Tuesday, November 29, 2022

Don’t Put All Your Eggs in One Bitcoin Basket

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by Marin Katusa, Katusa Research:

Do you like this chart?

Of course you do, anybody would.

After all, who wouldn’t want to make ten times their money in the span of a month?

This is what much of the cryptocurrency space looked like last year. You could’ve thrown a dozen darts at a board of digital coin offerings and likely made 10x your money from trough to peak on a handful of them.

Though there is undeniably a great amount of hype and mania surrounding the cryptocurrency space, there are also real, tangible ideas and technology behind all of it. And many of these ideas are actionable and investment-worthy vehicles.

Unfortunately, a lot of the times you’ll find that choosing the right investment can be like trying to find the needle in the haystack, as the below chart shows:

Now, of course, I’m not just trying to play the scaremonger here.

I know many who have made fortunes many times over in Bitcoin and other alternative coins (“altcoins”).

I’m going to show you data revealing that Bitcoin has become less and less relevant as an investment vehicle. And while there are several reasons for this, one which is becoming clear is that many investors believe the “easy gains” in Bitcoin have already been made. In the chart below, the data is saying that Bitcoin no longer carries the same dominant market weighting it did in the earlier days of cryptocurrencies.

Bitcoin’s market share has fallen drastically, and it now commands around a third of the total market capitalization of all cryptocurrencies.

For a long time, the performance of altcoins was closely tied to that of Bitcoin itself. Ever since the entire cryptocurrency universe exploded into the limelight last year, savvy investors have started to pay more attention to the things that differentiate each altcoin or token from one another.

The result?

Many cryptocurrencies have started to de-couple from their Bitcoin “peg”, and are now able to trade at valuations based more on their own merit (though it would be wrong to say that the price of Bitcoin doesn’t still influence the price of all other coins to some extent). Take a look at this decoupling below…

With all the money going into the cryptocurrency space, investors are clearly looking beyond Bitcoin, and have been for some time now. And while altcoins have been where a lot of that money has ended up, as you’ve previously seen, not all of the altcoins that glitter are gold.

So where else can that money go?

The Altcoin Alternative #1 – Bitcoin Mining

There are many different avenues to pursue when looking to invest into cryptocurrencies – the coins themselves are merely the simplest and most visible vehicle.

Building off of the coins themselves, one of the best alternative investment options is Bitcoin (or altcoin) mining. Bitcoin mining is how many of the early adopters got their start, as back in the day it could be done from your own computer with nearly negligible capital risk and expenditure.

These days, Bitcoin mining has scaled to such a large extent that only commercial Bitcoin mining projects can realize any sort of meaningful gain. This drove all the “artisanal miners” to lesser-known altcoins where the mining networks are not quite as saturated.

A number of these commercial Bitcoin mining projects have gone public. This allowed investors a way to cash in on the steady revenue stream that Bitcoin mining generates without having to go through the hassle of setting up a Bitcoin mine in their own basement.

Subsets of the Bitcoin mining space include companies who handle Mining-as-a-Service (“MaaS”), and companies that run master-nodes.

The MaaS companies contract a portion or all of their mining hash rate out to customers in order to receive a reduced, but more reliable income stream.

The companies that run master-nodes generate revenue from cryptos and operate as a type of super miner and blockchain protector that can perform unique tasks that other nodes can’t. DASH is the most well-known master-node-based cryptocurrency and doesn’t come cheap. The cost for a DASH master-node is around USD$800,000, or the price of a starter apartment, a few blocks away from Central Park in New York City.

Altcoin Alternative #2 – Bitcoin Exchanges

Investing in the Bitcoin exchanges that effect the transactions is another indirect way to cash in on cryptocurrencies. Right now, in any given 24-hour window, Bitcoin’s transaction volume amounts to some 600,000 BTC – or, given BTC’s USD $10,000 price point as of time of writing, some $6 billion dollars every day.

This volume works out to somewhere north of 150,000 transactions per day. Just how much money are these exchanges making? Transaction fees for Bitcoin currently sit around the $25 mark, not including the margins that exchanges charge for their spreads. With all of the other altcoins to consider too, there’s some pretty serious cash to be made in this space as well. However most companies worth their weight and our consideration are privately held, for now.

Read More @ KatusaResearch.com

‘Good Money’ Day: El Salvador Becomes First Bitcoin Country in the World

from 21st Century Wire:

Today, September 7, 2021, is a landmark day for the future of El Salvador and its people’s financial sovereignty as the tiny Central American country stands tall by becoming the first nation in the world to adopt Bitcoin as a legal currency.

