Bitcoin - Too Far, Too Fast?

Tyler Durden's picture

Authored by Peter Tchir via Forbes.com,

As Bitcoin surges above $9,250 on the open this Sunday, I have to admit to having some real trepidation at these levels.

I have been a proponent of the view that Bitcoin and cryptocurrencies would benefit from the launch of ETFs and futures.  My view is that allowing for easier 'adoption' of Bitcoin will help fuel its growth as it lets new investors participate indirectly.

I should not limit that theory to just more traditional ways to invest, like ETFs and futures, but should also include easier ways to establish wallets and to own Bitcoin (and other cryptocurrencies) the 'traditional' way.  There are a growing number of 'easy' to use guides to getting Bitcoin (I have glanced at many but haven't followed through to verify how well they work of don't work).

I am convinced that ease of access and the potential for more mainstream products linked to Bitcoin has helped fuel its surge.

But now, I am concerned it has gone too far, too fast.

I have three major concerns that could slow the price rise or even cause it to have a significant correction (yes, I am converting from bullish Bitcoin to at best neutral).

Here are the three concerns:

1. Are all the ETF and Futures launches a 'sell the news' event?  Basically the question is, while I believe that easier adoption will lead to inflows, how much of that is priced in?  Have speculators loaded their electronic wallets with Bitcoin hoping to capitalize on the expected gains to the point, there won't be more expected gains?  Understanding when something is 'already' priced in is difficult at the best of times, let alone with something as complex and growing exponentially like Bitcoin, but, I can't help but wonder.  I have felt a switch in discussions I'm having over the last few weeks.  A subtle switch, but one where the Bitcoin bulls seem more eager to name ever higher price targets, while the agnostics seem more willing to do work and think about it more, rather than in a rush to get some money into Bitcoin.  The sort of behavior that may be indicating a 'sell the news' type of environment.

 

2. There are becoming too many competing investments which are causing some investors to question how 'real' the existing ones are.  Yes, I understand that ICO's aren't necessarily dilutive, if you can purchase them with Bitcoin, but it does start to appear odd when it seems like virtually every day, someone or some entity is announcing some new variation on the theme.

 

3. Fedcoin, the potential for the Fed could be classified within concern number 2, but is really only part of a larger, separate concern - that governments or central banks will push back.  I read this week, along with a lot of other people, an article describing that Bitcoin was now worth more than McDonald's.  While that sort of article is designed to 'shock' investors, especially more conservative investors, I think it represents a larger, growing concern that the 'establishment' has surrounding cryptocurrencies.  Whether the concerns are more focused on the potential for illegal funds to enter the system, taxation, controlling 'pump and dump' schemes or making your own job more difficult to manage, I'm sensing they are rising to the surface again.  I think we have hit another tipping point where to expect a response to attempt to slow down the growth and valuation of crytpocurrencies should be expected.  Something that has risen almost a 'ten-bagger' in less than a year is bound to attract attention.  Bitcoin rebounded strongly after the China crackdown, so this fear might be over-rated, but a more organized government or central bank crackdown shouldn't come as a surprise to anyone.  The bigger question, in my mind, is whether Bitcoin can withstand that - but that is a question for another day.

I am torn, because my thesis of 'ease of adoption' seems to be playing out and in general it is a long way from being fully played out, which by itself is supportive of greater price appreciation.  But, at the moment, my concerns are winning out and I'd be taking some chips, or bits, as the case may be, off the table.

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Bud Dry's picture

"Buy Bitcoin using credit card" searches are rising quickly.

hedgeless_horseman's picture
 
Sure.
 
The Central Bankers are going to slow down the money printing... any minute now.  That will sure take the wind out of Bitcoin's sails. 
  
Just wait...
  
Any minute...
greenskeeper carl's picture

And banking systems are getting more stable by the day as well. And no other countries around the world are on the verge of instituting currency controls or outright collapsing either.

Number 9's picture

i cant wait for the opportunity to give my fiats to the hook noses for some fed coin.. is that not the a glaring example of redundancy?

