Whitney Tilson: "I'm Calling The Top Of The Cryptocurrency Madness", Admits Bitcoin Could Hit $1 Million

There is just one thing that cryptocurrency bulls love hearing more than Dennis Gartman bashing bitcoin, and that is Whitney Tilson bashing bitcoin. The reason is the same: just like Gartman, Tilson has rarely if ever been right about anything -in fact, it is almost safe to say that he has been largely wrong about everything - with the added bonuses that unlike Gartman, Tilson has blown up not one but two "hedge funds" (which really were copycats of other hedge funds).

So here is the good news: in his latest letter to... well, it's not clients as he no longer has those, so probably people who don't know they can unsubscribe from his spam mass mailings, Tilson writes: "I'm calling the top of the bitcoin/cryptocurrency madness." Naturally, the email was sent out when bitcoin was about $1,000 lower.

Here are Tilson's "arguments" for why the top of bitcoin is here... even if as he concedes, "bitcoin could go to $1 million" (how Whitney reconciles those two is anyone's guess).

I'm calling the top of the bitcoin/cryptocurrency madness

 

1) In the past week, I’ve been asked about bitcoin by a parade of the least-knowledgeable investors imaginable – and the only times such foolishness has happened before in my 18-year career were at the peak of the internet and housing bubbles, so I’m calling a top right now.

 

Blockchain technology is real in the same way that the internet was real back in 1999 and housing prices tend to go up in the mid-2000s – in other words, a good idea taken to absurd extremes is NOT a good idea!

 

That said, the greed and speculative nature of humans is inherently unpredictable, so for all I know bitcoin could go to $1 million.

 

But I do know the ultimate outcome: smoldering rubble, a lot of finger-pointing (where were the regulators?!), and a lot of tears and empty bank accounts, especially among those who can least afford it.

 

I don’t often quote our Malignant Narcissist in Chief, but I will here: “Sad…”

 

2) Trust me: run, don't walk, to watch this hilarious, clever four-minute Daily Show segment on bitcoin and other cryptocurrencies: The Rise of Bitcoin and Other Stupid Meme Currencies, https://youtu.be/nRItzSX0aCM

 

Here’s the opening by Daily Show correspondent Ronny Chieng: “Cryptocurrency: is it some fake sh*t some fu*king nerds made up on the internet to steal our money, or is it the future of finance? There’s no way all these people buying cryptocurrency have any idea what the hell they’re investing in!”

 

Other brilliant moments:

 

CNBC guest: “If you imagine bitcoin as a gold coin, Ethereum is a coin that has a magic spell in it.”

  • Chieng sits in a bubble bath explaining things (a scene stolen from The Big Short) (bonus: full frontal nudity – alas, the best part blurred!)
  • Chieng asks Joe Luben, co-founder of Ethereum: “Why do so many suckers on the internet, excuse me, sorry I mean people, believe fake money has value?” He played it straight, answering: “Ether is real…”
  • Chieng says “This is America, so I decided to create my own cryptocurrency, but that has to be an incredibly complex…” [on the screen, he goes to a web site called “Create your own Cryptocurrency” (I just Googled it and there are 1.83 million hits!)] and concludes: “I did it! It literally takes 10 minutes to go on a website and create your own coin.”

 
Then he tries to pay a sidewalk hotdog vendor and a taxi driver with his new Chieng-coin, and when the taxi driver throws him out of the cab, he lectures him: “Remember this moment, when you had a chance to jump on Chieng-coin and you didn’t!” – hilarious!!!

Meanwhile, bitcoin hit a new all time high of just shy of $20,000 earlier on Sunday, and just hours before the CME becomes the second US exchange to launch bitcoin futures as institutional adoption of the world's best - and most volatile - investment grows exponentially.

Comments

blentus Sun, 12/17/2017 - 11:02 Permalink

Noone knows what will happen, so it would be nice if all those random guessers would stop guessing.Also, random idiots thinking they can create a new crypto currency, like Bitcoin or Ethereum, on the website certainly seem like they know what they are talking about. Everyone should listen to them.

Dutti overbet Sun, 12/17/2017 - 11:16 Permalink

Tilson states:"I'm calling the top of the bitcoin/cryptocurrency madnessThat said, the greed and speculative nature of humans is inherently unpredictable, so for all I know bitcoin could go to $1 million."What a useless, foolish statement.According to that, if I buy Bitcoin, I could now lose a maximum of $20'000. On the other hand I could gain $980'000.A pretty good risk/reward ratio, it seems to me.

