Category Archives: Bitcoin
Big investors new to cryptocurrencies appear to be behind bitcoin’s rally to a record – CNBC
Stanley Druckenmiller (L) and Paul Tudor Jones
CNBC
A herd of new, big investors are scooping up bitcoin this year as the price more than doubles.
Investors who bought at least 1,000 bitcoins worth roughly $23 million at Friday's price and have had an account open for less than a year, drove significant demand since September, according to data firm Chainalysis. The new cohort together bought half a million bitcoins, or $11.5 billion worth, in the past three months.
In the time these new investors accelerated their buying spree, bitcoin's price more than doubled from $10,000 level. The new demand has helped fuel the cryptocurrency's rally to an all-time high, according to Philip Gradwell, chief economist at Chainalysis.
"The role of institutional investors is becoming ever clearer in the data," Gradwell said in a note to clients Friday. "Demand is being driven by North American investors on fiat exchanges, with greater demand from institutional buyers."
The surge in demand from wealthy Wall Street investors marks a sharp turn-around from bitcoin's first run-up three years ago. The 2017 rally was driven by retail investors, many of whom who bet on bitcoin and other smaller cryptocurrencies out of speculation. Bitcoin became a household name when it first neared $20,000 that year. It crashed soon after, losing 80% of its value in the following months.
Source: Chainalysis
Bitcoin crossed $23,000 for the first time ever this week, bringing its year to date gains to more than 200%. The cryptocurrency has recovered roughly a quarter of its value since Friday, and is on pace for its best week since May 2019.
The price resurgence in 2020 in part has been fueled by well-known Wall Street billionaires publicly backing bitcoin. Analysts say that gave confidence to otherwise skeptical, mainstream investors.
Stanley Druckenmiller and Paul Tudor Jones have both invested in the cryptocurrency and highlighted its potential as a hedge against inflation. Meanwhile,Square, MicroStrategyand Mass Mutual have used their own balance sheets to buy cryptocurrency. PayPal also added the ability for clients to buy bitcoin, which has opened up the market to millions of new buyers.
"We are seeing institutional capital flowing in at the fastest pace in the history of our business, and it is being deployed by some of the world's largest institutions and some of the most famous investors," Michael Sonnenshein, managing director at Grayscale Investments, told CNBC in a phone interview Friday. Flows into Grayscale's publicly traded Bitcoin Trust have increased roughly 6x from a year ago, he said.
Chainalysis also pointed to less liquidity in the market, with fewer sellers than there were there years ago.
Last week, there were 801,000 fewer bitcoin sent compared to 2017. To be sure, not all bitcoin being "sent" is being sold. But Chainalysis' Gradwell said it's a "good proxy" since there are limited use cases otherwise, especially when prices are spiking. Less bitcoin availability "would explain the rapid price increase this week," he said.
As bitcoin neared its high this week, rapper "Megan Thee Stallion" tweeted a bitcoin giveaway with Square Cash App, which was retweeted by Square and Twitter CEO Jack Dorsey. The endorsement coincided with the peak of bitcoin's price Thursday.
"Celebrity endorsements have typically been a bellwether for the top of the market, so maybe this omen will overcome the fundamentals I have shown in the data," Gradwell said.
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Big investors new to cryptocurrencies appear to be behind bitcoin's rally to a record - CNBC
Real Estate Billionaire Sam Zell Skeptical of Bitcoin but Says ‘It May Be the Answer or One of the Answers’ | Featured – Bitcoin News
The founder and chairman of Equity Group Investments Sam Zell says he is sceptical of bitcoin but concedes that it may be part of the solution. In particular, the billionaire and real estate magnate thinks the bitcoin community is composed of many individuals that he is not fond of.
In remarks made during an interview, the billionaire, who predicts that the U.S. dollar will lose its status as the worlds reserve currency within the decade, has no kind words for some unnamed individuals in the bitcoin space. A report quotes Zell remarking:
I am very sceptical, frankly, of bitcoin. Ultimately, it may be the answer or one of the answers. But right now, its a world thats extraordinarily populated by chameleons and other fast-talking characters. I dont believe everybody involved in it are the kind of people Id like to follow.
Although the billionaire does not explain how BTC can be one of the answers, the same interview, however, does provide some hints as to why Zell thinks so. When talking about the possibility of the U.S. dollar losing its reserve status, Zell warns:
If we keep doing what we are doing right now, I think it is 10 or 15 years away. If we lose the reserve status, I could see a 25% reduction in our standard of living.
Meanwhile, other individuals and organizations including the International Monetary Fund (IMF) seem to share the billionaires sentiments on the U.S. dollars future status. The IMF says central banks now need to think about the possibility of replacing the dollar with other alternatives which include digital currencies.