God Emperor's picture

When you'll be able to pay with Bitcoin for sex, then you'll know is a winner.

Untill then jhere's something to keep your mind off it:

Chanel Christian Gray Leaked Kinky Photos

http://celebrity-leaks.net/chanel-christian-gray-leaked-kinky-photos/


max2205's picture

Remember when everyone wanted to get paid in euros 

Stackers's picture

"It's gone too far too fast"

Yep. Just like when it went from 0.001 to $10, and $1 to $200 and $10 to $1,000, and $1,000 to $10,000, next up $2,000 to $200,000

38BWD22's picture

 

 

Could very well be ($10,000 eventually to $200,000), who knows?  But each time Bitcoin takes a nice price jump, I trim my holdings a bit by buying gold.  By doing that, I have now "paid for" all my remaining BTC, mmm, gravy...

Next price level I would probably sell some at would be $10,500 or so.  But, I won't trade much of $10,500 BTC for gold, I plan to keep at least some BTC until it looks like something better will take take it down (which almost surely WILL happen sooner or later).

Prisoners_dilemna's picture

Bitcoin in pictures.  While the first one is overly simple, I agreed with it. The second photo is supposedly accurate as of today.

https://www.reddit.com/r/Bitcoin/comments/7fw3l8/there_is_real_substance...

 

https://www.reddit.com/r/Bitcoin/comments/7fzh8o/current_asset_comparison/

 

Whether Bitcoin ever becomes the worlds reserve currency or not, it appears to have found, and continues to find purchase as money.

Mine Is Bigger's picture

In my unqualified opinion, most people seem to overlook the fact that it is super easy to buy a fraction of bitcoin, unlike shares, bonds, etc.

Many people are buying $100, $500 worth of bitcoins at a time.

To them, whether 1 bitcoin is $8,000 or $10,000 is probaly not so crucial as long as they see their $500 investment going up to $700, so on.

smallblockchevy350's picture

Why the FUCK do all you guys care so much about celebrity women? Who cares about a bunch of narcissistic high-maitenance evil bitches? Why the fuck would they care about you?

You might as well jerk off to a picture of 1 billion cash, you have a better chance of actually getting the cash one day.

I love porn, been looking at porn since I was in 4th grade. But I never gave a fuck about celeb women pics for the same reasons I don't give a fuck about who won last night's pro sports game. THEY don't give a fuck about me so why should I give a fuck about THEM?

Besides, there are tons of unknown girls out there who are just as hot but with way better personalities.

I'm not against you posting these links, BTW. Keep it up, do whatever you want. I upvoted you. I'm just sharing my worldview.

On the other hand, it does feel good knowing my fiance has a nicer-looking vagina than a pro model.

Dsyno's picture

Stop upvoting "God Emperor". He's a fucking spammer, you numbskulls.

MayIMommaDogFace2theBananaPatch's picture

4th grader looking at PRON!!!

Awesome!  (as long it isn't my kid)

Son of Captain Nemo's picture

They don't call it the oldest profession for nothing that demands that "medium of exchange" and "store of value" always gets top priority before the "job".

I bet there is alot of top shelf in that profession that are smart enough to know that a digital wallet ain't where you find "control" in your money counting!

Madcow Kaczynski's picture

your site likely has aids 

thanks though

SoilMyselfRotten's picture

Not one of the somewhat diverse people in my world own a Bitcoin or have even entertained the thought. When 1 or 2 of them tell me they bought a crypto i'll start to consider its a bubble.

dasein211's picture

Me too. As soon as I see people around my water cooler start buying, I’m out.

HillaryOdor's picture

This is not a convincing argument.  Yes bubbles typically top off when most speculators have capitulated and bought in, but bubbles typically occur in assets markets that most people consider legitimate, markets with a long history of gains.  The stock and bond markets are very old and proven.  There are a whole lot of people that do not consider a <10 year old experimental software with no backing to be a legitimate asset worth holding and will never buy into it, and for good reason.  Judging the top of the bubble by the number of people you personally know invested may not be a good strategy.

