Bitcoin: The Appetite for the Unknown

Lior Alkalay - INO.com Contributor


Over the past month, Bitcoin has become almost synonymous with the word bubble. In fact, Google searches for the combination words “Bitcoin” and “bubble” has jumped exponentially. That is unsurprising considering Bitcoin’s phenomenal ascent—piercing through record after record.

Even as calls and forecasts for Bitcoin’s eventual collapse intensify, the enthusiasm has intensified, as well. The cryptocurrency is now available for trading on the Chicago Mercantile Exchange floor, making its way forward as a form of legal tender. It’s also unsurprising, then, that in another Google search, the word combo of “buy” and “Bitcoin” is also at a record high.
So, how can we gauge Bitcoin? We cannot! And that is what I call the Unknown Factor.

Bitcoin Google Search Data
Chart courtesy of Google Trends

Bitcoin is No Tulip

Some prominent figures including Jaime Dimon CEO of JPMorgan Chase & Co and John C. Bogle-founder of Vanguard Group. have labeled Bitcoin as a bubble, even the world's most famous investor Warren Buffet has been a skeptic on Bitcoin labeling digital currencies a “mirage.” In fact, most of all, the latest Bitcoin surge is compared to the Tulip Mania that took place way back in the 17th century in the Dutch Republic. Back then, Investors got caught up in a frenzy of tulips and began speculating on their price. A bubble was inflated, and eventually, like every inflated bubble, in 1637 the tulip bubble burst, leaving investors “wounded” and with “hefty losses.” The difference between then and now is that a tulip is, for lack of a better description, a “useless asset.” As a commodity, the tulip, albeit pretty, is nothing more than a decaying flower with no real use or applications in food or industry. Unlike a commodity such as gold or silver, a tulip cannot be used for jewelry.
Continue reading "Bitcoin: The Appetite for the Unknown"

Futures Market for Bitcoin Gives the Currency Staying Power, But May Hurt Price

Matt Thalman - INO.com Contributor - ETFs


Futures contracts in the crypto-currency Bitcoin (CME:BRTI) are expected to begin trading on the CBOE on Dec. 10, after getting the green light last week from regulators. That gives the CBOE a week of exclusivity. The exchange operator's larger Chicago rival the CME has said its contracts will begin trading Dec. 18.

When the futures are offered, more investors will be given access to the crypto-currency. Institutional investors for one will now be able to build a position in Bitcoin through the use of futures trading.

Furthermore, retail and small investors will have a much easier time gaining access to the fast-growing asset class through the use of futures, but certainly, if Bitcoin Exchange Traded Funds, which would use the futures, are approved. Instead of having to go through lesser-known crypto-currency exchanges and using credit cards to make purchases of Bitcoins, investors will simply be able to use their brokerage accounts and buy and sell futures contracts through the well respected and trustworthy CME.

More so, many believe that once the CME is offering Bitcoin futures, Exchange Traded Funds will be permitted to offer Bitcoin investments through the use of futures. Continue reading "Futures Market for Bitcoin Gives the Currency Staying Power, But May Hurt Price"

Bitcoin Pigs Get Fat, But The Hogs Are Going To Get Slaughtered

Matt Thalman - INO.com Contributor - ETFs


Unless you have head your head stuck under a rock for the last 12 months, you have heard of Bitcoin and how the price of the first crypto-currency has skyrocketed this year. After hearing about this 'once in a lifetime investment opportunity,' I am sure most of you have thought about buying some digital currency. Maybe some of you have even taken the next step and bought some. (Congratulations to those of you who did.)

But as the saying goes, 'Pigs get fat, hogs get slaughtered,' I hope for your sake you are a pig and get out while you can. Unless you got your hands on some Bitcoin's in the last week, you have made money.

A recent Bank of America Merrill Lynch survey found that the Bitcoin traded is one of the most crowded trades on Wall Street, which obviously explains some of its massive run-up. Bitcoin's amazing performance over the last year now appears to have attracted some very risk-averse investors.

We have seen the price of Bitcoin fall 30%, 40%, even 50% in just a years' time. But, investors keep running into the asset and pushing the price to new all-time-highs.

So what would actually cause a Bitcoin collapse? Continue reading "Bitcoin Pigs Get Fat, But The Hogs Are Going To Get Slaughtered"

Modern Paradox: As Large As Goldman Sachs But Has No Intrinsic Value

Aibek Burabayev - INO.com Contributor - Metals


The Riddle

This riddle could be paraphrased as “It is almost worth the gold reserves of France (World #5), it is what all want now at the price of 2016, you would be eager to have it as a gift last Christmas, it stands at 14 GDPs of Kyrgyz Republic (my motherland)”. Yes, you got it right, it’s a Bitcoin - notorious, attractive and, of course, risky.

Last week the market cap of this coin hit an all-time high at the 99+ billion dollars increasing ten times from what it was just a year ago.

Chart 1. 1-year dynamics of Market Cap of Bitcoin in USD

Dynamics of Market Cap of Bitcoin in USD
Chart courtesy of blockchain.info
Continue reading "Modern Paradox: As Large As Goldman Sachs But Has No Intrinsic Value"

Bitcoin Bonanza Rolls On

Matt Thalman - INO.com Contributor - ETFs


As the Bitcoin phenomenon rolls on, we continue to see new prospectuses for possible Bitcoin funds despite the Securities Exchange Commission denying the creation of one Bitcoin Exchange Traded Fund due to the lack of market surveillance and regulation. Oddly enough, the currency was started to give its user autonomy from governments and other regulatory agencies.

So the main reason why the currency grew in popularity is the reason why investors are finding it difficult to invest in the asset. Thus far two different proposed Exchange Traded Funds have been denied in the US, but it would appear the once denied Winklevoss Bitcoin ETF might have a chance of being approved the second time around. What is interesting is that the Winklevoss Twins were not the ones who filed the petition for reconsideration of their ETF, it was the Bats exchange, which the proposed ETF would trade on if approved. Continue reading "Bitcoin Bonanza Rolls On"