The Blockchain Is Bigger Than Any Bubble

The Blockchain Is Bigger Than
Any Bubble

Bitcoin is a poor currency and a crazy investment
but the technology behind it is a real breakthrough.

Coin of the virtual realm.

An influential new recruit has joined the chorus of bitcoin skeptics. The chief investment officer of UBS, the world’s biggest wealth manager, says it’s too risky to be added to the firm’s portfolios — and his assessment is relatively mild. Others have called it “the very definition of a bubble” and even “a fraud.” Those stronger terms are justified, especially after the latest spell of wild price volatility. But the idea underlying bitcoin — blockchain, or distributed-ledger technology — could be transformative.

The problem with bitcoin and other so-called digital currencies is that they’re a misuse of this technology. As either a new form of money or an investment, bitcoin has fatal disadvantages. Tokens that are privately created — "mined,” if you insist — can succeed in a limited way as a means of exchange and be used to execute certain kinds of transactions. (Cigarettes in prison are a kind of currency.) But as a reliable store of value, bitcoin is much less useful, because its volatility is so extreme. The value of ordinary currencies is underwritten by governments and stabilized by central banks acting as trusted monopoly producers. Bitcoin and its rivals leave those vital roles vacant.

Moreover, bitcoin has no fundamental value as an asset — no stream of future income, no ultimate assurance of liquidity or security, and (unlike gold, say) no alternative use. Its scarcity (hence some floor on its value) is purportedly guaranteed by the underlying technology, but most of its buyers simply take that on trust. Should they come to doubt that guarantee, its price will collapse. In the meantime, bitcoin’s utility as a means of exchange depends on official tolerance — a point rightly emphasized by UBS’s Mark Haefele. That tolerance cannot be taken for granted, especially as bitcoin’s appeal rests so much on the anonymity of its users. At the moment, its comparative advantage is its usefulness for illicit purposes.

All this said, the distributed-ledger technology that underlies bitcoin is potentially very powerful. By reducing the need for central intermediaries, it holds out the promise of processing transactions of various kinds more efficiently than today. Many banks and exchanges are exploring these applications. Blockchain technology might also be used one day to produce new kinds of central-bank money. Central-bank digital currency could start to replace the electronic payment systems that financial institutions use with each other. A more radical idea is to use digital currency, issued and supervised by the central bank, at the retail level to replace physical cash. All these ideas are worth study now. And they’ll still be worth pursuing after the bitcoin bubble bursts.

Chuck Reynolds


Marketing Dept
Contributor
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Bitcoin Frenzy and Trendy Computers

Bitcoin Frenzy and Trendy Computers
Bitcoin 10,000! 11,000! 10,000! 9,000! 10,000!
Whatever!
How do you value a bitcoin?


I think you can reasonably put a range around the value:

  • On the downside, if people decide to stop using bitcoin as a means of exchange or a store of value or a speculative instrument, then its value will be zero. There is no scrap value for a bitcoin. 
  • On the upside, if bitcoin becomes the sole currency for all transactions in the world, you could take Dan Davies's back-of-the-envelope valuation methodology from 2014, plug in a gross world product of about $100 trillion, and get a value per bitcoin of about $500,000. (Here is a talk from Mike Novogratz along related lines.) But that methodology treats bitcoin as just base currency; if you assume that it also replaces all financial assets then you should probably scale that number up by an order of magnitude or so. 

So let's say that in the most pessimistic scenario a bitcoin will be worth $0, and in the most optimistic scenario it will be worth $5 million. So! Great! Now all we have to do is to figure out the likelihood that everyone decides bitcoin is a fraud and stops using it, and the likelihood that bitcoin becomes the sole means of exchange and sole store of value, and the distribution of possibilities in between, where it fills some smaller or larger niche with some smaller or larger value. I suppose that that is a hard and interesting intellectual problem, though more hard than interesting. Certainly no one seems to be answering it in any particularly rigorous way, nor do I think it is obvious that you even could. ("Macro guys are generally intuitive," says Novogratz; "they’re trying to play the futures, they’re trying to make bets on less information than the normal investors are.") The main question is: In one or five or 50 years, will everyone on earth want to use bitcoin, or a lot of people, or a few people, or nobody? There are no fundamentals, no cash flows or price-earnings ratios, to evaluate. It is pure speculation about speculation, a Keynesian beauty contest where all the pictures are blank. 

Now: This is fine. It's not bad. It's not an argument against bitcoin, not a reason to short it at any particular price level. The fact that bitcoin's success relies in collective trust in it, and that that trust has no underpinning in any external reality, is not a problem. Humans put their collective trust in lots of things with little or no underpinning in external reality; it is what has made us successful as a species. Society itself is a matter of collective trust. "There are undeniably certain successful, long-lasting, bubbles," says Jean Tirole, who let us just assume is using the term "bubble" in a technical and non-pejorative sense to mean an asset whose value is based solely on collective acceptance: "gold (whose value vastly exceeds the price that it would fetch if it were treated as a raw material and used for industrial or decorative purposes); or even the dollar, the pound or the euro." You could quibble that the dollar's value is maintained not by collective trust but by the fact that it must be used to pay U.S. taxes, but of course the U.S. tax system, and the U.S. government, and the notion of "the U.S." in the first place, are all maintained by collective trust.