GotitRight's picture

Not one CFA I've spoken with would go near it. It's a joke to them.

???ö?'s picture

CFA.  Another half-assed credential.  Just go read their study guides.  Complete joke filled with outdated conventional wisdom.  

MayIMommaDogFace2theBananaPatch's picture

The fucking IRS has guidance that they've published -- so, under the circumstances, why would a CFA treat it as a joke? 

It seems rather uninformed for someone in that industry.

greenskeeper carl's picture

I know exactly one person that has. He is always buying these random altcoins for pennies and selling them for a couple dollars. He knows its bullshit and unstable as hell, but he does make profits most of the time, which he uses to buy more bitcoin. But thats it, out of all my friends and family.

38BWD22's picture

 

 

I know just two (they found out on their own as well as I did).  I found out about Bitcoin here at ZH in 2014.

NO ONE among my family or close friends has any...

Madcow Kaczynski's picture

hey dochen,

what is the market saturation in Peru?

just curious.

 

Badsamm's picture

I live in SF and I’m surrounded by people that think they are smart. Most don’t even know the name, the few that do don’t understand the technology and fewer understand how to buy one.

dasein211's picture

It is no surprise that the more money they print the more bitcoin rises. Or the more governments try to confiscate assets the more it rises. No shame in taking profits and waiting to buy a huge dip. The only problem is that these dips seem to last only hours and A HUGE AMOUNT OF PEOPLEare waiting to buy the same dip.

smallblockchevy350's picture

Get on Gemini and put your limit orders in.

hmmmstrange's picture

There are 800 billion reasons to buy bitcoin in Saudi Arabia.

Mr. Universe's picture

A fellow trader and dear friend told me years ago when I worried about selling too soon. He said son, "I never lost money taking a profit". Advice that was for me, a day late, but that's another story.

Secret Weapon's picture

Actually, pigs get fat - hogs get slaughtered.

tmosley's picture

Your friend has never experienced hyperinflation then.

Putrid_Scum's picture

+1,000,000,000,000,000,000....X 10

SILVERGEDDON's picture

Legacy savings, silver, gold, land, and tools of freedom. 

Your " I don't give a fuck money " ?

Sure, toss a smidge at crypto. Just don't bet the farm on it - ever.  

dasein211's picture

Putting everything in 1 place is always retarded investment advice.

SILVERGEDDON's picture

You would be amazed at how many people think betting the farm " on a sure thing " is sage investment advice. 

Snowflakes gonna melt.  

38BWD22's picture

 

 

Bitcoin has been very good to me (just lucky).  But each time it creeps to over 1% of my net financial holdings, I trade a schnitzel of BTC for gold.

That has worked out very well.  Take some profits if you have been as lucky as I have (and there are many who are way ahead of me in BTC/electron wealth)!

SILVERGEDDON's picture

Does that mean if Bitcoin crashes, your card balance goes back to zero from negative infinity  ?

lickspitler's picture

Winners are grinners. Haters gonna hate.

Badsamm's picture

I hope it dips big as I will buy some more.

iamrefreshed's picture

Pretty sure the CC companies won't mind collecting their 20%+ rates whether or not the price rises or falls. In the end the banks always win.

Iconoclast421's picture

You dont say? $10,000 for something that I mined in 2011 for 5 days on my pc and then forgot? Give me a frickin break. Why not jsut go peddle tulips on the street. You might find a few suckers.

dasein211's picture

It took you 5 days?!! It only takes the FED 5 minutes to add zeroes to those wealth accounts!! You sir are surely being ripped off by Bitcoin.

Winston Churchill's picture

So they really don't care how much it costs to takeover BTC ?

You guys cannot have it both ways.Just who are those few holders that own nearly all BTC ever mined ?

Lots of ways to skin a cat.

adolphz's picture

Some really stupid comments here,