In reply to by overbet

Escrava Isaura a Smudge by an… Sun, 12/17/2017 - 12:50 Permalink

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:"Times New Roman";
mso-bidi-theme-font:minor-bidi;}
Whitney Tilson: "I'm Calling The Top……….. The top will be when we don’t have to listen to guys like you anymore. So, we’re not near the top yet. We have quite a few years to go. How can you tell? Oil depletion and price. Nothing else matters.  

In reply to by a Smudge by an…

JimmyJones Endgame Napoleon Sun, 12/17/2017 - 11:49 Permalink

It's profitable because you're not trading in dollars you're trading in Bitcoin or ethereum normal transaction rates do not apply because once again you are not operating within a typical currency system the rates for transfer or much lower and based on percentages so yes they do get a percentage cut of that tiny transaction which is extremely smalll but it is a profit to them nonetheless because those little transactions add up

In reply to by Endgame Napoleon

MadHatt a Smudge by an… Sun, 12/17/2017 - 14:12 Permalink

Read the whitepaper.https://bitcoin.org/bitcoin.pdf //editTheres only 21million bitcoin.All of them will be mined around 2140.If the transaction fees didnt go back into the pool to pay the miners, no one would mine it anymore, and the entire thing would fall apart.Thanks for the downvote... you dont know whats going on, and dont want to learn. Spot on.

In reply to by a Smudge by an…

sessinpo MadHatt Sun, 12/17/2017 - 15:53 Permalink

MadHatt    Transaction fees are put back into the blockchain to be mined again. Coinbase doesnt get that money. They charge a premium on spot price.-----Well no. You clearly state the fees are mined again. Fees do go to miners for verifying transactions, but they are not mined again. Once bitcoin is mined, it can not be mined again. They can be spent or used again, mayve that is what you meant.And if you understood the whitepaper, you'd know that the coins mined never left the blockchain in the first place so therefore they can't be put back into the blockchain. The blockchain is simply a ledger of transactions. The miner that gets credited for mining the bitcoin gets the fee(s) for the transactions contained within that block mined.  

In reply to by MadHatt

MadHatt sessinpo Sun, 12/17/2017 - 16:55 Permalink

The fee is a variable amount depending on speed and size of amount you want to send.Sending at the lowest speed will mean your transaction is sent within 25 blocks at a cost of 0.00128886 BTC/kBWithin 10 blocks costs 0.00230387 BTC/kBWithin 5 blocks costs 0.0034278 BTC/KbWithin 2 blocks costs 0.00378581 BTC/KbNext block costs 0.00567871 BTC/KbAnd yes, bitcoins are always on the blockchain. //editThe number of bitcoins per block mined is a is a varaiable that happens at determined times.First block mined was 50BTC. The Bitcoin block mining reward halves every 210,000 blocks, in 903 days the coin reward will decrease from 12.5 to 6.25 bitcoins.http://www.bitcoinblockhalf.com/It is independant of transactions sent... to a point.I was just trying to make the concept easier for someone. Maybe I used the wrong words. My fault. //double editI just assume coinbase charges a premium, I doubt they are trading and not taking a cut. They have employees and overhead and payments to meet. I highly doublt they are taking a loss at anypoint, as their servers can just go "offline" if trading drops too quick. 

In reply to by sessinpo

BarkingCat MadHatt Sun, 12/17/2017 - 17:00 Permalink

You do realize that if you are buying 1 Bitcoin using Ethereum and the price is 10 ETH for 1 BTC, your cost can simply be 10.002 ETH.The 0.002 ETH goes to cover your transaction and is split between the exchange and miners. 

In reply to by MadHatt

TheRideNeverEnds Endgame Napoleon Sun, 12/17/2017 - 13:37 Permalink

Buy all you can afford, it will be worth infinitely more in the future.

The mainstream is adopting it now, soon it will be the currency of the world and the world has trillions in money to cover. BTC is going to ramp straight into the ten figure range within the next couple years.

When one BTC=10,000,000,000 maybe you can start to consider worrying about it maybe starting to reach a top (permanent high plateau).

In reply to by Endgame Napoleon

DaveA Luc X. Ifer Sun, 12/17/2017 - 15:16 Permalink

Either Litecoin remains a shitcoin forever, or lots of people start using it, in which case it runs into the same problem.