But it is kind of boring. Arguments about bitcoin are like every other shouty argument about financial markets, but with a void at their core. "Bitcoin is capitalism, distilled," says Adam Ludwin, but it isn't quite; bitcoin traders are not allocating capital to productive uses in the real world. Bitcoin is finance, distilled, though, in the narrow sense that the distillation throws away all the messy productive real-world consequences of finance and leaves you with just an abstract thing to trade. You can do technical analysis or talk about sentiment or praise the technological innovation or bemoan the bubble or whatever, but you cannot compute the present value of the future free cash flows. And because there is no real historical analogue to bitcoin, people tend to answer the central question of bitcoin's viability through introspection. If you think that bitcoin is cool and revolutionary, you will be biased towards thinking that everyone else will eventually agree; if you think that bitcoin is a dumb fraud, you will expect everyone else to figure that out eventually too.

And so everything has a bit of a knee-jerk surface quality, where analysis often begins and ends with "I like bitcoin" or "I dislike bitcoin." "You know what I'd like to read is an article about a prominent person who thinks bitcoin is bad," I joked grimly on Twitter yesterday. Here are those articles about Jamie Dimon and Jack Bogle and Warren Buffett and Joseph Stiglitz and Ben Bernanke and, look, you know what, I don't need to do this list, Bloomberg has actually published multiple articles just rounding up which prominent people are for and against bitcoin; here's one from earlier this month, and here's an extremely comprehensive data visualization from this week. The Great Bitcoin Side-Choosing of 2017 is in full swing, but the side-choosings don't really add much to our understanding of the world.

A final thing to say about this model is: It makes for a lot of volatility. There is a traditional model of financial markets in which noisy speculators will push prices around, and then value investors will step in to push prices back toward fundamental values. So if a thing is worth $10,000, and people get excited and bid it up to $10,100, value investors will see it being overvalued and will start selling, capping the upside. If this causes the excitable speculators to start dumping the thing, and it falls all the way to $9,900, then the value investors will see it being undervalued and start buying, flooring the downside. Prices can fluctuate around fair value, and the value investors can be mistaken about what fair value is, but this basic process of trying to match price with value puts some constraint on volatility.

On the other hand, an asset that trades purely on trust is free of those constraints. If your measure of value is just that people like it, then the fact that the price has fallen means that the price should have fallen. If it goes up to $11,000, and then falls down to $9,000, there is no value-based argument to step in to buy. There might be an argument from sentiment or technicals or your faith in the future, but you cannot exactly say that the loss of enthusiasm that brought the price from $11,000 to $9,000 was wrong. The enthusiasm is the value. You should buy if you think other people will buy and sell if you think other people will sell; a contrarian value investor in bitcoin would be a category mistake. And contrarian value investors — the ones who buy when everyone is selling and sell when everyone is buying — are traditionally the ones who limit volatility in markets.

Anyway yesterday bitcoin had "a breakneck advance to a high of $11,434 before the reversal took it as low as $9,009," though "as of 3:36 p.m. in New York, it traded at $9,911.10, virtually unchanged from where it began the session." Meanwhile many of the big cryptocurrency exchanges had technical problems caused by heavy traffic. And there is this:

Rita Scott’s grandson convinced her in mid-November to get in on the latest investing sensation and buy bitcoin. “I thought it was a big coin,” the 70-year-old said. “I didn’t even know what it was, a piece of coin? Why would I invest in a piece of coin?”

Computers.

Here is a article about how "computer-powered trend-following hedge funds" are increasingly following trends into "less liquid, more exotic markets … like Brazilian and Czech interest rate derivatives, natural gas, uranium funds and even cheese and milk contracts," where returns are better than in more traditional markets. (Presumably all the trend-followers following the trend into trend-following in traditional markets have dissipated the returns to trend-following there, while trend-following in exotic markets has only just become trendy.) One simple story about the computerization of stock markets is that you'd expect it to start in extremely liquid stuff where there is tons of data and not much friction involved in implementing an idea derived from that data, and then move on to places where data is sparser and trading is more difficult, and that seems to be happening here.

Another story about computerization is that you'd expect computers to do a lot of analytical grunt work, freeing up humans to do higher-level thinking and add more value. In a sense that story is implicit in every article like this — the humans, after all, are the ones who decided to apply their computerized strategies to milk trading or whatever — but there's also the hint of the

opposite story too:

Hedge funds dabbling with these markets therefore need to make a big investment in expensive and sometimes complicated traditional trading infrastructure, hiring human traders and establishing relationships with big banks that can facilitate activity in “over the counter” markets, as opposed to assets that trade on an exchange. “Some of these markets require human traders and relationships with brokers and banks,” Mr Sargaison says.

You'd think that execution trading would be easier to automate than the investing decisions, but perhaps not. Perhaps in the future the high-level trading and investing decisions will be made by the computers, but they'll keep humans around to introduce them to banks and make sure the paperwork is in order.

Elsewhere, here's a heartwarming holiday story:

A computer glitch has allowed all of American Airlines’ pilots to take vacation during the week of Christmas, according to ABC and Reuters. The error could leave thousands of planes grounded during one of the busiest travel weeks of the year.

