Free markets have a much-overlooked moral function, perhaps their most important moral function – providing retribution for hubris – unwarranted pride, arrogance and blindness.
In Greek mythology, Nemesis stepped in to correct excessive exploitation of one’s dominion, one’s failure to align with Aristotle’s golden mean, one’s going much too far beyond the square footage of good sense and due care and concern for others.
Consider Icarus, who flew too close to the Sun and so lost his ability to fly.
Consider Narcissus, who, because of his vanity, Nemesis led to a pool where he saw his own reflection, fell in love with it, could not turn his eyes away from the floating image and eventually died alongside the water.
Free markets in crypto currency have just acted as Nemesis to investors in Bitcoin. Here is the story from the Wall Street Journal:
The crypto market turmoil only intensified this week, with bitcoin shedding more than 10% and over $10,000 in value. In the 24 hours leading up to Friday morning, more than $2 billion worth of leveraged crypto trades were liquidated, pushing bitcoin below $81,000, according to data from CoinGlass. The largest cryptocurrency is now on track for its worst monthly performance since June 2022, when the collapse of crypto lender Celsius Network plunged the market into what became known as its crypto winter.
Some traders have said the drop in bitcoin may be forcing some other selling in the traditional markets, which swooned this week.
“Every group chat I’m in, everyone wants to know who blew up,” said Nic Carter, founding partner at Castle Island Ventures. “You can’t make sense of it all now. There’s a general malaise with no exact catalyst to say this is why.”
This was supposed to be crypto’s year. There was a perfect storm of a crypto-loving White House, Wall Street adoption and friendly legislation that put a close to more than a decade of antagonistic U.S. regulation and prosecutions.
In a sense, it worked. Divisions between traditional and crypto finance seemed to blur. Portfolio managers are modeling cash flows based on the yields of stablecoins. BlackRock and Fidelity, among many others, hoovered up bitcoins for ETFs. Banks like Bank of New York Mellon and JPMorgan Chase wanted to put funds on the blockchain, while digital token companies like Ripple tried to become banks.
“Gateways are being opened every single day,” said President Trump’s son, Eric Trump, who has co-founded two crypto companies. “This dam is cracking. The two were becoming one and I think it’s very exciting.”…
“When Trump got elected, we were saying ‘gosh, finally we’re going to get all the institutions, ETF approvals, pretty much all the headlines that we dreamed of in crypto,’” said Santiago Roel Santos, a longtime crypto investor and chief executive of Inversion. “The market just has not reacted the way that you would have thought.”
Instead, crypto continues to struggle to break free of its reputation as the deranged, foul-mouthed little sibling of Wall Street, too volatile to trust, too entertaining to look away.
Donald Trump is on YouTube saying, “I only care about one thing… will we be number one in crypto?”
Nemesis came for the Trump family too. According to the November 19 edition of the New York Post:
Trump Media & Technology Group, the crypto and social media company controlled by members of the first family, has seen its stock price plummet to all-time lows – wiping out more than $5 billion in wealth for the Trumps as cryptocurrencies continue their slide.
Shares of Trump Media, which trades under the ticker DJT, have fallen nearly 70% this year – 34.6% of that just the past month, according to Barron’s. …
The family’s holdings, which were worth nearly $6.5 billion at their peak in mid-May 2024, have lost more than $5.3 billion in value since then, according to Barron’s.
The company’s nosedive is tied to a broader meltdown in the crypto market.
Cryptocurrencies have taken a big hit since Trump Media said in August it bought $2 billion worth of Bitcoin.
Bitcoin prices on Tuesday briefly dipped below $90,000 for the first time in months – wiping out the asset’s gains for the year.
Could even the Trumps be narcissists?
If so, Nemesis awaits.
In free markets, the “others” stand in for Nemesis.
As Sartre told us: L’enfer, c’est les autres – “Hell is others.”
Other market players are not docile subordinates waiting for instructions. They have free will and independent power. They decide what’s best for themselves. They need not follow the herd or succumb to trendy delusions about what the future holds. They set prices with their decisions to buy and sell. They can foreswear “irrational exuberance” and cause markets to crash.
This is morality in action – consequences imposed for being out of line.
The formation of monopolies and cartels attempts to drive this free-thinking morality from markets by controlling supply or demand and so setting prices. But such collaborations, in time, also fall prey to Nemesis. Others – innovators, creative destroyers – find workarounds to devalue what is controlled.
Pride goeth before destruction and a haughty spirit before a fall. – Proverbs 16:18