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Bitcoin Surprise and the Dollar
A year ago the Bitcoin was the buzz. An analyst from a major bank urged central banks to buy some for reserve purposes, completely ignoring the fact that there were not Bitcoin bonds, the market lacked transparency and was far too small. Another analyst tried to calculate intrinsic value of Bitcoins and came up with something well north of prevailing prices.
This Great Graphic was tweeted by Yahoo's Jeff Macke, and he got it from coindesk.com. It shows the large downtrend in the Bitcoin's value this year. In fact, the Bitcoin is making a new low for the year today (though the dollar is also somewhat softer on the day).
Yes, there is still a Bitcoin eco-system, but it has lost the buzz. It seems more like a quaint niche artifact. Yes there some shops and electronic vendors who will accept it in lieu of payment, but it seems this is more a a marketing ploy than an secession from sovereign money. The payment system technology may have some merit and this may be its real legacy.
At the end of September, the IMF published its latest reserve figures (COFER) for Q2. Global reserves rose $134 bln after adjusting for exchange rate movement. This is down from $166 bln in Q1 14. The euro's share of reserves slipped to 24.2% from 25.0%. This was the sharpest drop in euro allocation since 2011. Speculators in the futures market had swung to a net short euro position in mid-May, arguably responding to the same fundamental considerations as the central banks.
The US dollar's share rose to 60.7% from 60.3% of reserves. The Australian and Canadian dollar's share of reserves edged higher, as did the "other "category (which likely includes the Scandis, the New Zealand dollar, the Singapore dollar, Korean won and Danish krone). While many observers still talk about the diminished role for the dollar, we suspect the risk is in the opposite direction.
The role of the dollar may be enhanced in the coming years as the main alternative, the euro, is again hobbled and depreciation a 2-3 year time frame looks more likely. What are central banks interested in : liquidity, safety and then returns. US yields may rise on a medium and long-term view, but this may be more than offset by currency appreciation. Although the long term demise of the dollar is the widely held view, medium and long-term investors should consider the opposite scenario.
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This may sound conspiracy, but makes a bit of sense. Putin watched and benefited when US spent USSR into ground during cold war buildup. Do you think that guy forgot? He doesn't care that the ruble is getting crushed, he doesn't care about sanctions. They are used to it! Crushing our currancy and financial system is a great payback...it's more effective than trading nukes and ending the world. He invaded Ukraine to see who would fall in behind him. Trust me, Europe will be pissed with us soon enough, they are exposed to these sanctions and their economy can't handle much more..Russian s are great at chess....think 3 moves ahead...our jackass politician s are worried about the next election.....Thier currancy crashed 93% in 3 years after the breakup.....trust me, they will pay us back. He is heavy in natural resources and gold...he doest care about dollar crashing, he benefits! Wake up!
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Invest in Confederate Dollars or Zimbabwean Dollars
"On May 30, 1909, The New York Times ran a story under the headline “CONFEDERATE MONEY TAKEN: German Shopkeepers Apparently Ignorant That Civil War Is Over.”
According to the story, many merchants, hoteliers, and café proprietors in Berlin were still accepting Confederate cash that hadn’t been worth its face value in over four decades. The American consulate in Berlin had been fending off German businessmen who were trying to exchange their notes from, say, the Bank of Richmond for German currency. Whoops. The article closed with the line “[S]ome of [the merchants] have left the consulate convinced that the United States Treasury has really ceased payment and is ashamed to admit it.”
See http://www.ebay.com/sch/Confederate-Currency-/3414/i.html
http://www.ebay.com/sch/Zimbabwe-/162228/i.html
A 100 Trillion $Z is worth about US$3 .
Never mind Bitcoin .
Worry about the $US .
So your saying the world will continue to support our Military spending and illiquid entitlements at the expense of their own people. Sure glad I was born here and grateful that the world is that fucking stupid! Wake the fuck up buddy! They aren't dumb, we are just so fucking arrogant to see it any other way. Game over when the first boomers hit mandatory medicare in 2016. Write that down and circle it.
"Although the long term demise of the dollar is the widely held view, medium and long-term investors should consider the opposite scenario."
Actually Marc Chandler, I have read quite the opposite. While it may look like the 'long term demise of the dollar' is the 'widely held view' to you - and by method of which gives you nice cover to mock with your cute little 'conspiracy-kook' intros, the 'widely held view' in 'Widely held' professional investment circles - in which You reside by the way, has been that of a 'New $Dollar Bull' for quite some time - like say, at least a year or more Marc...? So you can 'cut the Crap' as it were...
"The role of the dollar may be enhanced in the coming years as the main alternative, the euro, is again hobbled and depreciation a 2-3 year time frame looks more likely."
Uh - Dude...? Do you pay any attention to the foreign policy actions of the United States...? One might assume you must, after all, you're the head of FX for BBH, right? Then again, You were the guy - not 7 months ago who suggested the that Ukrainian situation was all about nothing (hype I think was the term you used), to soon blow over, correct...? In not one, but (2) successive mainstream articles, not but 2 months apart...?
I eagerly await your next 'dispassionate look at the markets', sans the 'world is ending any day now' conspiracy-kook mockery.
I have 10 BTC. Some people drink and make expensive urine, others opt for the occasional couch dance at the strip club. Me, I like to gamble once in a while. When global fiat goes to shit, and people look for any store of value to place their money in, methinks bitcoin may be an alternative for those that won’t be able to get into bullion at any price. So we'll be there when it goes to zero, or a million. If it winds up zero, we’ll just bemoan the couch dances not had by making a little expensive urine.
Using that logic, Yugo's are priceless !
Bitcoin is an excellent black market channel and a fair international payments mechanism. The first generally eats about 30% of capital, the second a more modest 5-10%.
Unless and until it is penetrated by authorities, black hat and/or white hat. Then, back to bales of currency cuz it's safer.
What's a bitcoin?
BTC value against the dollar is irrelevant.
BTC value is "a quaint niche artifact"
Which makes BTC irrelevant.
It's backed by nothing.
It's valued in USD's,
So, why bother ?
It's the Emperors new clothes.