What if this is the future of artificial intelligence? What if the computer has grown a heart? Actual human managers, faced with the problem of staffing planes for Christmas, would pursue ruthless economic efficiency, flying more planes to make more money at the cost of making pilots miss the holidays with their families. But the computer decided instead to give everyone a Christmas miracle. "The system went from responsibly scheduling everybody to becoming Santa Claus to everyone," said a spokesman for the pilots' union. The computer has the holiday spirit, or at least a sense of humor. Look I know that this computer system is not like a sentient AI that actually made a conscious decision to do this — I realize it's just a spreadsheet or whatever that was programmed badly — but still I can dream. Eventually a sentient AI is going to be scheduling the pilots, and doing the trading, and so forth, and it would be nice if that AI is the sort of AI you could get a beer with.

Drug charities.

I am not a biochemist, but I have to think that the pharmaceutical industry's innovations in financial engineering are almost as impressive as its innovations in chemistry. One innovation that I have always been a little awed by is

the "copay charity":

Pharmaceutical companies increased their donations to copay charities in recent years, often in tandem with large increases of the price of drugs. Under federal law, drug companies can’t give direct co-pay help to patients covered by Medicare — which would be considered an illegal kickback because it could steer patients to one drug or another. Instead, they’re permitted to donate to independent charities that help Medicare patients, provided the companies don’t exert sway over how the nonprofits operate. 

The idea is that you invent a drug, manufacture it for $1, and then price it at $100. Medicare or other insurers pay for $90 of the cost, and patients pay a $10 copay. Some patients cannot afford it. You could just give them the $10, and you'd be better off: You'd effectively be selling the $1 drug for $90 instead of $100. And in fact there is a certain amount of this, in the form of copay coupons and "access programs" and so forth, but insurers don't like it: The point of the copay, from their perspective, is to steer patients away from expensive drugs and toward cheaper substitutes, so getting rid of the copay feels like a way for the drug company and the patient to team up to cheat the insurer. And Medicare is particularly strict about it, which is why these charities exist: If you give the money to the patients through a charity, rather than through a coupon, it looks a little bit less like you're teaming up to cheat Medicare.

Unless:

It had another effect, according to a redacted letter from the Department of Health and Human Services’ Office of Inspector General. It provided drugmakers with data that could help them see if their contributions were helping their own customers, potentially giving the companies “greater ability to raise the prices of their drugs while insulating patients from the immediate out-of-pocket effects,” and letting Medicare pay for the cost increases, according to the OIG’s letter, which was posted on the HHS website.

That's about Caring Voice Coalition, "one of the biggest patient assistance charities in the U.S.," which "is funded almost entirely by drugmakers" and which pays patients' copays so that the drug companies can get more money from Medicare. I mean, so that the patients can get access to life-saving medicines that they otherwise couldn't afford. Both are true. The OIG is "rescinding its previous favorable advisory opinions of the charity," which may prevent drugmakers from continuing to donate to it, which may make endanger its survival, which may make it harder for patients to afford life-saving drugs. That is perhaps the cleverest part of the copay charity scheme: How could anyone criticize a charity that lets people buy life-saving drugs?

Congrats OLA.

One of the weird symbolic fights over the Dodd-Frank Act has been over whether, when a big bank fails, it should be seized by financial regulators and recapitalized or liquidated in a way that protects the broader financial system, or whether instead it should have a messy bankruptcy. Intuitively you would think that having banks fail in a good way would be better than having them fail in a bad way, but there is some vague notion that setting up a good way for them to fail makes them "too big to fail," and that the only safe approach is to throw them into bankruptcy like everyone else. (Also there is always at least some risk that the good way to fail might require taxpayer support.) Anyway there has been much fulminating against Dodd-Frank's "orderly liquidation authority" but at the end of the day it looks like the

Trump administration wants to keep it:

The Treasury Department, in a coming report on the Dodd-Frank provision known as orderly liquidation authority, plans to propose changes to the policy without scrapping it wholesale, these people said.

Amusingly, President Donald Trump sent a memo to Treasury Secretary Steven Mnuchin "symbolically placing use of the authority on hold except for emergency use." Why would you use it except in an emergency?

People are worried about stock buybacks.

The basic worry about stock buybacks is that U.S. public companies have a lot of money and are spending it on buying back their own shares rather than on raising worker salaries or increasing research and development. This worry has been sharpened by a U.S. tax plan that would raise taxes on middle-class individuals and sharply cut Medicare in order to pay for lower taxes on corporations. If the corporations pass their higher after-tax incomes on to workers, then this might be a wash. But:

Major companies including Cisco Systems Inc., Pfizer Inc. and Coca-Cola Co. say they’ll turn over most gains from proposed corporate tax cuts to their shareholders, undercutting President Donald Trump’s promise that his plan will create jobs and boost wages for the middle class.

The president has held fast to his pledge even as top executives’ comments have run counter to it for months. Instead of hiring more workers or raising their pay, many companies say they’ll first increase dividends or buy back their own shares.

For a while last year, I was half-joking that corporate stock buybacks might become a campaign issue in the presidential election. Maybe in the 2018 midterms they actually will!

Things happen.

