16th November 2022 > > BIS.

tl;dr

The BIS and crypto bias.

Market Snap

Market Wrap

Crypto markets once again bound into a very tight range though as the days pass since the FTX fraudulent fiasco one cannot help but get hopeful that there is no more contagion. One day the last of the leveraged loons who are suffering because of recent price action will go out of business, which likely will be the trigger for the market’s recovery.

Curious Cryptos’ Commentary – BIS (Bank for International Settlements)

The BIS is very much a legacy TradFi institution. It is owned by 63 CBs (Central Banks) and provides a forum for discussing policy, it provides “independent” financial analysis, and offers banking services to those CBs.

It is a bureaucratically driven organisation, much like the IMF (International Monetary Fund) and is not too hot on the concept of innovation. One can safely assume it is institutionally critical of the crypto revolution.

But it is always good to know what the enemy is thinking, and the BIS has just allowed us to do exactly that.

…

In a new report titled “Crypto trading and Bitcoin prices: evidence from a new database of retail adoption” the BIS attempts to portray interest in BTC as being driven primarily by periods of price rises:

https://www.bis.org/publ/work1049.htm

This report is flawed on so many levels.

The basis for this conclusion is that the downloading of crypto related apps increases with the price of BTC and claims that the peak of such activity was in the months leading up to November 2021, when BTC reached its ATH (all-time high) of $69k.

That comment makes me want to recommend to the authors that they go away and try to understand cause and effect, for they have them mixed up in their own heads.

The report states that 40% of crypto users are men under 35 and concludes from this that “Users [are] being drawn to Bitcoin by rising prices.” One must be tremendously biased against cryptos to dream up such nonsense.

Finally the report makes the astonishing claim that up to “81% of users would have lost money” if they had purchased Bitcoin over $20,000.

I remain quietly confident that 100% of purchases of BTC above $20k are currently in the red.

Much like the auditors of Alameda Research (see CCC 8th November 2022) I suggest that senior management at BIS dig deep to fork out the funds for a brand new calculator to help their researchers perform simple subtraction exercises.