However, for his part, Zell warns of the disastrous consequences ahead if the tradition of unlimited debt and irresponsible activity does not end. Many analysts including bitcoiners see the excessive borrowing and printing of money as the prime cause of the U.S. dollars depreciation. The resulting diminished dollar value then forces some investors to seek and invest in inflation resistant assets. Bitcoin is proving to be one such asset.
What do you think of Zells bitcoin remarks? Tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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Real Estate Billionaire Sam Zell Skeptical of Bitcoin but Says 'It May Be the Answer or One of the Answers' | Featured - Bitcoin News
Here’s Why I Won’t Buy Bitcoin, and You Shouldn’t, Either – Motley Fool
This has been a history-making week, and I'm not just talking about the rollout of coronavirus vaccines. On Wednesday, Dec. 16, we witnessed the largest cryptocurrency in the world by market cap, bitcoin, blow past its previous high and eclipse $20,000 per token. In fact, bitcoin went on to also blow by $21,000 and $22,000 within a matter of hours.
For as volatile as the stock market has been in 2020, you wouldn't know it by looking at bitcoin, which is up by 201% on a year-to-date basis through the late evening of Dec. 16. This jaw-dropping rally is rebuilding the euphoria that overtook the crypto community back in 2017, and probably has folks believing cryptocurrency is a good investment.
But I am not part of that community, nor can I say I ever will be. The higher bitcoin goes, the more convinced I am that it's one of the most dangerous investments. Each of the major buy theses surrounding bitcoin can be easily debunked -- as follows.
Image source: Getty Images.
One predominant catalyst for bitcoin is the perception of scarcity. It currently has 18.57 million tokens in circulation and a cap of 21 million. Over time, the remaining 2.43 million tokens will be mined via transaction proofing and block rewards. With only so many tokens to go around (fractions of a token can be bought and sold), the buy thesis suggests that this scarcity makes bitcoin an excellent investment.
The problem is that bitcoin lacks genuine scarcity. Its perceived cap of 21 million tokens exists because of computer code. Last I checked, code can always be erased and rewritten. While it's unlikely that a community consensus would be reached to increase the circulating supply of bitcoin, the possibility of this happening isn't zero.
By comparison, a precious metal like gold has a hard supply limit. We can't use alchemy to make more gold. The only gold that's available is what's been mined or is still underground. When the only parameter of scarcity is written computer code, that's not true scarcity.
Image source: Getty Images.
Another buy thesis of bulls is that bitcoin's utility is growing by the day. More businesses are accepting digital tokens for payment, and a broader swath of people are buying bitcoin tokens for the first time. According to financial services company Fundera, around 2,300 U.S. businesses and 15,174 global businesses were accepting bitcoin at the end of 2019. More than a dozen multinational companies also accept bitcoin.
Slam-dunk proof of increasing utility, right? Not so fast.
Even following its monumental rally, bitcoin has a total market value of $400 billion. That compares to approximately $142 trillion in global gross domestic product (GDP) in 2019. While it's true that not all GDP is consumption based, this $400 billion accounts for less than 0.3% of global GDP.
Furthermore, approximately 40% of bitcoin tokens are being held by long-term investors with no desire to put those tokens into circulation. Rather than having $400 billion in buying power, there's more like $240 billion in purchasing power available, accounting for 0.17% of global GDP in 2019. There are not nearly enough tokens in existence to drive widespread adoption, based on these figures.
As one additional note, there are about 32.5 million businesses in the U.S., including sole proprietorships. Removing these nonemployer businesses leaves 7.7 million companies with at least one paid employee, per the U.S. Census Bureau in 2016. According to Fundera, just 2,300 of these businesses are accepting bitcoin.
Face the facts: There's no widespread utility.
Image source: Getty Images.
Bitcoin bulls are also pretty convinced that the most popular digital currency is now a bona fide store of value: i.e., an asset, commodity, or currency that maintains its value.
Every month, the Federal Reserve is buying roughly $120 billion in government-backed debt. When coupled with the central banks' pledge to keep its federal funds rate at or near record lows, it's pretty evident that the U.S. dollar will be under pressure. Crypto investors believe that a ballooning money supply is a green flag for bitcoin to head significantly higher.
The issues I have with the store-of-value thesis are twofold. First, bitcoin isn't backed by any other asset or government. Therefore, it has no tie-ins or official relationship to the movements of the U.S. dollar. Implying that a ballooning money supply should push bitcoin higher is nothing more than a dart throw.