Marvin Goodfriend Is Nominated to Be a Fed Governor. Matthew Klein: The DOJ’s case against the AT&T/Time Warner deal makes no sense. "In sum, §7 of the Clayton Act is a promising vehicle for combatting the anticompetitive effects of horizontal shareholding, should they be found." How a Small Bet on Tencent Made an African Firm One of the World’s Most Valuable. Banks Are Spending $20 Billion on Compliance Tech Ahead of MiFID. Credit Suisse vows to return 50% of profits to shareholders by 2019. Wells Fargo Is Dubbed a Repeat Offender and Faces New Wrath From Its Regulator. Companies Get Extra Incentive to Disclose Bribes: No Charges. Meditation Brings Calm to CEOs. New York City Has Genetically Distinct ‘Uptown’ and ‘Downtown’ Rats.

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-461

David https://markethive.com/david-ogden

As bitcoin passes $10,000, experts consider whether cryptocurrencies will crash or carry on

As bitcoin passes $10,000, experts consider whether cryptocurrencies will crash or carry on

  • Bitcoin has posted a return of over 900 percent since the start of the year
  • One technical trader said the rise of bitcoin in 2017 is the biggest bull market he has seen in over 40 years of working in finance
  • David Shrier, academic and CEO of Distilled Analytics, told CNBC that he has absolutely no doubt that there is feverish speculation going on with cryptocurrencies

Our mistake on bitcoin was treating it like a currency:

Bubble, Ponzi, tulip and trouble have been among the words used by crypto-critics over the past year as bitcoin powered from under $1,000 and passed the much talked about $10,000 marker. Despite being talked down by some major financial names, not least JPMorgan CEO Jamie Dimon, it looks like cryptocurrencies could be here to stay. Bitcoin has posted a return of over 900 percent since the start of the year with one technical trader saying the rise of bitcoin in 2017 is the biggest bull market he has seen in over 40 years of working in finance.

David Shrier, academic and CEO of Distilled Analytics, told CNBC that he has absolutely no doubt that there is feverish speculation going on with cryptocurrencies but that in itself is not a bad thing. "There is enough utility and utilization of bitcoin that it will retain some kind of value, even if the price settles down a bit. Amazon didn't go to $0 when the dotcom bubble burst, but other frothy stocks with no reality behind them did. Similarly, bitcoin won't go to zero, but I do believe a number of these other cryptocurrencies will fail," Shrier said.

Dominic Williams, chief scientist at research group the DFINITY Project, is also skeptical about the viability of initial coin offerings (ICOs) in particular, saying "only a fraction of the projects holding ICOs have any chance of success." ICOs are a way for companies to raise money — people pay money in exchange for a token or digital currency. The token doesn't usually give the investor equity in the company. Instead, it can be traded or used to do something with the firm.

Bitcoin will be "the biggest bubble of our lifetimes,

"The vast majority have been created specifically with the ambition of collecting money from enthusiastic investors rather than delivering utility in the real world," he said.Meanwhile, Ken Griffin, the founder and CEO of hedge fund Citadel, is concerned that some investors are mixing up blockchain and bitcoin. Blockchain is a general term for a distributed digital ledger that can record transactions and is tamper-proof. It's the underlying technology that makes cryptocurrencies such as bitcoin and Ethereum possible. He told CNBC that many people buying it, do not understand the underlying technology.

A ramp up in retail accounts over the Thanksgiving holiday helped bitcoin over $10,000 and some in the financial industry are worried about the fallout of a possible price crash. Shrier said he is not overly worried that a crypto-bubble "crash" will hinder bank acceptance of so-called distributed ledgers and added that "speculation helps attract new sources of risk capital and new entrepreneurs to the space." "Other market forces will assert themselves eventually, and what will emerge out of that is a new way of operating," he told CNBC.

It's official: Bitcoin is bigger than Disney 
 

On bitcoin's price volatility, Williams explains that for a cryptocurrency to be used day-to-day, its value has to be stable otherwise it cannot be effective as a medium of exchange."The value of bitcoin is notoriously volatile because it is created mainly by the interaction of speculative demand, which makes application as a normal currency impossible for now," he said.He is concerned though about the possibility that some people getting in on the action may get burned and bitcoin ends up being a kind of pyramid marketing scheme that leaves only the early buyers rich, with everyone else losing plenty of money.

Only time will tell

The rally may not even be over yet, according to some commentators. The man who called bitcoin's rise to $10,000, fund manager Michael Novogratz, has over 20 percent of his net worth in cryptocurrencies and told CNBC that he sees the possibility of it reaching $40,000 by the end of next year.

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-461

David https://markethive.com/david-ogden

2017 is the year cryptocurrency joined the global financial system

2017 is the year cryptocurrency joined the global financial system


This week, the value of a single bitcoin officially cleared $10,000,

a new high point that’s over an order of magnitude greater than its price at the start of this year. Bitcoin has defied market expectations before, but in 2017, it didn’t just become more valuable. Bitcoin and other cryptocurrencies have become an acknowledged part of the financial system — albeit a nebulous one.

