"It's Pure Frenzy" - Bitcoin Extends Overnight Gains, Rises 200% Year-To-Date

Tyler Durden's picture

More Japanese exuberance overnight (as USDJPY and Nikkei stumbled hard) sent Bitcoin to fresh record highs, blowing through $2800 and nearing $2900 this morning - now up 200% year-to-date.

It seems the momentum trade has caught the eye of Mrs. Watanabe...

But as we noted overnight, it's not just Bitcoin that is soaring, Bloomberg reports that Remixpoint Co., Infoteria Corp. and Fisco Ltd., have all seen volatile swings in their share prices after announcing businesses related to digital currencies.

Remixpoint, which has more than doubled since tying up with Peach Aviation Ltd. to let customers pay for tickets with bitcoin, fell as much as 9 percent in Tokyo on Tuesday.

 

Infoteria, up more than 50 percent in the past month, is testing ways to let shareholders vote by proxy using blockchain, bitcoin’s underlying technology. 

 

Fisco, a financial information services provider, began operating a bitcoin exchange last year and is up about 25 percent since early May.

All of these gains coincide with bitcoin’s rally, with the value of the virtual currency doubling against the U.S. dollar since early May. That has made the stocks of the these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. That’s because investors can make bets via their brokerage accounts instead of taking risks with bitcoin exchanges, according to Naoki Murakami, a well-known day trader in Japan.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ said Murakami, a frequent speaker at investor conferences.

 

“Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.”

Another reason why these stocks can become proxies for bitcoin is due to Japan’s relatively loose listing laws, some of which require no income and a market value of as little as $10 million before a company can go public. That’s made the Tokyo Stock Exchange home to hundreds of small companies.

“It’s pure frenzy,” Murakami said.

In April, Prime Minister Shinzo Abe’s government legalized digital currencies as a form of payment and placed rules around audits and security. That lent credibility to digital currencies, leading to some Japanese companies seeking partnerships with bitcoin startups.

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syzygysus's picture

is sticking a fork in my bitcoins bullish?  ;)

tmosley's picture

Depends on whether it is a hard fork or a soft fork.

The latter is bullish. The former my be the end of bitcoin. We'll see.

merizobeach's picture

Hey Mos, you've been riding this btc train for quite a while now, so I'll defer to your expertise.  If you would, please tell me about this fork on August 1st, especially as it pertains to resolving the confirmation time concern raised above.  Thanks.

tmosley's picture

The current bitcoin system only allows a certain number of transactions with each block, and miners prioritize transactions that pay them the highest amount, so if you don't pay enough, your transaction could be stuck in limbo for days or weeks (if you pay a high fee, you will get super-fast service). This is obviously an issue for the currency, as no-one wants to have to pay $3 to make a transaction to buy a popsicle or some other small transaction. Many wallets don't even let you change the transaction fee! I had a wallet in that situation, and when I tried to move it onto an exchange, it took a week to clear!

The miners like making lots of money with each block so are all too happy with the status quo. The users, and the market see the big problem here, and have created an update to the bitcoin protocol (called a fork) that has a hard date (August 1st) by which the miners must start using the new protocol or they will start rejecting their blocks. This will create two seperate blockchains. If the miners concede, it will be what is called a "soft" fork, and there will be one bitcoin from here on, with the updated, consumer friendly protocol. If some do not, there will be a "hard" fork, and there will be two active blockchains afterwards, which will disrupt the entire ecosystem and perhaps destroy the combined market share of both coins. If the vast majority of the miners reject the change to the protocol, then the status quo continues, and bitcoin becomes less and less useful as time goes on.

I think it will wind up being a soft fork, but I'm not willing to bet the farm on it. I have put equal money on BTC and ETH for this event. If BTC crumbles as a result of this, I expect ETH to pick up the slack. Other alts will probably benefit too, especially the ones built to be fast (and maybe anonymous).

merizobeach's picture

Thank you very much for that.

Now I would like to impose on you for one more question: where/how would you recommend I enter the market for BTC/ETH?  (I'll save the 'when' until there's a correction, or else I'll concede that I've missed the boat.)

tmosley's picture

I use gemini. I would avoid coinbase, as they have had some problems lately that make be worry about leaving my coins in there, but it would probably be fine if you bought from them and pulled them out. There is also kraken, but I haven't used them. These are all regulated US exchanges. The tax man will know what you are doing.

The way I am proceeding is with an immediate 5% investment (since risen to 9% but what do you do?) to get some exposure, and save the rest for the pullbacks/gap filling. Gaps need to be filled down to about $1800 and $1200. $1200 matches the historical pattern of crashing to the old highs. Might be too obvious, so it might not happen that way again. I'll be ready if it does. If it doesn't, I've got some other interesting things I'm looking at.

