crushed the value of the theorized Chinese commercial paper in the portfolio of Tether. I say theorized because Tether has never actually disclosed exactly what securities it actually is involved in; it has only disclosed the asset types it owns and percentage.

In a just breaking news story from Bitcoin.com ‘Crypto Exchange Zipmex Halts Withdrawals Citing Market Conditions, Financial Difficulties of Business Partners’ From the article…’On Wednesday, Zipmex announced via Twitter that “due to a combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners … we would be pausing withdrawals until further notice.”… Coinbase is not the only exchange with problems.

In my humble opinion, all of this adds up to a pinball game that is in the condition of ‘full tilt’; it’s just that a whole lot of people are not looking up to see that the countenance of the game has become dim and now they have to face that the game looks like it may be over. When markets ultimately and eventually become efficient as they always do, the arbitrageurs of the high flying (lying) days give way to the compliance officers executing forced trades to cover margin calls as the market falls, accelerating downturns.

Bob Moriarty prophetically shared a fact that manifested less than a day after he shared it.

People think that the US dollar is strong because the US dollar index is at a new high. Sorry. Compared to the Gold-linked Russian Ruble (since the imposition of sanctions) the dollar is down over 20% at last look versus Putin’s money. The US dollar is being used less and less around the world and no major country is a net buyer of US treasuries over the last year; most are net sellers.

Bitcoin SV is up as much as 16% in the last 7 days and yesterday Coinbase halted withdrawals . With all that is going on in the financial and the war realm, do you think that the cryptocurrency space is overall exhibiting strong signals or a weak signal?

When I was a kid, if we wanted to play a game, we had to walk 3 miles to a bowling alley that had pinball. I remember how good the older kids were at it. That is the first time I saw someone ‘tilt’ a pinball table on purpose because they were loosing badly. It shocked me that all the lights went off and the sound stopped so suddenly.

There certainly has been a lot of news and hoopla around crypto over the last few years as returns seemingly reached toward the sun. As of the last three months-not so much; the tables seemed to have turned.

When the tables turn-that is when things can change abruptly such as a ‘tilt’ in the markets.

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Stan Szymanski (or Encouraging Angels) is not a medical doctor. This is not medical advice. In all matters pertaining to the health and care of a human being consult a medical doctor. This is not legal, financial or personal advice. Consult appropriate professionals in those fields for that type of advice.