Bitcoin traded at around $960 at the beginning of the year, and it’s risen steadily since then, with a steep jump in the past two months. There are multiple, complementary explanations for this, but this latest boom was sparked partly by the CME Group, a futures marketplace that announced its intent to start listing bitcoin by the end of the year. It’s a stamp of approval that could help cement bitcoins’ position at other major financial institutions, many of which are already handling bitcoin-related trading in some capacity. Even JPMorgan Chase, whose CEO Jamie Dimon has said he would fire anyone who traded bitcoin, is reportedly considering a plan to let its clients access CME’s futures.

Bitcoin isn’t replacing cash,
but it’s gotten a big stamp of investor approval

Not everyone believes that bitcoin is ready to enter the futures market. Themis Trading principal Joe Saluzzi warned that the currency is dangerously unregulated: “It reminds me of the financial crisis all over again,” he told CNBC. And bitcoin is so volatile that spending it doesn’t make sense. Nobody knows how valuable a single bitcoin might BECOME — while Thomas Glucksmann of currency exchange Gatecoin said $10,000 was still “cheap in my opinion,” bitcoin has also suffered extended catastrophic crashes, including a long slump after passing $1,000 in 2013. As an example of just how surreal bitcoin fluctuations can be, Gizmodo writer Kashmir Hill tweeted about buying a sushi dinner in 2013 for the equivalent of $99,000 today.

There are still places where bitcoin payments make sense, although they’re sometimes unsavory: far-right groups have used them after being dropped by payment processors, for instance. And the underlying blockchain technology has myriad uses that aren’t cryptocurrency-focused — from quickly processing international money transfers to tracking legal marijuana. But people have also found uses for cryptocurrency that go beyond replacing cash. The best-known example of 2017 might be initial coin offerings or ICOs, in which companies sell digital tokens based on cryptocurrencies like Ethereum. ICOs range from serious fundraising efforts to absurd but startlingly successful jokes, and some have earned endorsements from the likes of Paris Hilton and Ghostface Killah of Wu-Tang Clan. And unlike Dogecoin or other earlier novelty currencies, they’ve attracted serious regulatory attention.

Some countries have outright banned ICOs — China barred the offerings as a form of “illegal public financing,” and South Korea announced “stern penalties” for running them. But other countries have attempted to clarify how existing rules apply to them. The US Securities and Exchange Commission ruled that some ICOs fell under securities law, setting them apart from general crowdfunding efforts. Japanese regulators also outlined how ICOs may fall under existing financial rules. In the US, the SEC has even issued guidance for how celebrities can hawk them.

Cryptocurrencies’ overall legal status is still complicated, but several countries have made major policy decisions around them in 2017. Some of these are negative: China shut down currency exchanges earlier this year, although traders have moved to other platforms, and the SEC rejected a high-profile application for a bitcoin stock fund. Many other countries have given more ambiguous signals. Russian president Vladimir Putin ordered regulators to develop a wide-ranging set of rules for miners and traders, even as officials have signaled a crackdown. India’s government launched a committee earlier this year to study digital currency regulation, and the Supreme Court recently urged it to speed up its work.

People have been prosecuted for cryptocurrency-related crimes like Ponzi schemes in past years, and governments have issued guidance about bitcoin. Some of these new decisions just raise new questions: the SEC, for instance, didn’t address how it would punish a decentralized network for violating securities rules. Likewise, getting attention from investors and regulators doesn’t tell us whether bitcoin will succeed in the long run, or whether cryptocurrencies will play a major role in most people’s lives. But even if cryptocurrencies aren’t directly competing with their traditional counterparts, the past year shows how serious they’ve become to both regulators and investors.

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-461

David https://markethive.com/david-ogden

What Bitcoin Watchers Are Saying After the Surge Past $10,000

Inside The La Maison du Bitcoin Bank As Cryptocurrency Emerges As Zimbabwe's Crisis Currency

What Bitcoin Watchers Are Saying After the Surge Past $10,000

Bitcoin entered uncharted territory on Wednesday after breaching $10,000 for the first time, leaving investors to wonder how long the rally will go — and whether it will end in tears.
 

The digital currency climbed as much as 4.4 percent to a record $10,379.53 during Asia trading hours, capping a more than 10-fold increase this year. Its market value has surpassed $176 billion, according to Coinmarketap.com.
 

Here’s what bitcoin watchers are saying about the dizzying rally.

 

Arthur Hayes at BitMEX

“They said it was a bubble at $1,000, they said it was a bubble at $5,000 and they said it was a bubble at $10,000,” said Hayes, chief executive officer and co-founder of Hong Kong-based BitMEX, a cryptocurrency derivatives venue. “Shorting anything is a very dangerous game, especially if you’re shorting into a transformational monetary system. These transformational experiences happen once every few hundred years and are extremely chaotic.”

What Bitcoin Watchers Are Saying After the Surge Past $10,000

Hayes, who was speaking on the phone from New York after attending the Consensus: Invest cryptocurrency conference, said he saw more people wearing suits than jeans and hoodies — a sign of growing interest on Wall Street.

“The fear of missing out is becoming stronger and stronger,” he said. “The traditional asset manager or investor, banker who has probably poo-pooed bitcoin the past few years is now paying upwards of thousands of dollars to hear about how they can get involved in this new industry.”

Hayes said bitcoin may reach $50,000 by the end of 2018.