El Salvadorans can now officially use the cryptocurrency instead of dollars and have the legal backing of their home country as they chart a new path towards greater financial freedom from a fiat money system that is centrally controlled and has for far too long controlled them.

Will The New Bitcoin CME Futures Contract Benefit Gold?

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by Dave Kranzler, Investment Research Dynamics:

The Chicago Mercantile Exchange (CME) announced a plan to launch Bitcoin futures by the end of the year. The price of Bitcoin surged to a new record in response to the announcement.  It was reminiscent of the dot.com era, when a dot.com stock would jump 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} if Maria Bartiromo merely whispered the name of the company on CNBC.

Ironically, the cheers for this new contract from the Bitcoin faithful could turn out to be analogous to chickens in the barnyard cheering at the appearance of Colonel Sanders.

GATA released an article about the new Bitcoin futures contract titled “So Long Cryptos.” I’m sure that editorial stance puzzled most Bitcoin price-momentum chasers.  Crypto aficionados, for now, overlook the fact that CME futures are used aggressively to push around the dollar-based Comex gold and silver futures contracts.

As GATA points out, the ability to manipulate precious metals futures contracts by the official entities motivated to suppress the price of gold is reinforced by the volume trading discounts given from the CME to Governments and Central Banks who trade on the CME.

If there any reason to assume that the same volume discounts will not be extended to the Bitcoin contract?  Another curious feature of the Bitcoin contract is that it will be settled in cash.  I would point out the original intent behind futures contracts was to enable producers and users to agree ahead of time on a price that would be paid for the delivery of the underlying commodity associated with the futures contract.  Futures were a financing tool intended to facilitate the production and distribution of the underlying commodity product.

The Bitcoin futures contract is settled only in cash – U.S. dollars.  To wit, does this not theoretically sabotage the intended purpose of Bitcoin, which is to provide an alternative to fiat currencies?  Why would you want to receive fiat dollars rather than delivery of the underlying?

Technically this is not a bona fide futures contract. It’s a derivative of the “index” price of Bitcoin but it does not facilitate the production and distribution of Bitcoin.  As such, it’s an instrument of pure speculation. By definition, this opens the door to manipulation by the entities who might be motivated to control the price of Bitcoin. Oh, by the way, those entities can buy and sell the contracts at a price advantage to the speculators by virtue of the volume discounts.

At least with gold and silver contracts, the contract enables the contract owner to take delivery of the actual physical commodity connected to the contract. To a limited extent, this mechanism serves to prevent the complete unfettered manipulation of gold and silver via the Comex futures contract.

With the Bitcoin futures contract, the contract owner is paid cash.  The absence of a requirement to deliver actual Bitcoins enables the issuance of an unlimited number of fiat dollar-based paper Bitcoin contracts which can be used to drive the price lower by increasing the supply of the contract relative to the demand.  So much for the idea that Bitcoin supply issuance is firmly capped. This could  actually be quite entertaining to observe

Read More @ InvestmentResearchDynamics.com

If You Don’t Own Any Bitcoin, Read This

This week it hit $19,000. What’s next?

by Adam Taggart, Peak Prosperity:

Wow. Just….wow.  Bitcoin’s price has gone ‘beyond exponential’ this week. Just yesterday, as I started working on this article, it shot up 22% — from $14,000 to $17,000 (hitting an intraday high of over $19,000).

And that’s after a mind-blowing upwards rocket ride over the past several months. 

I think it’s safe to say that the vicious melt-up in price over such a short timeframe has surpassed the expectations of even the starriest-eyed Bitcoin fanboys.

The whole world, especially the 99.99% of us that own zero cryptocurrency, is asking: What happens next? And, What should I do?

Is this insane trajectory going to continue for a lot longer? Do I need to get in now to avoid missing this once-in-lifetime fortune-making opportunity?

Or is this a classic bubble blow-off top? Is this the deadliest time to enter, right before the price implodes?

An Expert’s Take

I had the chance to ask these questions Wednesday to a long-time veteran in the digital currency space. We met at a gathering of online media ‘mavens’; this guy has published news and analysis on cryptocurrencies since 2011, for both investors and developers. He knows the space exceedingly well.

Unsurprisingly, he holds a lot of Bitcoin. I didn’t ask directly how much; but knowing that he was covering the space back when Bitcoin traded in the single-dollars range, my conservative mental math quickly concluded he’s probably worth more than most people I’ve met in my life.

