SPECTACULAR !! ........ (and absolutely terrifying ) ref :- "Bitcoin Guns for $10,000 as Cryptocurrency Mania Defies Skeptics (sic) " , Bloomberg Markets
On the move today so was going to pass on the blog entirely but in
the event we felt that we just had to make sure that you'd clocked what's going
on with Bitcoin, especially as we had made a rare foray into cryptocurrency
territory last week.
Just briefly, Bitcoin traded as high as $9,747 this morning. If
you take Friday's close at somewhere around $8,264, that's a rise of well over
17% over the weekend. Crazy stuff ..... Japanese exchanges have been inundated
by speculative buyers apparently. Why ? Well, for a start "bandwagon"
events like this create their own momentum, for a while at least. But there are
some fundamental reasons behind the move. We use the word
"fundamental" cautiously, mind you ..... we're not really sure what fundamental
means when it's applied to something as ethereal as Bitcoin. But the initial
surge occurred after news emerged that Coinbase, one of the largest platforms
for trading cryptocurrencies, had tripled the number of its account holders to
13 million over the past year.
Furthermore, despite the high-profile sceptics such as Jamie Dimon
of JP Morgan and Ray Dalio of Bridgewater, there is evidence (mostly anecdotal
at this stage) that even household-name institutions are deciding on whether
they can afford to ignore this phenomenon any longer. According to some, a
break through the psychologically important $10,000 barrier will only further
encourage them to do so. Wow, they're even talking about it like it's a regular
currency or commodity now, and that's good news for Bitcoin enthusiasts too.
Anything that legitimises cryptocurrencies and which brings them more into the
mainstream (such as the involvement of institutions), is bound to be considered
bullish.
What we're witnessing right now is the proverbial runaway train. Even
for the die-hard bulls, 6-month and 1-year targets are being met in days. 25%
reversals are being recovered almost as though they never happened. Only a fool
would stand in front of this runaway train -- another old market
cliche but admirable advice. But climbing aboard is plainly fraught with danger
..... for many, buying something that in percentage terms has achieved in two
weeks what it it took the S&P 500 45 months to do, and which currently
shows a 10-day volatility of 90, will not fit the desired risk profile of their
portfolio, not by a million miles.
Very possibly, the bubble has still got a long way to go before it
bursts ..... if it ever does, of course. These levels which already seem
stratospheric might turn out to still be cheap ..... yes, really. But many
who've missed the bus so far (what ? We thought it was a train ?) are not
likely to change their minds at these vertigo-inducing valuations. For them, a
watching brief will be the order of the day even if it means foregoing a possible
jackpot ..... and frankly, who could blame them ?
Just in case, keep an eye open this week for :
US TAX PACKAGE : Senate Republicans will try to get their version
of the tax deal passed, perhaps as early as Thursday. If successful, the
administration's hope is that they will soon agree a hybrid package with the
House of Representatives (whose own version is already passed) with a view to
getting the thing done by year-end.
GERMANY : Markets are seemingly untroubled, but the political
impasse will eventually weigh on things. The rumour is that the Social
Democrats may be open to a renewal of the "Grand Coalition" after
all, despite the slightly awkward fact that their leader Martin Schultz had
categorically ruled it out.
OPEC : The next Vienna meeting starts on Wednesday ..... what will
they say about an extension to production cuts ? And what will they say about
what their reaction might be to a further jump in US shale production if OPEC
and their colleagues outside the cartel (particularly Russia) do decide on an
extension ?
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