Bitcoin and the Cryptocurrency market are on fire. And it’s quite possible we haven’t seen anything yet.
Here’s a two year chart. Look at the trendline.
That trendline is the beginning of the trend noted below. We are moving from Innovators to Early Adopters. The Crypto market is moving fast. Money is flowing in. The trendline above is moving towards vertical. Notice we will go vertical soon (late 2017 to 2018-ish) to fulfill on the chart below.
Here’s another chart from this excellent article about the different adoption rates of various technologies. Notice the adoption window is becoming shorter and shorter. If you put Bitcoin on this chart it would be just under the first horizontal line (penetration) and be vertical (adoption rate). By 2020 I expect we’ll be well into our vertical stage.
Here’s a great video of James D’Angelo talking about S curves and it’s comparison to Twitter, Google and Facebook. Bitcoin will crush those returns. Keep in mind, this video is at least two years old.
Here’s my take on Bitcoin and the S curve. Buckle up buttercup, it’s going to be a wild ride.
As of today, in the year of our lord 2017, several parties are battling it out for control of Bitcoin.
Core Developers (the team that has current access to update Bitcoin code) has declined all requests for improvements to Bitcoin code. Result: Bitcoin has not evolved.
Bitcoin Unlimited, SegWit etc. Groups that insist Bitcoin change code to accommodate new capabilities ASAP or Bitcoin hard forks (hard fork means Bitcoin splits in two, similar to GOOG and GOOGL, except one version would eventually die).
The result is a stalemate and frustration. Some of the smartest people on the planet are hurling infantile insults at each other via Twitter. An example:
Fuck your mother if you want fuck. Indeed. T-shirts with this quote are now available online, naturally.
Things are not as they seem though. This battle isn’t about who can update Bitcoin software. It’s much bigger than that. This is about who will control the primary digital economic asset / store of value of the future.
Will the real Satoshi Nakomoto come forward and set right his wayward vision for ‘Peer to Peer Currency’? There are rumors…..
As if that’s not enough drama customers of Bitfinex, a major Bitcoin exchange, have been having problems withdrawing cash due to “banking issues”. As a result users have been buying Bitcoin at Bitfinex so they have access to withdrawing funds via Bitcoin to circumvent the “banking issues”. This buying pressure has caused a dislocation in price. Bitfinex price for Bitcoin has run as high as $100 higher than other exchanges. This dislocation has dragged Bitcoin price upwards across all exchanges. When the Bitfinex problems are resolved (I expect Bitfinex will implode) what will happen when that buying pressure disappears. Even more important, what happens when casual Bitcoiners see their investment fall 20%?
Even with those issues, Bitcoin continues to rise in price. A correction seems overdue (even welcome) by many. Including me.
Bitcoin is facing it’s own Brexit. Here’s what you need to know.
Similar to US Government, Bitcoin has three branches governing it: Developers (Legislative), Miners (Executive) and Users (Judicial).
Legislative power: The Developers create new code (Laws).
Executive power: Miners run the version of Bitcoin that is in the best interest of Miners. They can work with any party of Developers they choose, even if those Developers are not status quo.
Judicial power: Users choose to buy or sell Bitcoin (affecting supply/demand/price) including any versions created in a hard fork.
This is important because the three branches of Bitcoin are at war right now. A powerful subset of Miners are threatening to force a hard fork of Bitcoin. Think Apple splitting into two companies: Apple and Orange. Which stock would you buy and which stock would you sell? Now you are thinking like a user of Bitcoin.
The arguments between branches are so ridiculous that Vinny Lingham sold 90% of his Bitcoin and is encouraging other Users to defend Bitcoin by selling now to put pressure on Miners. An example of a well known User exercising proactive Judicial power.
If this subset of Miners cause a contentious hard fork it means consensus could not be reached. A contentious hard fork is like a big fat VETO by the Miners. It’s bad for Bitcoin and confuses the market.
If a hard fork happens the Users (Judicial branch) will settle the matter via price discovery (demand being the ultimate arbitrator, like the Supreme Court). I believe the fork of Bitcoin called Bitcoin Unlimited will die off. The cost will be substantial and there will be no winners, only survivors.
Despite the damage, Bitcoin will bounce back quickly. Bitcoin has been declared dead so many times it’s truly an example of “What is dead may never die.”
Ethereum, DASH and Monero are the #2, #3 and #4 Cryptocurrencies by market cap behind Bitcoin. They are also in a huge bubble that’s been created the past few weeks. Here are some numbers:
Ethereum: up 178% in 30 days
DASH: up 350% in 30 days
Monero: up 60% in 30 days
When Bitcoin is up the “alt coins” trend down or sideways. When Bitcoin is down, the alt coins trend up. Recent news about the SEC denying the Bitcion ETF, continued contentious debate over a scaling solution for Bitcoin, the Bitcoin Unlimited bug and now Vinny Lingham calling for lower Bitcoin prices have set the alt coin market on fire. Twitter is full of Crypto traders FUDing and FOMOing from coin to coin. If you think trading stocks in they dotcom heyday was crazy try the 24/7 crypto market. Ethereum was up 30% in a 12 hour stretch this week!