Blockchain usage will collapse down to just the people who really need it, in this case, criminals. And they'll all use Monero because its ledger is fully encrypted so that transactions cannot be traced.

In reply to by Luc X. Ifer

blentus tmosley Sun, 12/17/2017 - 12:23 Permalink

And idiot strikes again.I've already made transactions before, to show how retarded you are, so I won't bother again.But I bet that I could do a transaction for $1.8 without even trying.Yes. not ideal, but that's what we have at the moment.At least it's not $20, as copy/pasters like yourself keep bleating about.

In reply to by tmosley

tmosley blentus Sun, 12/17/2017 - 12:29 Permalink

Your membership in the super special Segwit Club really makes you SOMEBODY, doesn't it rube?Too bad 90% of the market isn't. Even if they all figured it out today, it's nothing but a one-time bandaid. Transaction costs will increase right along the same curve as before.And yes, even $1.80 is fucking unacceptable. And it can only go up from there on your current path.

In reply to by blentus

blentus tmosley Sun, 12/17/2017 - 13:05 Permalink

It doesn't make me somebody at all.It just shows that I actually try to understand technology I am using and talking about. It shows that 90% of the market is not fucking USING the technology, but just wants to get rich quickly.$1.80 is also very acceptable. Depends on how much you are moving. I am sorry, but I am not retarded enough to buy a coffe with any crypto currency. Yet. You just go ahead.Also I don't believe, for a second, that BCH is a solution to this problem. On the contrary.It offers absolutely nothing that other 'low fee' crypto currencies don't offer already and are more stable/reliable/tested and have much better reputation and less controversy. And are faster too. BCH is only trying to hang onto brand name and confusion.It offers a lot of controversy, has shit developers ('main' product is fork of core, and still pulls code from core - 'wallet' is a fork of 'coinomi' of whatever is that shit mobile wallet called, there is NOTHING new or unique about BCH at all), has technological evangelist that is a proven liar, has a main promoter which thinks that 'debating' random people on the Internet (by repeating same set of sentences all the time, until you die of boredom) is somehow important and still can't understand why people stick with BTC.And also, fuck you if you don't know how to use SegWit or what it is. Not my fault if you can't figure out something that has been put on network in November 2016 and has been activated in August 2017.And yet, you claim to have 'used' Bitcoin.

In reply to by tmosley

blentus tmosley Sun, 12/17/2017 - 13:59 Permalink

I am not complaining, you mongoloid.I am laughing at you for being a retard and paying high transaction fees.Well, not you specifically, you have no BTC left.But anyway - if you prefer to complain about something, instead of doing something about it - works for me.edit: also, I hope you are not using any other complicated technologies. Like mobile phones or washing machines.

In reply to by tmosley

Exponere Mendaces tmosley Sun, 12/17/2017 - 16:06 Permalink

Its sad seeing how far down the Bcash rabbit-hole you've fallen.You still haven't answered my original post about BCash - how its nearly-empty blocks disrupt the "bigger blocks" narrative.Here is the transaction chart again, with averages over different timefrimes - https://fork.lol/tx/txsJust facts, but you haven't addressed it at all. If the demand for "bigger blocks" meant anything, the graph would be inverted -- but it isn't.

In reply to by tmosley

Citxmech blentus Sun, 12/17/2017 - 12:36 Permalink

When I signed-up for Coinbase, they gave me $10.00 in BTC (0.0005 at the time).  I tried to move it to an exchange just to consolidate it into something else, as I'm not really into BTC as a vehicle right now.  Long story short, the move was going to cost $14.00!  Fuck that.  OTOH, moving a few hundred dollars worth of LTE or ETH was less than $2.00.Draw your own conclusions. 

In reply to by blentus

Matt Citxmech Sun, 12/17/2017 - 12:53 Permalink

How much does it cost to move $0.50 of LTE or ETH? How much will it cost to move your $200 USD worth of ETH or LTE in a year or two? The transaction costs must constantly increase over time, to cover the ever-increasing amount of processing power needed. Maybe side-chains or multi-tier systems can work around it, I guess we'll see.