TwelveOhOne's picture

By the way, the tax man might get reports from Coinbase et al, but Coinbase is not the federal government so any money I receive from them is not taxable.  You merely need to file form 4852 to correct Coinbase's erroneous assertion that you earned taxable income.

Pete Hendrickson has a great book I just finished, "Cracking the Code", which you can order from his website which also has a ton of great info: http://losthorizons.com

About to put it in practice myself, just waiting for the transcripts to get here.

syzygysus's picture

Nice clear and concise.  Thanks.

Silver Savior's picture

I transact in Bitcoin and they are fairly quick

explosivo's picture

If ZH is going to update us every time bitcoin goes up a hundred dollars or so, this is going to become the bitcoin blog. I'm ready for this. 

MickV's picture

How is "Bitcoin" a store of value (money) rather than a speculative investment? Will employers pay in Bitcoin, knowing that they will have to pay more for labor from one week to the next? How is it a value of your life's work? I want to know.

Making Merica Great Again's picture

If you knew what was it, you would be dumping everything you have to get bitcoins right now. Good luck :)

TheytookERjobs's picture

Dude sign up to coinjar buy bitcoin than buy iota and emunie with it.Adk questions later. Chopper would be proud

tmosley's picture

It will level out as more people use it. Right now, it accounts for maybe 1/100th of 1% of all transactions (an absolute guess, feel free to correct--its a tiny number though). If it goes from that level to 1% of transactions, that is a 100x increase in price. Once it is 25% of transactions, it can't go up more than fourfold in terms of real purchasing power all else held equal.

If use levels off, price will level off. It did after the last bubble burst. Remained remarkably steady in dollar terms for what? Two years?

TwelveOhOne's picture

Some employers have been paying salaries in Bitcoin for years, now.  The salary is set in dollars, so the amount of Bitcoin that the employee receives varies from one week to the next, not what the employer has to pay out.  Many likely purchase the BTC immediately prior to delivering it to the employee's wallet, thus minimizing their volatility risk.

MickV's picture

How do you know the price of anything when the "value" of the currency constantly changes? Just asking.

tmosley's picture

The market will tell you.

MickV's picture

Explain how there are only a finite number of "Bitcoin". How do people keep buying them then? Who sets the amount? What if EMP takes internet down, how do you get to your Bitcoin?

tmosley's picture

Some people sell, some people buy. Some people mine. Same as gold, only there is a set amount of bitcoin, while the amount of gold in the universe is unlimited.

There will be no EMP attack.

MickV's picture

How do you know that there will be no EMP attack? If the bankers want to do away with BTC wouldn't they merely disrupt the Internet, and destroy faith?

affirmed_78's picture

Yeah good luck with that.

Collectivism Killz's picture

A nation wide EMP would take dozens of hydrogen bombs being detonated simultaneously at 25k feet accross the US. The elites may be desperate, but that is well beyond their capabilities to do discretely. I would propose that banks are going to start riding the wave of cryptos to profit. They could really give to shits about the ideals or risks. The banks only worship profit, whether that is through facism, communism or demonocracy, they could really care less. Mark my words, banking money will and probably has already started moving into cryptos. Specifically, ETH and Ripple

Dangerclose's picture

Wrong. Altitude is more important. 1 HEMP at 350 miles altitude can wipe out the electronics of 85% of the CONUS if centered over say Nebraska. A mere 3 could get every last corner but also affect Mexico and Canada

TeaClipper's picture

Try studying what a worldwide EMP attack would entail. Because if its not worldwide then its not going to take the Internet, or any blockchain down. If a nuclear armed country does go for an EMP attack, however localised that maybe, then we will all have much bigger problems to face than fretting over our crypto

tmosley's picture

Doomers are always wrong. Doomers think there will be an EMP attack. Therefore, there will be no EMP attack.

Planning for such an event is like planning for a meteor strike, or a supervolcano eruption. It doesn't really matter what you do before something like that, you're not going to survive it anyways.

As for disrupting the internet, the economy is far to dependant on that. If it were shut down, the economy would collapse, and they would lose a ton of money. Many other places have tried various methods to disrupt it. None have worked. Most governments are now seeing that there is nothing they can do to stop it, and are either embracing it (as Japan has), or are laying off so they don't look like idiots when everyone can see that they can't enforce their own dumb laws.

TwelveOhOne's picture

Also from reading Jim Stone, freelance journalist's site http://jimstone.is , it seems that most electronics sold these days are configured with the ability to remote disable them -- so whether there were nuclear explosions or not (and, whether they exist or not), "the grid" will go down and we'll all have our devices, cars, etc non-functional.