This won’t end well for anyone except maybe Bitcoin longs. Bitcoin is antifragile. It’s been through this before. Bitcoin has an ecosystem and most importantly it is used as a store of value and money. The same cannot be said for Ethereum, DASH or Monero.
Very few companies survived massive runs in their market cap during the dotcom bubble. I expect the same of Cryptocurrency. When this alt coin bubble pops, and it will, those bubble profits will make their way back to Bitcoin.
The SEC doesn’t protect retail investors from anything, least of all bitcoin. It protects big megabanks from prosecution and competition. How can we be sure? Because pump and dump scams are everywhere. A nothing company with zero employees can merge into a shell by technical SEC rules and then start blasting ads to first time investors. This is all perfectly fine. Banks don’t buy into these scams. Retail dumb money does. No protection there.
But Credit Suisse for example can go on and issue double leveraged short term VIX futures shares like the TVIX that are more volatile and explosive than a bucket of antimatter. A bitcoin ETF though would be “too dangerous” for consumers, but the TVIX, the bane of all aggressive novice shorters who dream of making it rich quick, that’s perfectly wonderful, because it’s issued by Credit Suisse.
A bitcoin ETF is way too dangerous, but triple leveraged bear and bull ETFs issued by investment management behemoths with literally trillions of dollars under management, are fine and ubiquitous. Any teenager old enough to open a brokerage account can click a button and buy any of them and the fund decay all goes to the Big Boys. They’re fine because they are backed by Big Money, the same guys who can so easily influence who gets nominated to financial regulatory agencies.
So, good riddance to the SEC.
The biggest threat to Bitcoin is Bitcoin. Bitcoin is software that has a consensus mechanism built in to handle upgrades. To keep it simple, consensus can be reached in a couple of ways and requires majority of miners, users or exchanges to agree on what software version to run. Today a version called Bitcoin Unlimited was attacked via a bug shutting down a majority of miners running the Bitcoin Unlimited version of software.
Why did this happen? Because the selfish fucks at Bitcoin Unlimited want Bitcoin to be Visa over fucking night. They are willing to kill the goose that lays the golden eggs and they shill daily for a hard fork of Bitcoin. They released untested code and got hammered for it. That this happened today is a great thing. Bitcoin Unlimited loses credibility and the case for SegWit, or at least a controlled and well tested fork, is reinforced. Suck it Bitcoin Unlimited.
Gramatik has a song out about Satoshi Nakomoto, the anonymous creator of Bitcoin. “We buying whips with cryptocurrency.”
UPDATE: ETF denied. Bitcoin dead cat bounced off $1,000. I think we’ll have a final capitulation spike down and then resume upward trajectory for rest of 2017. 4 years in the making and the entire ETF drama will be forgotten by next week.
The SEC decision regarding the Winklevoss Bitcoin ETF is due March 11 (Saturday). Expect an announcement around 430PM EST today.
In anticipation, Bitcoin had a $170 5 min candle today. $170 in FIVE MINUTES. Even for Bitcoin that is ridiculous. $1200 > $1360 > $1190. Bitcoin is a rodeo bull, just try to hang on.
I expect either $2,000 or $1,000 Bitcoin within 7 days. I am leaning that the ETF is denied and we test $1,000. I’m a buyer post announcement either way. If denied, we’ll have a buying opportunity and the entire ETF will just be a blip on the chart by Q2 2017.
However, if the ETF is approved then we’re in uncharted territory. Buy the rocket and hold on.
March 11 marks the day the SEC will hand down it’s decision on the Winklevoss backed Bitcoin ETF $COIN.
Bitcoin has rallied on the rumor of approval and fresh capital hitting Bitcoin via an ETF. As a result, Bitcoin touched on all time highs. There are two numbers to crack for Bitcoin to be in uncharted territory: the Mt Gox Exchange high of $1265 and parity with gold.
If the ETF passes some are predicting Bitcoin will fast track $5,000+. Bitcoin’s “market cap” is ~18B, or just slightly larger than TWTR. A Bitcoin ETF would cause a strong rally. Do I recommend COIN? No, I recommend you hold your own Bitcoins over an ETF the same as I recommend holding your gold over GLD.
If the ETF fails Bitcoin is still Bitcoin. Bitcoin may see a 20% correction. Buy Bitcoin there.
I don’t believe the ETF will pass and I think that’s the right decision. Bitcoin is still evolving. Labeling Bitcoin as a commodity via ETF would be like labeling AOL in early 90’s as “the Internet”. The Internet evolved bigly from the early days of AOL. Bitcoin is in that kind of early phase.
My advice? Stop masturbating for 20 minutes and invest a few minutes to improve your mind and impact your piker bank account long term. Buy a hardware wallet. Buy some bitcoins. You’ll be an early adopter and find out how easy it is to use digital currency. You can use purse.io to name your own discount on Amazon by paying in Bitcoin. The key is to start now.
Oh, we also have this thing called a debt ceiling coming March 15th. That could really set off some fireworks with Bitcoin price as Trump and Congress twitterjerk themselves into a budget war.
(HOUSEKEEPING) I’ve been bashing GBTC for over a year. In a comment section somewhere I stated GBTC was an OK buy if you only had retirement accounts and wanted Bitcoin exposure. I am revoking that comment and reinstating that GBTC is complete garbage.