In reply to by Citxmech

Citxmech Matt Sun, 12/17/2017 - 13:49 Permalink

I have no idea.  For the record, I am not a "true believer" in the mold of Fonestar.  IMHO that twit did more to turn people off of cryptos than anyone else in ZH history.OTOH, I do think cryptos offer real utility.  My main critiques were:  1. They can be cloned in perpetuity; and 2. Because of this I was doubtful that BTC would ever cross the price of Au/Oz.  Well, I was as wrong about #2 as anyone can be wrong.  With regards to #1, it seems that the crypto market is now like the .com boom period, but where amateur small fry day-traders can play like only the big-wheels can in the regular markets.  This means that it's relatively easy to make money right now.  Of course it's also easy to lose it.  As long as you don't put more in play than you can afford to lose, the risk/reward is pretty good.  As time moves on, I suspect we'll identify which platforms the market supports, and at that time, I hope to have loged substantial positions.If I lose my ass, at least I will have had some fun and received a fantastic education.

In reply to by Matt

blentus Citxmech Sun, 12/17/2017 - 13:11 Permalink

Welcome to the club of people who can't understand the difference between an online wallet/exchange and being in control of your own money.Try using StringCoin wallet, then shit on Bitcoin when you learn that minimum transaction fee is 0.004 BTC. Yes, that is $76 at the moment.Choose the exchange that supports Segwit, use (hardware) wallet that supports Segwit. If your exchange doesn't support it, complain about it. Review the fees in advances, before transacting. Exchanges/wallets are abusing the fuck out of fees right now.Other than that - I don't know what to tell you.Go buy BCH, or other currencies, I guess. Exchanges won't reduce the fees anytime soon, since they are making an absolute killing at the moment.

In reply to by Citxmech

Citxmech blentus Sun, 12/17/2017 - 13:22 Permalink

I understand the difference between a wallet and an exchange.  I'm talking about how folks new to the system buy-in.  Can't play on Binance without cryptos so you need a place to get them.  I used Coinbase, as every other purchasing exchange that I have access to seemed to suck even worse.  At least on Coinbase, the BTC transfer cost is 10x that of ETH or LTE.  I'm not saying any of this is fatal, just that we're seeing record influxes of fiat into the crypto-space, and that's WITH huge restrictions to getting-in. That's actually a good sign, as I'm sure entry points will improve.Of course the exits are going to be a huge log jam if the market tanks at some point too, and there's not much incentive to work on that portion of the exchanges.  The personal wallet gets your long-term holds off the exchange, but if the entire crypto market crashes, you're still going to have a tough time exiting, as I'm sure most vendors will instantly stop accepting cryptos in a declining market. 

In reply to by blentus

blentus Citxmech Sun, 12/17/2017 - 14:34 Permalink

I am not in the US, thus I do not know if anything I can suggest applies to you, but...When I was getting BTC in recent months, I was getting them at localbitcoins.com. it is very convenient for me, was done using online banking and was very quick.Localbitcoins.com has much much much much smaller transaction fees than exchanges I've used. They were grouping outputs properly and were doing 'batch transactions' (for lack of better word, or me not knowing existance of that better word). If you are able to get BTC through localbitcoins.com, I would suggest you do so. Do a test run first, of course, and check tx fees before commiting to anything else.I have also heard/read that Coinbase users can move their BTC to GDAX, then transfer them out for fee of $0 (or very low fee).I do not have personal experience with this, but do a search and you should find plenty of hits that go into details.Good luck.

In reply to by Citxmech

Citxmech blentus Sun, 12/17/2017 - 14:42 Permalink

Thanks.  At this point, I'm fine with buying ETH on Coinbase and paying the couple of bucks to move things over to the exchanges.  The above observations were more for new folks who want to play on an exchange with a few hundred dollars who might get surprised by the huge range of transfer fees between coins.

In reply to by blentus

Matt tmosley Sun, 12/17/2017 - 12:50 Permalink

The downsides to cryptos are pretty big. Ever more processing power must constantly be used to keep the currency safe. So more capital and electricity must be used, just to retain the existing value. This must be maintained 24/7; otherwise, someone could spend five minutes to launch a massive attack and wreck it all. Also, what happens if America ever presses the Internet Kill Switch? Bitcoin has a lot of limitations which people have come up with lots of different solutions to, so there is the whole risk that there could be a sudden massive move to a different currency.ICOs are even crazier, since they are basically completely unregulated IPOs. Like investing in penny stocks, except there is no compliance or due-diligence or any regulatory framework at all. Someday, the tax man and other government agencies will be coming around, and people will have a lot fo work to do showing what they made or didn't make on all this. 

In reply to by tmosley