So here what I learned during my chat with him:

  • He thinks the current price action is “nuts”: To his veteran eye, the current frenzy is a speculative mania and will end in a massive sell-off, resulting in huge losses for those buying in at these prices. He’s watched Bitcoin long enough to have seen it experience several 70%+ corrections. In his mind, this will simply be the latest one. And there will be more in the future, he predicts.
  • But he’s not worried in the long run: Like many longtime crypto investors, he sees a much higher price potential for Bitcoin. But to reach that level and sustain it will take years. The currency will need to be much more widely held among the general populace and used in a material percentage of transactions (i.e., not just being held by speculative investors). Until then, he expects lots of volatility (both up and down) of the sort we’re seeing now.
  • He admits that Bitcoin could lose out to a superior successor: When asked if the capital currently flowing into Bitcoin could flee for a better crypto ‘mousetrap’ in the future, he says “sure”. Which is why he has diversified holdings across a number of cryptocurrencies and watches new entrants into the the space closely. But one advantage Bitcoin increasingly has over the rest of the crypto field is scale. He gave a highly-technical argument for how the blockchain actually has limited value without a platform to offer it sufficiently critical scale. “Does Bitcoin offer that critical scale yet?” I asked. “Probably not yet” he answered, “But it’s much closer to it than any other competitor at this time. And it’s growing faster than the rest.” Translation: Bitcoin is the odds-on winner at this point.
  • He expects the world’s central banks to criminalize the cryptocurrencies: We talked about the central banking cartel’s longstanding monopoly of the money supply and its historic ruthlessness for squashing all competition. He agreed that the central banks would like nothing more than to replace the current cryptos as well as all paper fiat currencies with digital sovereign versions. And he predicts they will likely try to do exactly this. How successful will they be? Uncertain. He can certainly foresee a time when they ban ownership of Bitcoin and its brethren, criminalize transacting with them, and shut down the exchanges. Though while the cartel may be able to seriously curtail Bitcoin et al, he doesn’t see it succeeding in driving them to extinction for several reasons. One he offered that I hadn’t heard before (but have since verified) is that private investors have put a network of satellites up in space dedicated to making it possible to transact in Bitcoin anywhere on Earth even if the terrestrial networks are taken down by the authorities or natural disaster.

His overall takeaway? Don’t buy at today’s prices; wait for a correction (it could be a really big one). But once it happens, buy in and hold, as he sees the price going much, much higher over the next decade.

By the way, I’d share this guy’s name with you but he asked me not to. Given how stratospheric Bitcoin has risen over the past year, he says his biggest priority right now is to fly under the radar and have as few people as possible be aware of his crypto holdings. Apparently this has recently become a real concern for Bitcoin investors who have suddenly become overnight multi-millionaires (Or hundred-millionaires. Or in the case of the Winklevoss twins, even billionaires). A vast windfall like this makes you an alluring target to criminals.

Just one more unexpected consequence of this crypto mania we’re watching play out in real time.

The Peak Prosperity View

The above expert’s views match well with those of our team’s outlook here at PeakProsperity.com.

Charles Hugh Smith, who has been writing about Bitcoin for us since it traded below $600 has long had a price target of $17,000 — which seemed unattainably high even just one short week ago. That underscores how insane the price moves of the past few days have been.

With the $17,000 milestone hit so quickly, does he think a large correction could ensue? Very possibly. (I should make clear though, he remains quite bullish about Bitcoin’s long-term future potential).

Davefairtex, our resident charting expert, notes that his model now shows Bitcoin’s level of overvaluation at “nosebleed” levels with a daily RSI of over 98 and the forecaster clearly predicting a reversal:

And reader mrees999, our community’s most-respected educator on the cryptocurrency space — and one of the biggest advocates earlier in the year for buying Bitcoin — offered the following words of caution yesterday:

I probably wouldn’t get in now. It’s gotten irrational with FOMO. I’m selling into this rally and waiting for a massive correction once the bit shorts come in with the futures trading about to begin.

(Again, I should point out that mrees999 remains robustly optimistic about Bitcoin’s longer-term future price potential.)

To the above, I’ll simply add two additional pieces of data to show how quickly Bitcoin has outstripped any sort of rational justification for its recent price explosion.

