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This Is the Week Wall Street Went Nuts Over Cryptocurrencies (bloomberg.com)

Posted by msmash on from the growing-trend dept.

Wall Street banks that weren't already on the bitcoin bandwagon appear to be piling on, or least eyeing seats, after the cryptocurrency surged to all-time highs this week on the way to $6,000. From a report: Analysts are working to keep up with demand from clients for information. UBS and Citigroup published extensive explainers on blockchain technology, while senior executives at JPMorgan Chase warmed to the cryptocurrency during the bank's third-quarter earnings call. The digital currency has risen more than fivefold after trading at less than $1,000 as recently as December, breaking the $5,000 mark this week and already targeting the next thousand-dollar level. Throughout its rise, the cryptocurrency shrugged off tighter regulations, feuding factions and warnings from the likes of JPMorgan's Jamie Dimon of fraud and an eventual price collapse.

8 of 180 comments (clear)

  1. Bubble! by XXongo · · Score: 4, Insightful
    http://www.investopedia.com/te...

    What is a 'Bubble'
    A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset M and driven by exuberant market behavior.

    1. Re:Bubble! by JesseMcDonald · · Score: 4, Interesting

      You can't categorically declare that Bitcoin's price is "unwarranted by the fundamentals of the asset". It's a new asset type and its fundamentals are yet to be determined. We're still feeling out Bitcoin's ultimate utility and long-term viability. Surges like this are inevitable.

      We've gone through this process several times already. Each time people have declared it a "bubble", and yet... while each surge has been followed by a "crash", the average price after each crash has been significantly higher than the average price before the preceding surge. This was true at $2, $30, $200, $1200, and $4000. The long-term trend has been toward gradually increasing prices and less volatility.

      --
      "The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
    2. Re:Bubble! by Lisandro · · Score: 5, Insightful

      Gold is not valuable because it is tangible; it is valuable because it is scarce. So is Bitcoin, BTW. Much like gold, as a currency it is inherently deflationary.

    3. Re:Bubble! by mysidia · · Score: 3, Interesting

      It is why most wealth is not maintained in currency form, but rather assets that increase in value faster than inflation.

      Perhaps.... but imagine a world with a deflationary currency. In order for businesses to persuade you to invest in their business or their debts, the bar for investing will be a much greater return --- because the business will have to increase in value faster or pay in interest a rate of interest you expect to be greater than the rate at which the deflationary currency increases in value, thus the cost of capital will be high, and businesses will be more responsible and careful with $$$ they spend not to waste it, Whereas with an inflationary currency it is almost a "Given", that tangible commodities and businesses will become worth more currency over time.

    4. Re:Bubble! by MangoCats · · Score: 3, Insightful

      Gold is very valuable because people have, throughout the past many hundreds of years, considered it very valuable. The fact that it is hard to mine, relatively easy to refine and store, etc. does help, but in the end the value of gold comes down to people's willingness to pay for it - and that willingness to pay for it has much more to do with its historical value than its current and future intrinsic worth, it's just a financial investment.

      Bitcoins have negative intrinsic worth, but they've managed to hang on as the "cybercurrency of choice" even while they are hardly differentiable from dozens, maybe hundreds of alternate blockchain based cybercurrencies. The only thing propping up bitcoin is people's willingness to continue paying for it and mining it. It's worse than betting on Coke or Pepsi. But, then again, plenty of people got stinking filthy rich by investing in Coke, or Pepsi.

  2. So where can I go short on bitcoin? by Wrath0fb0b · · Score: 3, Insightful

    So in a functioning market, investors should be able to go long or short on an asset -- that is, it should be possible to assert that it will rise and to assert that it will fall (or if you're clever, buying options that assert the price will remain right where it is).

    As far as I can see, a hypothetical person that wanted to bet that bitcoin would fall doesn't really have a vehicle by which to take that position.

  3. Thank you slashdot by JasonVergo · · Score: 3, Funny

    Back in 2011, Slashdot had a post about bitcoin. I thought it sounded interesting. So, I mined some and sent some money via dwolla to tradehill to mt.gox or something crazy like that and bought some. That $300 is now worth over $250k. I don't remember there being that many hater on the thread back then. If there were, I'm glad I didn't listen to them.

    1. Re:Thank you slashdot by Jzanu · · Score: 4, Insightful

      I'm German, I just hate the direction of the US led economics and American idiots advocating the stupidity that is killing off everyone who isn't as greedy as possible. If I can help one person realize analysis requires more thought than that then I am happy. There are greater interests exist in the world, and greater purposes for existence. Family, community, peace, humanity itself.