Second, store-of-value assets are designed to maintain their value over time and protect investors from volatility. Yet in March, bitcoin nearly lost half of its value in a 24-hour period. In 2018, the largest cryptocurrency by market cap shed over 80% of its value. In 2013, bitcoin lost about half its value in about six hours. This isn't how a store-of-value asset behaves.
The truth is, buying bitcoin is pure speculation.
Image source: Getty Images.
Bitcoin optimists will also crow about bitcoin leading the digital payments revolution. Going cashless could resolve the issues created by certain regions of the world being underbanked. Additionally, the blockchain technology that underlies bitcoin could revolutionize the payment processing and settlement time frame, especially in cross-border transactions.
While I don't disagree that a digital payments revolution is underway, or that blockchain could offer global financial and supply chain solutions, bitcoin isn't the vessel that's going to make this vision a reality.
The interesting thing about blockchain is that it can be tethered to multiple types of digital currency, be used in conjunction with fiat currency, or can operate independent of a tethered token. There's absolutely zero evidence that bitcoin is necessary to support a blockchain revolution.
To add, buying bitcoin tokens does not give an investor any ownership in the underlying blockchain. With no ownership in the solution that has the potential to actually drive this digital revolution, bitcoin investors are pinning their hopes on other investors being willing to pay more for a currency that exists only in computer code than they did.
So, why is bitcoin rallying? I'd surmise it's a combination of short-term emotions, technical analysis (i.e., pretty charts), and a grossly inefficient crypto market that overwhelmingly favors the buy side. After all, it's nowhere near as easy to bet against bitcoin as it is to bet against a publicly traded stock.
History has proved that sentiment can shift at the drop of a pin in the cryptocurrency space. I'd suggest investors keep their distance from bitcoin.
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Here's Why I Won't Buy Bitcoin, and You Shouldn't, Either - Motley Fool
Bitcoin could see a 25%-30% sell-off in the new year, but it’s still a long-term buy, trader says – CNBC
Bitcoin's record rally could hit a wall in 2021.
Signs in the cryptocurrency's technical chart point to a 25%-30% sell-off that's likely to hit early in the new year, Miller Tabak chief market strategist Matt Maley told CNBC's "Trading Nation" on Thursday.
Bitcoin broke above the $23,000 level for the first time on Thursday, building on a massive, 215% year-to-date rally.
"There's no question it's been a melt-up, and it could last a little bit longer," Maley said. "I think on a short-term basis it could continue a little bit longer, and I'm very bullish on it on a very long-term basis. But intermediate term, I'm a lot more concerned than I think a lot of other people."
Part of the problem is the market's excess liquidity, Maley said. Over the summer, that sideline money fueled the mega-cap tech rally; now that those stocks have stabilized, it's driving bitcoin, he said.
"The problem is it's now taken the weekly [relative strength] chart on bitcoin to a very, very high level," he said.
"It's above 88 [as of Thursday]. That's not quite up to the 90 level that it reached twice in 2017, but those were followed by declines of 36% and 64%," he said. "We're not quite there yet, ... but as the pandemic starts to fade a little bit [and] maybe that liquidity becomes a little less plentiful, this stock could get clobbered like it has many other times in the past."
He noted that just since 2016, bitcoin has seen 10 declines of 20% or more, seven declines of 30% or more and four declines of 48% or more, adding that investors shouldn't underestimate its pattern of volatility.
"People need to be careful as we move into the new year," he said. "I love it long term, but I think it's going to be a much deeper sell-off than the 10%-15% ones we've seen more recently. I think you're going to see 25%-30% easily. Again, I don't think that really starts until early in the new year, but I do think it's coming soon ... based on this overbought condition and the froth that we've seen in this asset class in the last week or two."
Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, said he would suggest holding on for the long term, volatility and all.
"It took me a little while to get on this train, but I think it really is the new currency," he said in the same "Trading Nation" interview. "If you have that long-term perspective, three-, five-, seven-year perspective, you just hold onto it."
Bitcoin has become a global currency, a hedge against inflation and something of a "new commodity" in this market environment, Bapis said, comparing its triple-digit rise this year with gold's 24% gain.
"Lastly, it's become a part of a balance sheet reserve for some of these big companies," he said. "PayPal is now accepting bitcoin as a global currency ... starting in 2021. Square has made a massive investment into bitcoin, and it's also using bitcoin for its reserve on the corporate balance sheet. ... Blockchain, we all know that that's the real technology and it's here to stay, and I do believe bitcoin is a leader in the global currency, cryptocurrency side of this for as far as we can see."
"Ijust think you own it and put it away for a long-term investment and watch how it maybe transforms the currency and the world we live in today," Bapis said.