The first is this chart below, which shows how Bitcoin’s price has blown above the maximum Fibonacci extension between its previous swing low and yesterday’s swing high (note: this chart was created before the price continued higher to $19,000):

Read More @ PeakProsperity.com

Study Finds That 22 Percent Of Bitcoin Investors Are Using Debt To Fund Their Investments

by Michael Snyder, The Economic Collapse Blog:

Investing in cryptocurrencies such as Bitcoin, Ripple, Ethereum and Litecoin is extremely risky, and experts all over the country are warning that people should only invest what they are willing to lose.  Unfortunately, many are getting swept up in the current euphoria surrounding cryptocurrencies and are not listening to that very sound advice.  A disturbing new survey that was just released found that 22 percentof all Bitcoin investors are either directly or indirectly investing in Bitcoin with borrowed money…

According to LendEDU, a personal loan research firm, more than 18 percent of Bitcoin investors have used borrowed money to trade the cryptocurrency. In a global survey of 672 active Bitcoin investors, researchers asked traders the method they used to fund their cryptocurrency trading accounts. The majority of investors used banking systems such as credit cards and ACH transfers to fund their accounts.

But 22 percent of traders revealed that they have not paid off their credit and debit cards after purchasing Bitcoin, effectively investing in the cryptocurrency with borrowed money.

Credit card debt is one of the most toxic forms of debt that you could ever carry, and investing in anything when you still have credit card balances is extremely unwise.

Yes, cryptocurrencies went on an epic run in 2017, but there is absolutely no guarantee that they will continue to rise in 2018.

In fact, there is a very real possibility that we could see a cryptocurrency crash, and there are many investors that are actually eagerly anticipating one

Well, as many traders expected, it appears that institutions are using the futures product to slowly but surely build a short position in bitcoin. According to the CFTC Commitment of Traders report (available CBOE futures), non-commercial traders held a net short position of around $30mn as of Tuesday Dec 26, or around half of the total open interest.

Separately, the Traders in Financial Futures breakdown provided by the CFTC show that the leveraged funds category that consists largely of hedge funds and various money managers had a short of around $14mn, or around a quarter of the total open interest.

In other words, spec investors have used the futures contracts to establish Bitcoin shorts.

On the other hand, there is also the possibility that cryptocurrencies such as Bitcoin could continue to defy gravity and soar even higher over the next 12 months.

In fact, a rumor that Amazon.com will soon start accepting Bitcoin has lots of people buzzing

As a backdrop to all of this, there is a strong rumor that Amazon is about to accept Bitcoin as a method of payment. Patrick Byrne, the CEO of Overstock, has stated that Amazon will soon have no choice but to start accepting it. He is quoted as saying, “… they have to follow suit. I’ll be stunned if they don’t because they can’t just cede that part of the market to us if we are the only main large retail site taking Bitcoin.” Scott Mullins, an Amazon executive has confirmed that Amazon is, “working with financial institutions and crypto-experts to spur innovation, and facilitate frictionless experimentation.”

If the Amazon rumor turns out to be true – Bitcoin will probably go into orbit! Be prepared…

If someone knew exactly what would happen throughout 2018, that individual could make an absolutely obscene amount of money.

Unfortunately I don’t know where cryptocurrencies are heading, but it does appear that things are about to get a whole lot more interesting.  According to Reuters, it looks like you will soon be able to invest in Bitcoin using leveraged ETFs…

The new idea is to build “leveraged” and “inverse” funds that would rise – or fall – twice as fast as the price of bitcoin on a given day.

Direxion Asset Management LLC plans to list such products on Intercontinental Exchange Inc’s NYSE Arca exchange if U.S. securities regulators give the nod, according to a filing by the exchange this week.

In the filing, the exchange said the listing “will enhance competition among market participants, to the benefit of investors and the marketplace.”

So if Bitcoin rises or falls a thousand dollars in a single day, those financial instruments will be designed to move by about twice as much.

That should be fun.

Meanwhile, some are asking what will happen to cryptocurrencies such as Bitcoin, Ripple, Ethereum and Litecoin if the long-awaited collapse of global financial markets finally happens this year.

Well, some believe that it would be doom for cryptocurrencies, but others believe that cryptocurrencies would be like gold and would actually do extremely well during the next great financial crisis…

The question is what will happen to Bitcoin and Cryptocurrencies once the financial collapse takes place. The signs are that when economic circumstances start to deteriorate the price of Bitcoin rises. A prime example of this is during the Cyprus and Greece bailout which saw the price of BTC rise considerably during this period. With banks stopping access to cash in ATM machines, Bitcoin was the perfect solution to be able to store it safely out of the banks and Governments’ hands.

