Two Bullish Signs For Bitcoin

I believe the crypto-currencies are an unmitigated disister of a product for the following reasons:
1. High and variable transaction fees.
2. The “value” of these crytos in very unstable.
3. Cyber-security issues
4. Even the supposed anonymity is in question with an exchange releasing personal information of tens of thousands to the IRS.
5. The Damocles Sword of Government intervention outlawing cryptocurrencies.
6. Market price manipulation. Although this is not a new thing in financial instruments, the effect on price is larger on these “currencies”. A group of traders and some “official sources” seem to be creating situations and news greatly affect the price in a short time, as mentioned in number 2, above.

I attempted to buy Ripple a few months back. After doing some research on the process to buy it, store it, and convert it back to physical cash, I concluded the costs, risk, and transaction inconvenience to be too high for cryptocurrencies to be a viable alternative to our current system.

As far as trading goes, If I had to trade Bitcoin futures, I would only take the short signals.
 
johnarb said:
CNBC took notice of the "hedge against market turmoil using bitcoin" narrative:

https://www.cnbc.com/video/2018/03/...st-the-trade-war-one-fm-trader-thinks-so.html
More...

Hopefully sane minds will prevail and an global economy destroying trade war can be avoided. However, if a trade war does breakout, shorting equity indexes would probably be an “effective hedge.”

Money looking for a safe haven in a flight to quality would not go to cryptos. The price performance of the cryptos is loosely correlated to the equities markets and geopolitical concerns in South Korea. Although the influence of South Korea is becoming less over time.

In a trade war, money should flow away from risky assets to some of the established safe-haven assets.
 
I distinguish between trading Bitcoin based on technicals vs. evaluating Bitcoin as a potential long-term investment. While I feel fairly confident that Bitcoin will eventually be worthless, it has been behaving fairly well technically over the past couple of weeks. I still believe that the high in December has a decent probability of being the all-time high. If Bitcoin gets back over 15,000, I may re-evaluate that.
 
We all have our opinions on the future of bitcoin and obviously I'm biased as my investment portfolio is 100% cryptocurrencies. I posted the Upfront presentation by Thomas Lee that featured detailed research on bitcoin that I feel I should post here as this thread seems to be getting more attention.


In addition, I posted a thread showing quantifiable data on the growth coming from hedge funds and institutional investors. These are hard numbers, not opinions from ET naysayers who have no research or evidence for back up

Surging Demand
Late last year, as the world turned crypto-crazy, Kingdom and BitGo began to focus on offering custody for institutional investors. The timing was perfect: Crypto hedge funds had been proliferating (an estimated 100 new ones launched in 2017) and the skyrocketing price of bitcoin, ethereum and other “alt coins” meant small funds were suddenly sitting on tens of millions of dollars in crypto assets. That creates a compliance problem. Once a hedge fund crosses $150 million in assets, it is required to store its assets with a qualified custodian. Belshe estimates two dozen hedge funds crossed that threshold last year, but are not complying with the rule.

Indeed, an SEC letter in January stated that custody is a key issue facing “fund innovation” related to crypto holdings. Industry advocates including Union Square Ventures’ Fred Wilson have called for “institutional-grade custodians” to help firms comply with the law and offset security risks.


Since launching, cryptocurrency custody is “by far” Kingdom’s fastest growing asset class. Belshe estimates there’s $10 billion worth of hedge funds holding crypto assets in the market, and another $10 billion of demand waiting to invest. He’s seen growing interest from typically conservative mutual funds and pension funds.
 
The cryptos may have started nobly enough, but has since been apparently hijacked by former penny stock shills. Without significant regulatory oversight, this “investment” is ripe for abuse on an unsuspecting public.

This product is not competative to the current monetary system in place with its guarenteed against hacking, low and consistant transaction costs, and ease in conducting a transaction.

In addition, I read almost everyday on Arstechnica.com where someone or some group lost their investment to hacking.

Furthermore, the is no limit to the number of these “currencies” that can be started. This has the effect of diluting the available money that could into a particular crypto.

You may want to consider diversifying your investment funds.

Tulips were popular once and promoted by respected people. The world saw how that turned out. There is no free lunch. The public is going to get burned on this one, like every other mania before it.
 
maximumpossiblesuffering said:
The cryptos may have started nobly enough, but has since been apparently hijacked by former penny stock shills. Without significant regulatory oversight, this “investment” is ripe for abuse on an unsuspecting public.

....

You may want to consider diversifying your investment funds.

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Bitcoin has evolved over the years and from my point of view, it has been great. I bought the bulk in 2013 (and was also a bitcoin miner for many months). Bitcoin price went all the way up to $1200 only to experience a bear market that seemed to have no end in sight (it bottomed in 2015, but did not shoot straight up from there so it still felt like one of the previous bear market rallies whenever the price went up).

I always thought it was a long term investment and was always prepared to lose all of the money invested. There were months when I did not even fire up my cryptocurrencies wallets to sync up the blockchains, however, I was always running a bitcoin node (and other cryptocurrencies nodes) as true to the ideologies of decentralized blockchain, I need to make sure I have a copy and was not relying on others.

Thank you for the advice. I have plans.
 
johnarb said:
Bitcoin has evolved over the years and from my point of view, it has been great. I bought the bulk in 2013 (and was also a bitcoin miner for many months). Bitcoin price went all the way up to $1200 only to experience a bear market that seemed to have no end in sight (it bottomed in 2015, but did not shoot straight up from there so it still felt like one of the previous bear market rallies whenever the price went up).

I always thought it was a long term investment and was always prepared to lose all of the money invested. There were months when I did not even fire up my cryptocurrencies wallets to sync up the blockchains, however, I was always running a bitcoin node (and other cryptocurrencies nodes) as true to the ideologies of decentralized blockchain, I need to make sure I have a copy and was not relying on others.

Thank you for the advice. I have plans.
More...

Good to hear you have plans and congrats on being an early adopter.

A couple of years ago, I considering starting a crypto mining operation, but never got around to it.

One last concern I have on these cryptos is unlike in our capital markets, where one’s investment allows a small and indirect way for capital to be available for business expansion, the cryptos appear to be one of the ways for countries under U.S. sanctions to be able to have easier access to goods from Germany and certain other countries. Thus one’s investment, in a small way, contributes to helping these countries.

I hope you have specific financial goals in mind with your current allocation of funds such that when reached, you will take some money off the table.

Best wishes to you.
 
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