Bitcoin Volume Slide Draws ‘Black Swan’ Author’s Grave Warning

Bitcoin (BTC) has once again found itself under the spotlight, this time because of an ominous warning from renowned author Nassim Nicholas Taleb, best known for his work “The Black Swan.”

The author, who has long been skeptical of cryptocurrency, took to social media to voice his concerns about the declining volume of Bitcoin and its potential consequences for the market.

Taleb pointed out that Bitcoin’s trading volume has experienced a significant decline of over 85% from its peak. He highlighted the potential dangers of this trend, suggesting that as trading volume diminishes, the susceptibility to market manipulation increases. 

With fewer participants actively trading, it becomes easier for market manipulators to exert influence, distorting the natural price discovery mechanism.

When I said pple lost interest in bitcoin, it was based on this: BTC Volume is slowly disappearing, down >85% from the peak.

As volume drops, manipulations become easier but, at some point, manipulators will need to exit.

This is how Open Ponzis implode. pic.twitter.com/K8fJDeaftw

— Nassim Nicholas Taleb (@nntaleb) August 11, 2023

BTC Declining Volume Sparks Concerns Of Market Manipulation

The author’s ominous prediction is that while manipulation might thrive in an environment of dwindling volume, there comes a point when manipulators will need to exit their positions. 

Taleb’s statement, “This is how Open Ponzis implode,” rings an alarm bell about the sustainability of a market that may be increasingly influenced by manipulation.

Taleb’s skepticism toward cryptocurrency is not something new. In June, he compared Bitcoin to the Mafia, quipping that while both entities have made promises, the Mafia tended to deliver on its vow of protection. His historical skepticism aligns with his broader intellectual framework, which often emphasizes the unpredictability and fragility of complex systems.

While his views might be cautionary, they are not without resonance. Critics of cryptocurrency have long voiced concerns about market manipulation and the lack of regulation, highlighting the need for transparent and secure trading environments.

Bitcoin maintains spot in the $29K region. Chart: TradingView.com

SEC Explores Bitcoin ETF Landscape

Amidst these concerns, the US Securities and Exchange Commission (SEC) is entering the fray by exploring the potential creation of ARK Invest’s spot market Bitcoin exchange-traded funds (ETFs).

The regulatory agency has issued a document inviting the public to share their opinions on a proposed rule change. This change would enable the Chicago Board Options Exchange (CBOE) to list and trade shares of the ARK 21 Shares Bitcoin ETF.

This move by the SEC signals a broader push to engage with public sentiment on cryptocurrency-related financial products. The debate around Bitcoin ETFs is part of a larger conversation about integrating digital assets into traditional financial systems, while maintaining investor protection and market integrity.

At the time of writing, BTC’s price stands at $29,382.49 according to CoinGecko. The past 24 hours have seen a stable performance with no major change, while the cryptocurrency has witnessed a modest 1.2% increase over the past week. 

Featured image from The Economic Times