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Bitcoin could see a 25%-30% sell-off in the new year, but it's still a long-term buy, trader says - CNBC
Treat Bitcoin like a punt, and not as an investment – Mint
It was the technology stocks in the US till a few months back that were getting investors attention, but that got trumped more recently by the multi-bagger returns of some cryptocurrencies. There are newspaper front page comparisons of the value of bitcoin with the returns on the Sensex and gold, where the crypto emerges as a multi-bagger, giving better returns than others. There are interviews with crypto exchange owners that talk up the future value of this unregulated decade-old virtual currency. No wonder people feel like they missed the biggest gold rush again.
Crypto enthusiasts like to compare bitcoin to gold using analogies of mining bitcoinno matter that only keyboards are tapped and no underground mines are explored. The crypto logo has a shiny gold-like image to emphasize that association, but nobody yet has worn a ring or a necklace made of bitcoin for it is a fully virtual currency that is unregulated.
Also Read | How hunger came back to haunt India
In India, the buying and selling of cryptocurrencies move in and out of being illegal. It was in March 2020 when the Supreme Court of India lifted a two-year ban by the central bankthe Reserve Bank of Indiathat had effectively stopped cryptocurrencies from being traded and exchanged. While the ban has been lifted, yet the discomfort with something that is fully virtual, has no underlying asset value and is unregulated, does not leave the minds of fiduciary-minded financial advisers and planners.
But the returns are mouth-watering and if the buzz around overnight crorepatis is giving you serious FOMO (fear of missing out), lets go through this checklistif you answer yes to all of them, go ahead and put your money in (notice that I hesitate to even use the word invest in this situation) this virtual casino. Go ahead if:
I really doubt that many of the people rushing into crypto investing would check any of the above boxes. It is a rush and most people are getting caught up in the feeding frenzy around the profits that some people seem to have made.
But, if you identified yourself as a zero-risk investor in March 2020 when the equity markets fell 30%, and some debt funds froze, are you serious about what you are about to do dabbling in something that can lose half its value in a dayas it did in March 2018 or get an adrenalin rush and more than double in a day, as it did in November 2017? If volatility in stocks keeps you in FDs, what are you even thinking of when you think you can take the roller coaster ride of a cryptocurrency?
If the itch to dip your toes in this is very strong, use less than 5% of your investable amount in a year, to purely punt in cryptos. Stay away from ICOsinitial coin offeringsmost of them are scams. Stay away from multi-level marketing crooks who will ask you to build crypto downlines to make money.
I cannot say this often enoughfind a fee-only financial planner and build a plan rather than bump around from last years winner to last months winneryou end up holding only losers and sleeplessness. Money and investing is about setting you free, not making you addicted to a trading screen.
Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation.
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Treat Bitcoin like a punt, and not as an investment - Mint
Massive Bitcoin Gains Are Being Dwarfed By Ripples XRP, Litecoin, Ethereum And These Minor Cryptocurrencies – Forbes
Bitcoin has broken fresh ground this week, climbing above $20,000 per bitcoin for the first time ever and grabbing global attention again three years after bitcoin's 2017 boom and subsequent bust.
The bitcoin price is up around 30% over the last month, adding to gains of more than 200% since Januaryand pushing up other top five cryptocurrencies by value ethereum, Ripple's XRP, and litecoin.
Ethereum, Ripple's XRP, and litecoin, some times known as alt coins, have all soared by more than 30% over the last 30-day period, with the likes of smaller cryptocurrencies cardano, NEM and stellar making even bigger gains.
The bitcoin price has shot above $20,000 this week, climbing as high as $23,780 on the ... [+] Luxembourg-based Bitstamp exchange before falling back slightly.
"While bitcoin has largely dominated the narrative, I believe investors should look to alt coins who have tremendous amounts of development in both the core technology and usership, yet are still a fair way off their all-time highs," Nicholas Pelecanos, head of trading at NEM, which developed NEM's XEM digital token, said in emailed comments.
"Does this leave these alt coins undervalued against bitcoin? I believe it does and am expecting to see the price of these alt coins, such as ethereum and XEM, rally hard when the bitcoin price inevitably slows down."
Many smaller cryptocurrencies are closely tied to the bitcoin price, with moves higher and lower triggered by bitcoin developments and sentiment. However, alt coins often swing by much bigger percentages, often losing or gaining double and even triple digit percentages in mere days.
Cardano, a top ten cryptocurrency, has added around 70% over the last month. Two top 20 cryptocurrencies, NEM and stellar, have more than doubled in price over the last 30 days, as bitcoin puts cryptocurrencies back in focus.
Bitcoin's reputation as digital gold has grown this year, gaining as investors fret over the possibility of increased inflation and helped on by a number of big-name investors who have publicly named bitcoin as an emerging inflation hedge.