What also happens during a depression is interest rates skyrocket and start to see hyperinflation. This will mean it is extremely hard to get finance from banks and the cost can make it unsustainable. The ICO market is a perfect solution to this problem and as the banking sector suffers, ICOs will boom. More companies will look to these as a cheap way to raise money and will create their own cryptocurrency.

Read More @ TheEconomicCollapseBlog.com

BTC Futures to Push Bitcoin to $70,000… and Beyond? Here’s How & Why

Seven Deadly Economic Sins — One Bitcoin Future

by David DuByne, Medium:

As we stand in the current world economy, suffocating and on its last breath, we face three choices to resolve the global liquidity crisis:

  • a debt jubilee
  • a global war
  • bitcoin (BTC) futures.

My choice is BTC futures.

This is not to say that bitcoin was created and released at a particular time for this exact end result, but for sure central banks are taking advantage of it to solve multiple problems.

The Cliff Notes version: letting BTC futures run up to $70,000 on the Chicago Mercantile Exchange (CME) will have these results.

  • Global war prevented
  • Civil unrest mitigated, as food prices climb higher due to Grand Solar Minimum* losses in global agricultural output
  • Refilled pension funds and underwater liabilities planet wide
  • Backdoor way to institute universal income
  • A way to restart the consumer spending economy
  • A beginning to fixing poverty everywhere
  • Anyone, anywhere can invest in bitcoin futures, so the wealth effect spreads everywhere
  • As BTC skyrockets, everything else will follow, as in the stock market

We can start a global war. Or we can set the bottom price of BTC at $7000 and open it on the futures market, solving all of the liquidity and debt problems we now experience. It will take 10x the current $7000 mark to breakeven and backfill the current funding negatives at debt to GDP.

The US Federal Reserve, central banks and governments around the world have massive unfunded liabilities that will not be repaid even if we indebt our grandchildren. You are looking at Medicare, sovereign debt, pension funds, and on it goes, literally quadrillions of dollar value and they can’t even pay for that with the existing GDP. Current IOUs far exceed the ability to service that debt. Even with the highest stock market ever in the US, they still can’t pay for that. Governments need to find wealth from somewhere.

If a 10x return to $70,000 per BTC in the future clears part of the liabilities, why not let it run even further? If it pushes to $140K, people will then have money to spend and rekindle the economy.

Push it wide open to $210 /280K and it’s a party again:

  • social in-fighting stops
  • all of the wars stop
  • all of the home foreclosures stop
    – huge reduction in homelessness begins

Once they get the match lit, it’s a rocket ship. Somewhere along the way, the central banks will begin liquidating their BTC holdings, but if you are reading this article — you’re in so early, you’re helping push the rocket to the launch pad. Ignition, now, is just months away.

Now, in my vision of the future, central banks have fixed their problems. They will want a bit of rotation or they will want a bit of stimulus in the economy — all they have to do is stimulate a new coin, rinse and repeat. Once people feel the wealth effect again — and I truly mean feeling wealthy — it’s going to be a new era. The feeling of the 1990s: spend today, as there is always more coming in tomorrow.

The BTC futures trading market, and how Ankorus is a direct avenue to CME BTC futures contracts.

1. “The roaring twenties” started with technological innovation: the radio and the car, especially. It’s the same thing here with how cryptocurrency’s starting off. It’s similar to how it was after world war one, when the world was in debt.

Imagine a meteorite just flew by earth, and it’s made of solid gold — just cruising by, in space — and we rocket up to it, harvest it, and bring it back into the Earth economy. This introduction of new wealth into the system would enrich everybody. Crypto is like that. It didn’t exist before, but now everyone wants a piece of it because it keeps going up. Its new wealth, magical new wealth, that has come out of nothing, and if everyone can get in on that… and they let it ride way up high, this will be new wealth that central banks and governments can use to repair all of the existing, broken, unfunded liabilities. Everybody can get in on it, and planners can fix the broken monetary system.

It doesn’t matter that it’s ones and zeros, it’s the belief in a new form of wealth that actually becomes a new form of wealth, the confidence of limited supply and value associated with a finite resource. Why is gold more valuable than aluminum? It’s the same with bItcoin, which has a limited supply, and when the world adopts it as a store of wealth, central banks need only have some of the underlier to start off the BTC futures, options and ETF markets — and send it to the moon.

Sovereign players will need to begin securing as much BTC as they can. They will be the big buyers of the actual BTC, storing it on a wallet, out of circulation in cold storage. Let’s term that “physical bitcoin” for lack of a better term. Once they secure enough of them, this is short squeeze that can carry on for a decade.

Read More @ Medium.com