Personally I don't believe in nuclear explosions.  Reactors, certainly, having worked at one.  Explosions?  No, lots of fakery around the imagery.  Seems Stanley Kubrick was hired to make nukes seem real (Dr. Strangelove) and later hired to make space seem real (2001/moon missions).  Good theater; but, it's theater.

sudzee's picture

Cryptocurrencies (800 currently) require real assets to purchase. As deposits in the central banking system exhaust themselves there will be nothing left to bail-in thus the ponzi will collapse. A few more months and central bank printing will be a meaningless drop in the bucket. 

hadriansnightmare's picture

Bitcoin at 3000?  I was always intrigued with the tech (although barely understanding it)  and own PM's.  I owned 6 Bitcoins back in the 400-600 era and made a decent return.  Bot some Bitcoin, Ethereum, and Ripple (although I am no fan of Ripple for a number of reasons) last month.  I hope we get a crash so I can reposition for an all or nothing 5 year hold.  I am intrigued how many here have no idea as to the basic concept of this tech.  This is a fairly cutting edge blog with some very bright people on board.  This only proves to me-this is no bubble.   Please Bitcoin crash away.

affirmed_78's picture

Another article desperately hoping this is a BTC bubble.  It isn't going to feel good watching this climb and climb without any skin in the game.  

 

What people don't get is there are real use cases for BTC.  People want to own it, and that's not changing anytime soon.  Even higher transaction fees (not really that high, $2-$3 to transfer) will only serve to make BTC more of a digital gold/store of value.  What other currency can you control the keys securely and digitally without any 3rd party middle man or government censoring your transactions?  There will likely be other winners too, as ETH has shown.  People talk about there being a zillion other digital currencies.  Yeah, but none with the network effect of BTC.  What exactly is it worth?  I don't know, but we'll find out.

OverTheHedge's picture

As a non-bitcoin-owner, I can either a)  buy some now to speculate (which is not a currency, not money, but bubble monopoly-money playing), or b) buy some now to transfer to someone else as a transaction. With the price leaping all over the place, how do I know either how many bitcoin to send, or how much in $ terms it will actually cost me, given the time delay for transactions and volatility?

Right now, bitcoin is not useful for me. When the price settles, I'm all for it and look forward to using it for transactions. I don't speculate, because I don't gamble, because I always lose. Losing hurts way more than winning feels good - I'm just that type of person - when I gamble, I know the odds are against me, so I wonder why the fuck I just threw my money away. Not conducive for good, enthusiastic bubble-mania.

TwelveOhOne's picture

Right now, bitcoin is not useful for me. When the price settles, [...]

Your issue is you're looking at it backwards.

Bitcoin's price is settled, in my mind: 1 BTC = 1 BTC.

As the Fed keeps printing more dollars, and as the utility of BTC becomes known to more and more people and they decide to convert the dollars they have (which continue to shrink due to the printing) into BTC, the price will continue to rise.

The dips are because shorter-term traders are cashing out.

The trend is up-and-to-the-right, but with some sawtooth action.

Like you, I don't enjoy losing more than I enjoy winning -- so I don't trade.  Did in the past, never with good results.

King of Ruperts Land's picture

Bitcoin should stick its nose up and be a little more snobby. If you cannot afford the transaction fees, move your business to a lesser coin. We are running the most premium super secure electronic store of value on the planet.

Look at the network hash rate. That is not free or cheap.

GodHelpAmerica's picture

Russia developing its own version of ETH.

ZH needs to cover this ASAP. What if Russia is the first of many?

I can't imagine this is good news for the original platforms...

https://www.bloomberg.com/news/articles/2017-06-06/putin-eyes-bitcoin-ri...

Silver Savior's picture

The problem I have with bitcoin and some of the other crypto is that if I just trade this stuff as currency the value of it keeps going up. So I don't want to get rid of it in transactions anymore. I may be compelled to just sit on it and use other means of payment. 

These crypto currencies depend on transactions being made so if too many people decide to store it that probably would not be good. 

tmosley's picture

It will stop rising once adoption stops rising. It is rising now because it is being adopted in east Asia. This won't last forever. Good opportunity to make some profits, but foolish to go all in, because it looks very bubblicious, and we should all know by now that even new paradigms can create manias and thus malinvestment leading to a burst.

echoes's picture

It's called gresham's law (good money drives out bad), the good money is used as a store of value til saturation is met. It's why i hodl, and use it only if i have to.

NaiLib's picture

"Russia creating their own,,," "FED creating their own..."ECBcreatingtheir own..." etc etc ALL Ats are created to mine and sell for Bitcoin. Bitcoin will crash several more times, but that is just as it should. In the end BTC will stand there, while th rest were just a bubble

Silver Savior's picture

Damn I wish I invested in crypto for retirement instead of my 401k. They kept telling me the 401k was the best thing in the world though. Just like they were all too eager to sell me an IRA right before the 08 crash when I should have bought gold. 

I just want to move to the mountains and away from anything human.