 

Stephen Innes at Oanda
 

“I’d be a little bit worried on a falling knife scenario,” said Innes, head of trading for Asia-Pacific at Oanda Corp. in Singapore. “Are current investors prepared for this? No, of course not.”

Longer term, cryptocurrencies will gain more credibility as CME Group Inc. starts selling bitcoin futures and other mainstream institutions get involved, Innes said. For now, he sees a short-term pullback of 3 percent to 6 percent as investors take stock of how much they’ve gained.

“When we’re starting to get into these crazy numbers, I’m a little bit fearful that retail traders are jumping in under the false guise of this will run on forever,” he said. “We know things never go in a straight line.”
 

Jehan Chu at Kenetic Capital
 

“If you look at the kind of trajectory not just of the currency and the price, but really of the mind share among influencers, among governments, among central banks, among enterprises — that’s actually where I see the real guideposts of where the price will go,” said Chu, managing partner at cryptocurrency fund Kenetic Capital in Hong Kong, who first bought bitcoin at about $1,100 in 2013.

“One of the main factors is the settling down of the civil wars that have been raging on,” Chu said, referring to intense debate within the industry over technology upgrades that resulted in the formation of a rival coin called bitcoin cash. “There’s much less drama at the moment at least. One side has disarmed and that has really provided a clear path ahead to show that the ecosystem can grow in a more predictable manner.”

Chu sees some risk of a correction, but not a major one, and said that high prices will ironically serve to draw more institutional interest.
 

Dave Chapman at Octagon Strategy
 

“Now, you’re getting an enormous amount of legitimacy and credibility in the bitcoin protocol,” said Chapman of cryptocurrency trading firm Octagon Strategy in Hong Kong. “Admittedly, there is an element of FOMO (fear of missing out). That’s not entirely healthy for the current market. There is a sizable amount of people investing in bitcoin purely on speculation.”

Chapman sees a correction coming, but is unsure how large it will be.

“I see possibly a correction but then also an immediate bounce-back just owing to the size of the market. People will double down and see it as a buying opportunity.”
 

Gavin Yeung at Cryptomover

“Owning a whole bitcoin is now a status symbol,” said Yeung, CEO of Hong Kong-based investment company Cryptomover. “We are coming to see that bitcoin itself is a Veblen good. The higher the price, the more desirable the product is to the general public.”
 

Lewis Fellas at Bletchley Park Asset Management
 

“The principal driver has been the proposed CME futures contract, which has really woken up Wall Street,” said Fellas, chief investment officer at Bletchley Park Asset Management, which invests in cryptocurrencies. “The secondary driver is media coverage. It’s fueling a fear-of-missing-out as we set successive new highs, luring people in for a quick profit ahead of the futures contract.”

The risk of a near-term retreat is real as regulators could still block or delay the proposed futures, Fellas said. “A delay or ‘no’ could easily trigger a 30 to 40 percent correction.”

Authors: Eric Lam and Justina Lee 29 November 2017, 04:42 GMT
With assistance by Andrea Tan

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David https://markethive.com/david-ogden

Bitcoin could ‘easily’ reach $40,000 by the end of 2018, hedge fund legend Novogratz says

Bitcoin could 'easily' reach $40,000 by the
end of 2018, hedge fund legend

Novogratz says

Former Fortress hedge fund manager Michael Novogratz said Monday that bitcoin can multiply more than four times in roughly the next 13 months.

  • "Bitcoin could be at $40,000 at the end of 2018. It easily could," Michael Novogratz says on CNBC's "Fast Money."
  • "Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well," adds Novogratz, formerly a macro hedge fund manager at Fortress Investment Group.
  • But Novogratz doesn't recommend retail investors put any more than 1 to 3 percent of their net worth in cryptocurrencies, or wealthier investors to put more than 5 to 10 percent.
Theman who called bitcoin $10K nowees this for the cryptocurrency."Bitcoin could be at $40,000 at the end of 2018. It easily could," Michael Novogratz said Monday on CNBC's "Fast Money." "Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well."Bitcoin was trading near $9,656 late Monday afternoon, after hitting a record high above $9,700 earlier in the day, according to CoinDesk. Ethereum hit a record high of $493.40 Monday, according to CoinMarketCap, and last traded near $482. The total market capitalization of all digital coins on CoinMarketCap hit $304 billion Monday. Novogratz said he expects that could increase by about six times to $2 trillion at the end of next year.

Market capitalization of all digital coins

"There's a big wave of money coming, not just here but all around the world," said Novogratz, formerly a macro hedge fund manager at Fortress Investment Group. He is planning to launch a $500 million digital assets fund through his new firm, Galaxy Investment Partners. Demand from Asia has contributed to bitcoin's gains. Japanese yen trading in bitcoin dominates trading volume at about 62 percent, according to CryptoCompare. U.S. dollar-bitcoin trading accounts for about 21 percent, and trading in South Korean won accounts for about 9 percent. "What's different about these coins than other commodities … there is no supply response here," Novogratz said. "So it's a speculator's dream in that as buying happens there's no new supply response that comes up. So every price move gets exaggerated. It's going to get exaggerated on the way up. There will be 50 percent corrections. It will get exaggerated on the way down."

