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More Wall Street Pundits Caution Against Investing In Bitcoins (cnbc.com)
Peter Boockvar is the Chief Investment Officer of Bleakley Financial Group, a $3.5B wealth management firm -- and he predicts "an epic crash will hit the cryptocurrency market," according to CNBC. "He isn't sure if it'll come to a grinding halt or be a slow and steady drop -- but he says it's coming."
"When something goes parabolic like this has, it typically ends up to where that parabola began," he said on CNBC's "Futures Now." Boockvar, a CNBC contributor, contends bitcoin is in danger of dropping 90 percent from current levels. He calls it a classic bubble. "I wouldn't be surprised if over the next year it's down to $1,000 to $3,000," he added. That's where bitcoin, the largest cryptocurrency player, was trading less than 12 months ago. Friday afternoon it was trading above $11,000.
Meanwhile, today the International Business Times chronicled the predictions of tech billionaire Mark Cuban. In June of last year as bitcoin was climbing toward the $3,000 threshold, Cuban cautioned potential investors about jumping in on the bandwagon... "[C]rypto is like gold. More religion than asset. Except of course gold makes nice jewelry." He told his followers at the time that he wasn't questioning the value of Bitcoin but was questioning the "valuation" and said , "I think it's in a bubble. I just don't know when or how much it corrects." Cuban suggested that when everyone is "bragging about how easy they are making [money]," that indicates there is a bubble happening...
Still, the Dallas Mavericks owner was open to the idea of using cryptocurrencies as a volatile investment vehicle. "If you're a true adventurer and you really want to throw the Hail Mary, you might take 10 percent and put it in Bitcoin or Ethereum," he said. Cuban also cautioned, "If you do that, you've got to pretend you've already lost your money"... Showing just have far Cuban has come on bitcoin and cryptocurrency, he announced earlier this week that his Dallas Mavericks will accept bitcoin and Ethereum as a method to pay for tickets starting next season. Even if the tech investor doesn't fully believe in cryptocurrency, he's clearly willing to try to profit off it...
Meanwhile, today the International Business Times chronicled the predictions of tech billionaire Mark Cuban. In June of last year as bitcoin was climbing toward the $3,000 threshold, Cuban cautioned potential investors about jumping in on the bandwagon... "[C]rypto is like gold. More religion than asset. Except of course gold makes nice jewelry." He told his followers at the time that he wasn't questioning the value of Bitcoin but was questioning the "valuation" and said , "I think it's in a bubble. I just don't know when or how much it corrects." Cuban suggested that when everyone is "bragging about how easy they are making [money]," that indicates there is a bubble happening...
Still, the Dallas Mavericks owner was open to the idea of using cryptocurrencies as a volatile investment vehicle. "If you're a true adventurer and you really want to throw the Hail Mary, you might take 10 percent and put it in Bitcoin or Ethereum," he said. Cuban also cautioned, "If you do that, you've got to pretend you've already lost your money"... Showing just have far Cuban has come on bitcoin and cryptocurrency, he announced earlier this week that his Dallas Mavericks will accept bitcoin and Ethereum as a method to pay for tickets starting next season. Even if the tech investor doesn't fully believe in cryptocurrency, he's clearly willing to try to profit off it...
If I remember a recent Ars Technica article correctly, bitcoin has had 4 exponential spikes in prices similar to the current one. After each there was about a 75% drop in price. The last one was in 2014, up to $1,100, then down to $250-300 and staying there for years until the current spike to $19,000 occurred.
But now we have a new variable. Those past spikes were when bitcoin owners were largely geek speculators who were also true believers in bitcoin. This current spike coincided with wall street speculators getting involved and soon followed by speculators from the general public. These "newcomers" may not be as forgiving as the preceding "true believers".
That said, don't conflate blockchain and bitcoin. Blockchain technology is likely to be part of our future. Bitcoin is just one user of blockchain technology, it may or may not be part of our future. "Not" is a serious possibility given that bitcoin has deviated from its design and its assumptions about its blockchain security are no longer valid. Its security required a global distributed community of miners who are regular individuals using their own computers and this has not been true for years. Bitcoin is plausibly vulnerable to mining cartels and government intervention due to the current state of affairs where we have a relatively small number of miners using expensive specialized ASIC hardware that is geographically located in a single country and reliant upon inexpensive government supplied electricity. Are cartels or the government likely to subvert the bitcoin blockchain? Probably not, but it remains plausible, and bitcoin security is based on the assumption that such things are not even remotely plausible.
Bitcoin is entirely replaceable by a another coin with better security, new features and/or better performance. Before anyone makes a "network effect" argument, keep in mind that a network effect needs high switching costs to be effective. There is little to no switching cost to move from bitcoin to a different coin.
The valuation of bitcoin surged on the assumption that it will become a major currency. However, it's hard to see how bitcoin is going to be good for much of anything. Transactions are too expensive and too slow for it to become a regular currency. Early on, people believed it was an anonymous form of payment - but in fact every transaction is public. It was also supposed to be a democratic currency, but that promise has failed as well because now a few big players hold most of the bitcoins. By all reports, it wastes a tremendous amount of electricity and contributes to global warming.
To quote one economist, "It's not a currency until people are paid with it." I don't see it ever getting there, especially with governments against it. And if it isn't destined to become a currency, then it it is destined to crash, maybe even disappear.
Gold can be confiscated by the government as it crosses a boarder. Also, transferring $5mil in gold might be much more expensive due to security concerns, not to mention time-consuming depending on the distance. Bitcoin isn't perfect, but it does have a several advantages.
Gold doesn't disappear when the exchange vanishes.
because wallets can be lost/stolen/hacked. The exact same reason people don't put all their money under a mattress. if your stupid enough to keep your life savings personally hidden with no insurance that is your business but please don't suggest to others that it is a smart decision. Banks and Governments provide certain benefits and insurance that bitcoin etc do not and most of us prefer that.
"...Dallas Mavericks will accept bitcoin and Ethereum as a method to pay for tickets starting next season. Even if the tech investor doesn't fully believe in cryptocurrency, he's clearly willing to try to profit off it..."
He doesn't have to hold the currency longer than a few seconds. So, he doesn't have to "believe in it" at all.
The crypto space—regardless of what happens to it in the long term—is brim full of intentional Ponzi schemes and pump and dump operations on a scale that would otherwise be difficult to access elsewhere. Operations like Bitconnect collect over a billion dollars from poor sods that don’t know any better and just vanish into the night. Goodbye decades of savings. While far from impossible, it would be very difficult for an illiterate investor to destroy his capital this quickly with the exchange traded instruments.