BustainMovealota's picture

They tell you that because "they " don't  have a vested interest.  "They" can't make money off crypto-currency,, but you can.

richdemetri's picture

I don't know about bitcoin. But Ethereum's technology surely has a massive future. Bitcoins got some issues to overcome though.

richdemetri's picture

I don't know about bitcoin. But Ethereum's technology surely has a massive future. Bitcoins got some issues to overcome though.

King of Ruperts Land's picture

Bitcoin is just fine if the idiots who are trying to make it an online VISA card just go somewhere else.

Bitcoin doesn't have a scaling problem or transaction limit problem. It has a freeloader and low value customer problem.

When the Bitcoin community (the miners) finally figure out what is in their best interest, they will forget all the grand schemes of replacing VISA.

Instead Bitcoin should should see its ultimate use as replacing or at least supplementing: gold.

Silver Savior's picture

Will work for Bitcoin. Never thought I would have ever said that. Bitcoin stopped being geeky at $800.

Ripple has been facinating me a lot too. Ripple is a technology for the banks and banks have a lot of money. I bought over a thousand XRP and am thinking about getting 10k of them then sit on it. I know a lot of xrp is made but the Outlook still looks good.

Exponere Mendaces's picture

Ripple is basically "FedCoin".

Its centralized, issued by a single entity.

More is issued by the same entity when they feel like it. It isn't algorithmically controlled.

There is a huge float out there locked-up by the same people. This is called a "pre-mine" by some crypto currency people. Its usually indicative of a strategy to enforce artificial scarcity as a marketing technique.

Ripple is fiat, digitized.

Invest at your own risk.

 

kuro_neko's picture

the guys making REALLY rich with crypto are NOT the ones buying coins, but those SELLING them

notably selling all those new tokens or coins through ICOs, and getting tens if not hundreds of millions on Day 1, and getting even richer on day 2 with the retained amount of coins when the price in the secondary is already x3 or x10 in a few days or even hours...

This is a bubble my friends, a huge bubble. There's no telling how high it will go, but it will crash for sure

BIT-CON and ALT-CON are just a gigantic Wealth-transfer Ponzi-esque mechanism where the late buyers enrich the early buyers.

There is absolute no intrinsic value in Crypto. There are already stuff like Apple Pay or WeChat Pay where you can do instant money transfer safely in SECONDS.

People buy bitcoins or altcoins because they hope to find a greater fool to resell it at a much higher price but we all know not everybody can win in this game. There are a lot of people who got insanely rich in this bubble and those stories are enticing new people to play game. But maths don't lie. Some coins are up x100 or more !!!!

actually ETH is up x250 !!! in less than 18 months.... with near 20bn market cap if its was doing x250 again then it would reach 5 TRILLION market cap !!!! it just means the big and easy gains are BEHIND us. We're in the overheated phase, and when the market goes down, there's no telling when, under its own weight, then it will utterly collapse.

In 5 years, most of the coins will be valued less than 5-10% than what they are worth today.... and its not shocking its just going back to what it was worth a few months or weeks ago.... LOL

 

PS in the case you don't know crypto is NOT really anonymous. Bitcoin exchanges have KYC procedures. People who thought they could hide money with Bitcoin have actually been arrested. There are techniques to follow the trail, and Bitcoin is as safe as your PC or your mobile. which means no safety, the NSA has already access to all your passwords and every file... LOL

gunzeon's picture

"BIT-CON and ALT-CON are just a gigantic Wealth-transfer Ponzi-esque mechanism where the late buyers enrich the early buyers."

Well, this cannot be argued against, most here will agree that is the case.

But what we also need to note are:

 - Bitcoin is first on the scene, goto crypto for bank-free value transfer, first on the block and going nowhere anytime soon.

 - bitcoin works, never been hacked in the past few 4-5 years

 - sure, does not have whistles and bells most of us cannot understand anyway, like eth for ex

 - sure, slow as shit - will be resolved very soon

 - sure, is not anonymous unless you want it to be

don't think ponzi, think "Network Effect". I guarantee that anybody that exchanged their coins for fiat currency is sad right now.

 

Exponere Mendaces's picture

I can tell you, in addition to your other points -- a Ponzi requires a constant inflow of people to survive. There were plenty of times after the big rallies in 2011 and such where Bitcoin was basing for a long time. Not exactly a friendly environment for such a scam.

Also, a Ponzi doesn't operate well with an asset that everyone wants - and nobody who has it wants anyone to reduce their chances of getting more. Its typically the reverse, where they try to push it on everyone.

Me, I don't care if no one in here buys anything. More for me.

 

Silver Savior's picture

I bought Royal Canadian mint silver bars with some of mine like hell I wanted fiat. Just was taking out what I put in. Now my crypto is just profits.