Bitcoin's jump higher this week came after news fund manager Ruffer Investment Management moved around $750 million of its clients' money into bitcoina move designed to "primarily a protective move for portfolios" to "act as a hedge" against "some of the risks that we see in a fragile monetary system and distorted financial markets," a Ruffer spokesperson told bitcoin and crypto news website Coindesk.
Ahead of bitcoin's surge over $20,000, many smaller cryptocurrencies, such as ethereum and XRP, were already soaring as investors eyed technical developments and token giveaways.
XRP, a digital token developed by Ripple, made huge gains through November ahead of a hotly-anticipated giveaway of a new cryptocurrency, known as an airdrop. Ripple controls around 60 billion of the 100 billion XRP tokens that will ever be created.
The XRP price has fallen back slightly since it peaked late last month but its currently up by around 90%.
The bitcoin price has surged to fresh all-time highs this week, climbing well above $20,000 per ... [+] bitcoin after brushing the psychological barrier three years ago.
Meanwhile, ethereum, the second-largest cryptocurrency after bitcoin, is up by 32% over the last 30 days. Investors began piling into ethereum over the summer amid a surge of interest in decentralized finance (DeFi)using crypto technology to recreate traditional financial instruments such as loans and insurance.
Ethereum's blockchain is used as rails by many DeFi projects and some investors think the ethereum price will benefit as DeFi's popularity rises. Ethereum was given a further boost by the closely-watched launch of ethereum 2.0 last month.
Litecoin, some times known as the silver to bitcoin's gold, has this week climbed to its highest price since for 16 months, up around 40% on its price 30 days ago. However, litecoin is still far from its all-time highs set in late 2017, down some 75%.
The bitcoin and cryptocurrency community has been quick to talk up bitcoin's 2021 prospects despite its recent sky-high gains, with many pointing to PayPal's PYPL recent support of bitcoin and a handful of other cryptocurrencies and similar digital infrastructure development as potentially supporting the bitcoin price going forward.
"We are only in phase one of the bull-run," Pascal Gauthier, the chief executive of France-based bitcoin and cryptocurrency physical wallet maker Ledger, said via email. "Many big players are investing time and resources to build or buy digital asset infrastructures needed to support the swell of institutional and retail adoption."
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Massive Bitcoin Gains Are Being Dwarfed By Ripples XRP, Litecoin, Ethereum And These Minor Cryptocurrencies - Forbes
Why Stocks of Bitcoin Miners CleanSpark, Marathon, and Riot Blockchain Were Up Again Today – Motley Fool
What happened
Shares of CleanSpark (NASDAQ:CLSK) shot higher on Tuesday on news that it had acquired more equipment to mine bitcoin. The company is a technology company in the energy sector, but it expanded its business into bitcoin when it acquired a bitcoin mining operation called ATL Data Centers earlier in December. More equipment allows more bitcoin to be mined, which is why CleanSpark stock was up 18% today.
Bitcoin miner Riot Blockchain (NASDAQ:RIOT) also announced it's increasing its operations. It was able to buy 15,000 Antminers from Bitmain for $35 million using cash on hand. The move increases the company's capacity by 65%, so the stock's 33% jump today was somewhat understandable.
Finally, fellow bitcoin miner Marathon Patent Group (NASDAQ:MARA) might have moved just based on these two other stocks. It upgraded mining operations earlier in the month, but there was nothing newsworthy to explain its 22% spike today.
Image source: Getty Images.
For those who don't know how bitcoin works, here's a simplistic overview. The network is designed to facilitate the movement of tokens, with a ledger recording who owns which bitcoin at all times. Known as blockchain technology, computers voluntarily join the bitcoin network to process transactions, recording them on the blockchain. This means the bitcoin network is decentralized: Computers can be anywhere, and they aren't all owned by any one individual or company.
Computers race to record transactions first, because the winner is issued a brand-new bitcoin as compensation. Unlocking new bitcoin is known as mining. It's an expensive process. Companies invest in equipment powerful enough to outdo the rest, facilities to house the equipment, and energy to run and cool equipment.
Once it's deployed its new mining equipment, CleanSpark says its mining capacity will be 300 peta-hashes per second (PH/s). For its part, Riot Blockchain will have 3.8 exa-hashes per second (EH/s). Marathon will have 3.56 EH/s. For perspective, 1 exa-hash is 1,000 peta-hashes. Without diving too far in the weeds, suffice it to say that Riot Blockchain and Marathon have more than 10 times the capacity of CleanSpark. But this makes sense because CleanSpark's main business is something else.
