  What you need to know today in crypto and beyond May 19, 2021 Sponsored By:  Welcome to The Node.
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Today's must-reads Top Shelf  BITCOIN BRUISED: Crypto markets are seeing red. Bitcoin dropped to nearly $30,000, early Wednesday, putting it on track for its worst month in more than three years. The crash shook out at least $8 billion in leveraged derivatives positions (short of a record set on April 17). Coins are flooding onto exchanges (a sell pressure signal), despite interruptions at Coinbase, Gemini and Kraken, though several trading firms told CoinDesk they're "buying the dip." SETTLEMENTS: BlockFi incorrectly deposited and attempted to reverse excessive amounts of bitcoin sent to users' accounts during a March promotional giveaway. The company says fewer than 100 users received erroneous payouts. At least one client allegedly received 700 BTC. BlockFi has been able to rollback many of the transactions and has reportedly threatened legal action against those that moved the BTC into personal wallets. COMPTROLLER CONTROL: The new Acting Comptroller of the Currency, Michael Hsu, is signaling the office will take greater caution on crypto than under his predecessor, Brian Brooks. Hsu has ordered a review of the crypto-related guidance Brooks issued – such as allowing banks to custody crypto and use stablecoins – in order to encourage "responsible innovation."
SHIFTING OPINIONS? About 80% of central banks are exploring use cases involving CBDCs, with 40% already testing proof-of-concept programs, according to a report by blockchain infrastructure platform Bison Trails. Separately, European Central Bank Vice President Luis de Guindos said crypto is not a "real investment" and has "very weak fundamentals." Finally, Coinbase CEO Brian Brooks went to Washington, D.C. to meet with lawmakers.
–D.K.
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 First COVID-19. Then GameStop. Then Coinbase. The events of the last year have destined bitcoin to play an integral role in our world.
Next week at Consensus by CoinDesk, our virtual big-tent conference, we explore the place of bitcoin as an asset, as a worldview and as a response to the extraordinary policies coming out of our financial, technological and societal institutions.
Join our Explorations track "Bitcoin as a Worldview" with Cynthia Lummis, Lyn Alden, Dan Held, Meltem Demirors and more at Consensus by CoinDesk, May 24-27. Register today.
Overheard on CoinDesk TV Sound Bite  "Investors express a lot of worry about inflation. That's the top three topics in nearly every conversation: inflation, inflation, inflation."
–Cornerstone Macro analytics head and former New York Fed Director Benson Durham, on CoinDesk TV's "First Mover."
What others are writing... Off-Chain Signals 
–D.K.
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A message from CoinDesk  Introducing Unlocked 101 at Consensus by CoinDesk 2021 New to crypto? Here's a crash course. Unlocked 101 is a free educational series of sessions designed to give you the tools to navigate crypto. Sessions will be hosted May 4–20 to prepare you for Consensus by CoinDesk 2021, our virtual big-tent event.
Putting the news in perspective The Takeaway  The Decoder: BTFD Crypto moves in cycles. There are programmatic cycles, like bitcoin's supply halving every four years. There are hype cycles, where the latest technologies capture public attention, promise the world and then cannot deliver. Then there are cyclical movements in price: what comes up often comes down.
Bitcoin, rangebound below $60,000 for weeks, is now changing hands below $40,000. Does this portend a reckoning? A correction? Some see it as a buying opportunity.
They will tell you, "BTFD." Buy the dip, as it were. Let's decode what the meme means.
Don't overcomplicate it.
(Please don't take investment advice from someone who writes about memes. And be wary of taking investment advice from memes.)
It's a reminder that even though bitcoin is volatile, it trends up. In 2015, bitcoin advocate Alex Millar released a video that offered unconventional investment advice for the crypto industry. "Don't buy bitcoin," he said. "It's going to crash."
Zooming out on a multi-year chart, Millar looked at the notable boom-and-bust cycles in bitcoin's trading history. Bitcoin, in 2011, he said, went from 6 cents to 36 cents, then crashed. Months later, it went from 85 cents to approximately $29 before cratering to $3. In January 2014, bitcoin was trading above $1,000. The next year, one BTC was worth $239.
The trend is clear: Bitcoin will crash. Left unsaid was that in four years bitcoin went from being worth pennies to dollar parity to swinging between a few hundred and a few thousand dollars, with downward swings in between.
At the time, Millar cautioned against buying the dip. "You know it's going to crash," he said. It seems like he's changed his tune.
"As an investor, you gotta ask yourself if an asset is worth its price. If you answer yes, then you gotta buy. And if the price then decreases from there for bad reasons, you need to double down if you want to respect your original analysis," Millar told CoinDesk in a direct message.
It's a show of solidarity. Cryptocurrencies are novel – largely unproven – technological and monetary systems. Assets like BTC, ETH or DOGE buck the investment wisdom taught in prestigious business schools. They lack the cash flows or expected returns that historically have been used to value stocks or start-ups. Instead, crypto trades based on user demand and investor sentiment. All bitcoiners have is a codebase, community and a story to tell.
That goes a way toward explaining all of bitcoin's death pronouncements over the years. The "greater fool" analysis of crypto, or the idea the price will continue to go up as long as new investors can be persuaded to buy in, must lead to a cataclysmic crash, critics say. Every dip could be that great unravelling, when the crowd suddenly gets wise.
Crowds are known as much for their wisdom as their madness. Buying the dip is just picking a side.
Where FOMO fits in. On trading forums, the saying is, "The best time to buy bitcoin was 10 years ago. The second best time is now." Trying to time markets is tricky and there is always a fear of missing out (FOMO). Bitcoiners have developed a trading strategy to mitigate both risks: Amass as much bitcoin as possible and never sell. A dip is just a reminder to buy.
It is an expression of a deeper belief. Sometimes an investment is more than a simple allocation of capital, a calculated bet that something may be more valuable over time. Sometimes, an investment is emotionally or politically motivated.
The "smart money" that has moved into bitcoin this past year has often followed a galaxy-brained investment thesis. Paul Tudor-Jones, a hedge fund manager credited with sparking the institutional wave into bitcoin, said the cryptocurrency could become an inflation hedge. Another outsized fund manager, Stanley Druckenmiller, said bitcoin is on its way to becoming a global reserve currency. Meanwhile, Twitter and Square CEO Jack Dorsey has long said bitcoin will be the native currency of the internet.
If bitcoin succeeds in any of those roles it would be massive. But there is another motivation many hardcore bitcoiners are motivated to buy as much as they can: It is stealing power from the state.
I'll leave you with one thought, what happens when the dip keeps dipping?
–D.K.
The Chaser... 
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