In contrast to oil and renewable energy products, Novogratz pointed out companies cannot produce more bitcoin in order to meet demand since the digital currency's supply is limited to 21 million coins. Novogratz said Monday that "probably over 20 percent" or "maybe even 30 percent" of his net worth is in cryptocurrencies. He said he's split roughly in half between bitcoin and ethereum. But Novogratz doesn't recommend retail investors put any more than 1 to 3 percent of their net worth in cryptocurrencies, or wealthier investors to put more than 5 to 10 percent.

Back on Oct. 10, Novogratz said on CNBC's "Fast Money" that he expects bitcoin will top $10,000 in the next six to 10 months. Bitcoin traded near $4,874 that day. During a mid-November plunge of more than 20 percent in bitcoin's price, Novogratz said he bought $15 million to $20 million worth of the digital currency, according to Reuters. Bitcoin has since more than recovered to an all-time high of $9,732.76 Monday, according to CoinDesk. At that level, the digital currency was up more than 10 times in price for the year and about 50 percent for November.

Last Wednesday, Fundstrat's Tom Lee raised his mid-2018 price target for bitcoin to $11,500 from $6,000. That followed a similar upgrade last Monday by Standpoint Research's Ronnie Moas, who raised his 2018 price target for bitcoin to $14,000 from $11,000. CNBC also reported that Novogratz agreed on Oct. 4 to join the board of advisors for a new token-exchange project based on digital currency ethereum.

Chuck Reynolds


Marketing Dept
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Falling Dominoes? $10,000 Bitcoin Price Now LooksInevitable

Falling Dominoes?
$10,000 Bitcoin Price Now Looks
Inevitable

 

Never say never, but bitcoin looks set to topple the $10,000
mark across global exchanges today.

While BTC is yet to pass the notable milestone on western exchanges, trading in Asia has already seen the cryptocurrency hit as high as $10,086 today on data source CoinMarketCap. Bitcoin first started peeping above the psychological hurdle on several South Korea-based cryptocurrency exchanges last night. As per CoinDesk's Bitcoin Price Index, however, the cryptocurrency is still trading at $9,917 levels. That said, the chart analysis shows the dominos are falling, and bitcoin is set to pass the historical price point sooner rather than later.

The chart would show:

  • A minor drop to $9,500 levels yesterday was quickly undone as the cryptocurrency found takers around the upward sloping 50-MA (moving average).
  • The 50-MA, 100-MA and 200-MA favor further upside in prices (sloping upwards).
  • More importantly, the rising trendline (drawn from Nov. 12 low and Nov. 24 low) is intact. The trendline is seen offering support today $8,800 levels.
  • Potential bearish price RSI divergence: The RSI would form lower highs if the current 4-hour candle closes below the 4-hour 50-MA level of $8,625. That would confirm a bearish divergence

Bitcoin has potential to extend gains to $10,400 levels, as suggested by the bull flag breakout earlier this month. The slight cause of concern would be confirmation of the bearish-price RSI divergence. In such a case, the cryptocurrency could witness a deeper pullback to $9,000 levels. However, that may not necessarily yield a trend reversal for

two reasons:

  • In the past, bitcoin has made major tops following the confirmation of the bearish price RSI divergence on the daily chart. A 4-hour bearish divergence is unlikely to yield anything more than a minor pullback.
  • The outlook remains bullish as long as the rising trend line is intact. Only a break below the trendline support would signal a near-term bullish-to-bearish trend change.

Chuck Reynolds


Marketing Dept
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Bitcoin nears $10,000 mark as hedge funds plough in

Bitcoin nears $10,000 mark as hedge funds plough in

Bitcoin nears $10,000 mark as hedge funds plough in

  • Cryptocurrency now worth seven times an ounce of gold, with market cap higher than IBM, McDonald’s or Disney – but analysts warn of ‘a huge bubble’
  • Bitcoin mining consumes more electricity than Ireland

Bitcoin has hit a record high after passing $9,000 (£6,700) and is close to reaching five figures as investors in the cryptocurrency shrug off warnings of a bubble.

The cryptocurrency rose to an all-time high of $9,721 on Monday. It is now worth more than seven times an ounce of gold, which is seen as a haven in times of turmoil.

In a remarkable rally, bitcoin started the year at $1,000 and smashed through $5,000 in October.

Analysts said the decision by the Chicago Mercantile Exchange (CME) to launch bitcoin futures in December had fuelled buying, but also warned of the dangers of a speculative bubble building. The digital currency has gained more than 50% since the CME announced its decision on 31 October.

Neil Wilson, senior market analyst at ETX Capital, said: “The legitimacy this gives bitcoin as a tradeable asset is very important. The market cap of bitcoin now exceeds that of IBM, Disney [or] McDonald’s.”

The value of the 16.7m bitcoin units in circulation has exceeded $160bn.

screenshot-www.theguardian.com-2017-11-28-07-56-19-584

Warning of looming pain for bitcoin buyers, Wilson added: “But for traditionalists, it’s hard to fathom. Rather than a commodity or currency, bitcoin is like owning stock in a company that will only ever issue 21m shares and never pay a penny in dividends.

“The only way it has value is if the next guy is willing to pay you more for it – the greater fool. With no intrinsic value to bitcoin, it’s hard to see this as anything other than a giant speculative bubble.”