Bitcoin believers obviously like to see companies investing in bitcoin mining equipment. After all, many think bitcoin is poised to surge in 2021, which would lead to increased mining revenue for these companies. Just how high could bitcoin go? No one knows for sure. Indeed, it could plummet for all we know. But many excitedly project the future value of bitcoin using something called a stock-to-flow model. Championed by a Twitter user going by PlanB, the model projects bitcoin could be worth more than $200,000 by 2024.
I'm not suggesting the stock-to-flow model for bitcoin is an infallible framework. I'm merely pointing out how bullish some are about the future price of bitcoin. This bullish sentiment raises their outlook for many cryptocurrency stocks, including bitcoin miners. In summary, investors believe bitcoin can keep soaring, and the increased capacity will lead to windfall profits for miners. That's why these three stocks are up today.
Image source: Getty Images.
Yesterday when bitcoin mining stocks soared, I pointed out that all bitcoin miners have unique cost structures and therefore should be considered on a case-by-case basis. This is exemplified by CleanSpark's entry into the bitcoin mining space. The company's business is primarily software for microgrids: small, decentralized, self-sufficient power systems. Basically, CleanSpark is in the energy optimization business, and that could be useful for bitcoin mining.
CleanSpark believes it can reduce its power cost for mining bitcoin below $0.0285 per kilowatt hour (kw/h). That sounds low. But for perspective, that's the cost that Marathon has already achieved at its primary facility. While one would expect CleanSpark to have a competitive advantage, that doesn't appear to be the case.
Reducing energy consumption and cost are among the few things bitcoin miners like CleanSpark, Riot Blockchain, and Marathon can control. But the most important factor is the price of bitcoin, which is entirely outside of their control. For that reason, bitcoin-mining investors will likely keep their eyes fixated on bitcoin and not the fundamentals to these businesses.
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Why Stocks of Bitcoin Miners CleanSpark, Marathon, and Riot Blockchain Were Up Again Today - Motley Fool
Arent You Glad You Kept Your Bitcoin? Dont Sell It. – Forbes
ladies and gentlemen, we have lift off. (Photo Illustration by Mykola Tys/SOPA Images/LightRocket ... [+] via Getty Images)
Arent you glad you kept that Bitcoin? I know I am.
Even with the recent decline from its highs, coming close to $20,000, investors have been bullish. Is it going to $50,000? Nope. Its going to $500,000, some on the Street have told me (hint: she runs a big, innovative ETF). These are the wild speculative prognostications that make Bitcoin what it is. But keep it. Even if it goes to $5,000 again. Weve seen that what comes around, goes around.
It took over 1,000 days since Bitcoin hit its previous all-time high, recorded in December 2017.
We are buyers at this price as we believe Bitcoin will appreciate over the short-, medium- and long-term,says Daniel Wolfe, fund manager at the Simoleon Long Term Value Cryptocurrency Fund, which he runs in partnership with SPRING, a Moscow-based investment firm. Taking a three to five year view and dollar cost averaging into a position that represents around 5% of your portfolio is prudent today.
Okay, but are we at liftoff yet? You know, that Bitcoin Moon thing.
The next nine months will bring substantial appreciation for Bitcoin, Wolfe thinks. I would not be surprised to see $50,000 next summer. Within four years, we expect the capitalization of all cryptoassets to grow five-fold, with Bitcoin at $100,000, he told me last week.
Bitcoin vs the Dow, Nasdaq and the S&P 500.
BTC vs the Dow, S&P 500 and the Nasdaq.
There are a number of factors driving the stellar rise of Bitcoin this year. Microstrategy MSTR and Square SQ , for example, have been buyers. Major investors like Paul Tudor Jones and Stanley Druckenmiller are in.
The availability of institutional-level infrastructure has eased their entry: Fidelitys custody solution is one example. Second, the so-called halving of the BTC reward (since May 11 each block carries a 6.25 BTC reward in lieu of the 12.5 BTC reward before the halving) means that more of the new demand must be satisfied on the open market as miners cannot keep up.
Historically, the halving has led to a new peak in the BTC price 13-15 months after the reduction in the BTC reward.
Buying and holding BTC has become easier for retail investors. PayPal PYPL now allows its 350 million users to buy and hold Bitcoin using their existing accounts, something that Robinhood and other fintech companies also allow now.
I think the reason behind the growth is the dollar which we foresee weakening against other reserve currencies. Any respectively stable assets and property are the most attractive investment, says Nikita Zuborev, head of marketing at the 13-year old BestChange.com, a free Russian exchanger aggregator.
The market for cryptocurrencies has changed, Zuborev says. A lot of derivatives, futures and options trading has launched in recent years. Bitcoin has gained a significant share of the crypto trading market. Despite the DeFi fever holds a dominant position in contrast to the trends of 2017 when the previous price record was set, he says.
