It’s 17:43, according to the clock on the oven. I’m going to write for exactly 17 minutes about Bitcoin and then I’m going to publish. It will be disorganized, and completely unresearched.
The last few days have been insane in the markets. On Thursday evening I sat in a hotel room and watch the price of BTC jump from $15,000 to $19,000 in the space of about two hours. Coinbase and GDAX buckled under the strain and went down at least twice. And were shaky for the whole time. In the downtime I checked my earliest prediction where I said it was either predicted a ceiling of around $10k based on it being used for illicit uses. I also said there was a chance between ‘possible and likely’ that Bitcoin would fall to zero for technical reasons.
Bitcoin has not fallen to zero. It has exceeded my ceiling. As well as being used for illicit online transactions, it’s become a speculative tool, with the promise of mainstream adoption - though adoption for what seems unclear to me.
Bitcoin has become less and less useful - no-one buys anything with it while it’s on a surge like this one, the fees are prohibitively expensive at $3-20 a transaction at the time of writing. It’s hard to use if you don’t simply leave your money in an exchange (which is a huge mistake).
I’m an intelligent guy. I’ve been a programmer for at least 15 years. I worked in finance, I’ve invested on and off in shares for many years. I’ve followed Bitcoin, invested and used it since at least 2012 - maybe longer — and I’ll say this… I do not understand it completely, I don’t understand an enormous amount of cryptocurrency stuff. I’m suspicious of people who seem to profess to understand it all. At the same time, people I enormously respect, who are smarter than me, are behind cryptocurrencies.
What do I think? Well firstly, I think that Bitcoin is the most accessible speculative bubble for a lot of people. As it’s become more accessible, the price has risen. It’s now easier to buy some stake in BTC than any form of other security. I think in a big picture, there’s a lot of money washing around in the world looking for productive opportunities - we’re in an everything bubble. In that situation it makes sense that even the most cautious investor would allocate 5% of their investment to a high risk, high return asset class. I believe this has had some impact on BTC.
I think Cryptocurrencies are here to stay, and they are going to be a big thing. I believe they will change the world. But so far, Bitcoin hasn’t changed anything, and it has many shortcomings. So even if cryptocurrency becomes huge, that doesn’t necessarily mean that there’s any value in Bitcoin.
People talk of parallels between Bitcoin and Netscape in the early days of the web, but an investor in Netscape who held all the way would have lost everything because Netscape is worthless. And just because you held Netscape stock, didn’t make you more able to profit from, say, the rise of Google.
And not only that, but the entire landscape of investing changed over the dot-com era. From infrastructure, to social networks, to Software-as-a-Service and into marketplace businesses like Uber.
I don’t know where Bitcoin is headed. Futures trading begins tomorrow and there’s been relative calm today in the price. I can’t predict whether this pushes the price up or down. I certainly think that up to now it’s only been possible to take a long position on BTC, and from tomorrow it will be possible to short it.
I believe there’s a lot of murkiness in the pricing of BTC. At the moment my limits (which are relatively high) are around $20,000 per week of trading. That’s not a huge amount when compared against the current market cap. At it’s peak, I would only be able to sell 1 BTC and buy 1 BTC each week. This must have some form of impact on the market.
And some brief notes as I run out of time:
- BTC is 99% in male hands
- 99% of ICOs have been complete and total bullshit scams. My understanding is that the flow is generally ETH -> ICO, and I assume that the scammers on the receiving end of these billions of dollars of crypto assets are liquidating them, or are about to.
- Bitfinex is going to vaporize with everybody’s money, and Tether alongside it.
- If the US government decides to regulate crypto markets, which is inevitable on some level, then the price will plummet. A huge driver thus far in the price has been the ability to buy BTC. When I acquired my first BTC I had to bounce through a convoluted mess of Linden Dollars and some other exchange just to get them. It was worth the hurdle.
Now you can just buy with a credit card.
My time is up.