Bitcoin is a virtual currency that emerged in the aftermath of the financial crisis. It allows people to bypass banks and traditional payment processes to pay for goods and services.

Banks and other financial institutions have been concerned about bitcoin’s early associations with money laundering and online crime, and it has not been adopted by any government.

The price has been volatile. Bitcoin plunged below $3,000 in mid-September after the Chinese authorities announced a crackdown. To help rein in some of that volatility, CME will not allow the trading of bitcoin futures at prices 20% above or below the settlement price from the previous day.

screenshot-www.theguardian.com-2017-11-28-07-58-59-094

Hussein Sayed, chief market strategist at the online foreign exchange broker FXTM, said bitcoin was showing no signs of slowing.

It is not just retail investors buying the cryptocurrency. Many hedge funds have also decided to include it in their portfolios and, according to CNBC, the financial news service, there are more than 120 funds investment devoted to cryptocurrencies.

Sayed said it was almost impossible to give the cryptocurrency a fair value based on fundamentals, but added that there had been a strong correlation between the price of bitcoin and number of users opening new wallets.

He added: “Given that number of users haven’t exceeded 0.1% of the global population, there’s still more potential for this momentum trade to continue. Whether the price will be justified in the foreseeable future, depends on the adoption and the application of the new currency, but so far it still looks unstoppable.”

The starkest warning has come from the JP Morgan chief executive, Jamie Dimon, who said bitcoin was a fraud that would ultimately blow up.

There has been a boom in initial coin offerings (ICOs), in which new cryptocurrencies are launched into the market – often backed by a celebrity, such as the American socialite Paris Hilton and the boxing champion Floyd Mayweather.

ICOs have come under increased scrutiny from regulators, owing to fears that investors are not properly protected. David Futter, a partner in the digital economy at the law firm Ashurst, predicts that scrutiny will intensify.

Source Gaurdian Business UK

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

 

 

 

David https://markethive.com/david-ogden

Cryptocurrency Market Cap Breaches $300 Bln, BTC Dominates

Cryptocurrency Market Cap Breaches $300 Bln, BTC Dominates

The cryptocurrency market cap has breached $300 bln,

according to marketcap.com, with gains in many of the major currencies, particularly as  Bitcoin price has jumped over $9,500. The market cap has been driven by a number of factors, but Bitcoin continues to maintain a 53 percent dominance in the total cap. The market cap surge has been spurred on by a huge jump in the value of Bitcoin, but other coins have also had excellent weeks. Ethereum and Litecoin had particularly strong weeks, with Ethereum posting an all-time high and other altcoins like Monero, IOTA, and Dash all had a strong showing as well.

What’s driving the market?

The market cap increase is reflective of a general feeling among market movers that the cryptocurrency market will continue to grow. Investors are beginning to join in the market and are producing substantial gains. The increase in hedge funds, as well as the general awareness in the market, are both strongly bullish signals for the market. The last Bitcoin climb was coupled with declines in altcoins, but this run up has carried altcoins with it. This may well be a strongly bullish sign for the market as a whole. According to many insiders, the market has just begun it’s bull run, with increasing investment coming. According to Mihail Lala – founder and

creator of WAWLLET:

"Gravity is the key element. The investment rivers fed a 300 bln lake due to a natural flow. The market is attracted by need and opportunity. We are just at the beginning of early majority. The lake is just 15 percent loaded."

Chuck Reynolds


Marketing Dept
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Litecoin Price Hits Record High Amidst Very Solid Cryptocurrency Market

Litecoin Price Hits Record High Amidst Very Solid Cryptocurrency Market

The price of the virtual currency Litecoin reaches an all-time high of $87

per token on as of press time, amidst the sustained solid performance of the cryptocurrency market. It is projected that the price of the digital currency could even surpass the $100 level before the year ends.

The trading of Litecoin has reached almost $381 mln in a 24-hour period across all trading exchanges. This shows that the digital currency is moving towards it all-time high as Bitcoin surged past $9,000. The majority of the Litecoin trading volume was dominated by the exchanges GDAX and Bitfinex, outperforming cryptocurrency exchange Bithumb. The trading data also showed that there are three fiat currency trading pairs among the top three, signifying that there is new capital entering the digital currency market.

Solid performance of the virtual currencies

Litecoin’s sustained upward trajectory is just one of the positive developments in the digital currency market. Earlier, the altcoins Bitcoin and Ethereum have posted record increase in prices. These were followed by Monero and Dash, which also set all-time highs in their prices during trading. The sustained strong performance of the other digital currencies amidst Bitcoin’s phenomenal rise is seen as a sign that the cryptocurrency market will experience phenomenal growth in the near future. In the past, when Bitcoin performed well, the other altcoins like Litecoin were usually adversely affected and posted sharp declines. This new trend shows that the altcoins are increasingly being accepted in the market.

Future for Litecoin

Litecoin’s surge is a sign that the industry players already see the potential of the cryptocurrency. This has also helped pushed the digital currency’s market capitalization to more than $4.5 bln and strengthened the altcoin’s solid growth in the market. It remains to be seen, however, if this bullish performance will be sustained in the days to come.

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-461

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