You can now use PayPal to buy Bitcoin. (AP Photo/Richard Drew)
DeFi means decentralized finance, or peer-to-peer financing done over a blockchain ledger that eliminates the middle man usually banks and brokers.
Bitcoins amazing run this year is also due to new money coming in, says Benjamin Duval, CEO of 4C-Trading and UpBots, a Swiss trading interface for cryptocurrencies, DeFi, forex and commodities located in Zug, Switzerland. There is a more stable market with more advanced projects...with long term solutions offered by DeFi for example, he says. The growth of this segment of crypto, or rather its promise is enticing investors to keep their capital invested instead of selling it for hard currency.
Three years ago, in November and December, Bitcoin grew to $20,000 and the reason for that was human greed. There was no widespread application of the technology that could justify that growth, says Gapporov Behkzod, CEO of Okschain, a new generation decentralized financial service using crypto. People were looking to get quick and lost a lot in the panic, he says about those heady days in 2017.
Bitcoin is still at the beginning of its story, Behkzod says. Theres more growth and corrections to come. I wont try to make a prediction, but I suppose that we will see a $1,000,000 Bitcoin price and that is not a limit. A lot of our colleagues working with vast volumes daily are already talking about this, he says. These are the guys who have the vision.
Regulations are also moving forward. Thats always been a sticking point for those who wanted to make cryptocurrency a real industry. They wanted some more transparency and new that was a sticking point before bigger money would jump in.
All the elements are gathering now, says Duval from Switzerland. Even if a decrease in price occurs in the coming weeks, 2021 should see a new peak for virtual currencies and it would not be surprising to see Bitcoin hit the $50,000 to $80,000 mark, he says.
Paul Tudor Jones picks Bitcoin. Says it will go much higher within the next decade. Photographer: ... [+] Michael Nagle/Bloomberg
In some ways, the pandemic has emphasized the need for market-resistant investment opportunities in 2021. What began as demand for inflation-beating interest rates has now become a deeper need for growth and security.
People want to diversify into alternative investments and cryptocurrencies offer everything from collateral-backed lending to store-of-value protection to forex-style trading, says Chris Roper, communications chief for alternative finance startup, MyConstant. They matched $16.6 million in crypto-backed loans their core business in the third quarter this year. It was a record quarter for them.
Paypal will make Bitcoin a household name, Roper says. Youll get a new generation of investors in the crypto-ecosystem seeking growth in challenging economic times.
If Bitcoin looks too expensive, theres always the other two darlings of the crypto world Ripple XRP and Ethereum, priced at $0.51 and around $571, respectively.
Alternative coins usually follow the movement of the Bitcoin price, but the difference is that it is easier to have a speculative effect on them so, sometimes, we will see a discrepancy in the charts, says Oleg Fakeev, a well known crypto investor and founder of Kit Investments, a crypto investment community. The superiority in the capitalization of Bitcoin over other coins is one of the few factors that protects it from constant manipulation by large players, he says.
Ethereums creator, the Russian-born Vitalik Buterin, has redone the smart contracts used by Ethereum, but explaining that is way above my pay grade. Investors in crypto got excited about it. Even Tim Pool was speaking about this weekend on his YouTube broadcast.
Interest is undoubtedly growing, says Fakeev about cryptocurrencies in general, not just Bitcoin. Markets are exchanging audiences those who have invested only in cryptocurrencies went into the stock market, and stock market investors, having made sure that Bitcoin survived the test of time, are starting to invest in cryptocurrencies.
Behkzod thinks cryptos man of the year, however, is fellow Russian Buterin.
If there was no Ethereum smart contracts, I think there would be a collapse in (crypto) supply and demand, he says. Ethereum will develop more in the future. Its going to grow, he says. Im following the same goals as Buterin at Okschain, he says, hoping that some of this resurgent crypto pixie dust can rub off on him and what is apparently a rash of new investors rediscovering what was once nearly left for dead.
The crypto winter appears to have ended, Roper says. Its an exciting time with the entry of Square and Paypal. The industry is maturing.
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Arent You Glad You Kept Your Bitcoin? Dont Sell It. - Forbes
Why Bitcoin Is Falling, And What It Means – Forbes
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Cryptocurrencies are the new golden child in some investing circles. Bitcoin is the new hot commodity so to speak. But is it new revolution, or just a new signal of market speculation? The answer may be both. Lets explore this.
In the aggregate, the market seems to have made some temporary conclusions about Bitcoin. To be clear, this is an evolution. As Bitcoin and crypto as financial instruments take on a life of their own, I see a recent pattern.
Bitcoin is behaving as a proxy for taking investment risk. In other words, its price is being driven not by fundamental value, but by folks on the hunt for a near-term profit. How else do you explain the gyrations of the past few years?
After all, this is alleged to be akin to a currency. The only currencies whose values hop around like Bitcoin are from emerging nations in the 1970s. That is, where the only consistent thing was instability.
Bitcoin was at one point rationalized as the new gold. In other words, it was where investors fled when they wanted something physical and solid, when they lost faith in traditional, government-backed currencies.
Below is a chart of 3 investments: The Nasdaq 100 Index, an ETF (symbol GBTC) based on the movement of the price of Bitcoin, and a gold ETF.
But Bitcoin and gold have been travelling in opposite directions more than they have been in sync. This is different from in the past. And it adds to the case that Bitcoin is its own animal, one driven more by speculation than fundamental or even flight to safety factors.
Lately, Bitcoin is acting much more like a leveraged stock ETF than a currency, or a successor to the global banking and fiat currency system that some claim it will be. But that doesnt mean it isnt a useful consideration for some portfolios.
Ycharts.com
If you have the risk tolerance (and thats up to you, not anyone else), Bitcoins pros and cons are clear. The pros are evident from some of the temporary price gains. The cons are that it moves like you might expect a new-era, heavily-hyped but potentially valuable asset type to move - with high volatility, and based on factors that are difficult to put our fingers on.
I think that for now, Bitcoin and other cryptocurrencies are destined to remain as-is: they are proxies for the markets desire and willingness to take on big risk to pursue big return, especially over short-term periods of time. In that respect, it is something that can be considered as part of whatever set of high-volatility, tactical assets you consider within your research process.
Just do not be fooled: Bitcoin is not a panacea. Its a trading vehicle, at least for now. And its recent hints of at least a temporary price top, after a strong rally, is likely an indicator of market risk-taking pulling back as well.
Comments provided are informational only, not individual investment advice or recommendations. Sungarden provides Advisory Services through Dynamic Wealth Advisors.
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Why Bitcoin Is Falling, And What It Means - Forbes
Bitcoin Flirts With $19,000 As Institutional Interest Grows – Forbes
Bitcoin prices neared $19,000 today, after climbing from roughly $17,600 yesterday. (Photo by ... [+] Nicolas Economou/NurPhoto via Getty Images)
Bitcoin prices approached $19,000 today, moving closer to hitting a fresh, all-time high at a time when institutional investors are increasingly taking an interest in the space.
The worlds largest digital currency by market value reached as much as $18,956.34 around 5:45 p.m. EST, according to CoinDesk data.
At this point, it was up close to 8% from the recent low of $17,593.17 it hit yesterday morning, additional CoinDesk figures show.
Further, the digital asset was trading roughly 5% below the all-time high of $19,920.53 it attained earlier this month.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin has spent much of the last few weeks fluctuating between $18,000 and $20,000, and the latest rally took place after the cryptocurrency fell below $17,600 yesterday and then proceeded to climb.
When explaining these latest gains, analysts pointed to technical support and the impact of recent developments involving institutional investors.
Marouane Garcon, managing director of crypto-to-crypto derivatives platformAmulet, commented on the digital assets latest price movements, describing $18,000 as an accurate support level.
Tim Enneking,managing director ofDigital Capital Management, also provided some input, emphasizing that:
There is a lot of space between $13.7k and $19.8k with very little technical ammunition to determine support and resistance levels simply because, historically, the price has spent an immaterial amount of time in that range. Therefore, traders naturally gravitate toward numbers which end in a lot of zeros.
He noted that many of the fluctuations we have seen this month have involved bulls and bears pushing the digital asset between price levels like $18,000 and $19,000.
The cryptocurrencys latest price movements have taken place against a backdrop of institutional adoption, with the most recent example being insurance giant MassMutuals decision to buy $100 million worth of bitcoin for its portfolio.
To add to this, Ray Dalio, and founder, co-chairman and co-chief investment officer of hedge fund Bridewater Associates, recently generated headlines for taking a more optimistic stance on bitcoin.
During a Reddit ask me anything session that took place on December 8, Dalio stated that:
I think that bitcoin (and some other digital currencies) have over the last ten years established themselves as interesting gold-like asset alternatives, with similarities and differences to gold and other limited-supply, mobile (unlike real estate) storeholds of wealth.
John Todaro, director of institutional research forTradeBlock, described these developments nicely:
Institutional investors and traders remain open and interested in bitcoinarguably the most open they have been in the history of the asset, which continues to be a positive.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.
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Bitcoin Flirts With $19,000 As Institutional Interest Grows - Forbes