Bitcoin Bounces Back Again - Beginning Of The End... Or Bump In The Road?

A crypto-Christmas miracle? Bitcoin is now unchanged from the pre-Friday bloodbath, having scrambled higher for the last 24-48 hours as much of the world enjoyed a day off.

 

The entire crypto space is rallying once again today but the question remains, is this another dead cat bounce on the way to 'zero' or is Tom Lee, John McAfee, and Mike Novgratz right, this is a bump in the road to $40k and beyond...

 

As The Economic Collapse's Michael Snyder notes, Bitcoin, Ethereum, Litecoin and other major cryptocurrencies have been on a wild ride this year, and over the past 10 days the volatility that we have witnessed in the marketplace has been absolutely breathtaking.  On December 17th, Bitcoin shot above $19,800 for a brief moment before it started plummeting dramatically.  At one point the price of Bitcoin dipped below $11,000, which represented close to a 45 percent decline from the record high that it had hit just five days earlier.  And Bitcoin was far from alone – virtually every other major cryptocurrency was also down between 25 and 50 percent during that five day period.  But now almost all of them are bouncing back, and at this moment the price of Bitcoin is $14,219.99.

So where do things go from here?

There are many that believe that in the short-term the price of Bitcoin will fall back toward the actual cost of production.  It has been estimated that the cost to produce a new Bitcoin is currently between three and four thousand dollars, and with the price of Bitcoin so high there is a tremendous incentive for Bitcoin miners to produce as many as possible right now.

But there are others that are convinced that Bitcoin could eventually go to zero

Morgan Stanley analyst James Faucette and his team sent a research note to clients a few days ago suggesting that the real value of bitcoin might be … $0.

 

That’s zero dollars. (Bitcoin stood at around $14,400 at the time of writing.)

To back up his assessment, Faucette made the following arguments…

  • Can Bitcoin be valued like a currency? No. There is no interest rate associated with Bitcoin.
  • Like digital gold? Maybe. Does not have any intrinsic use like gold has in electronics or jewelry. But investors appear to be ascribing some value to it.
  • Is it a payment network? Yes but it is tough to scale and does not charge a transaction fee.

Faucette also pointed out that the number of online retailers that accept Bitcoin is actually falling.  Five of the top 500 e-commerce merchants accepted Bitcoin during the first quarter of 2016, but now only three still do.

In order for Bitcoin to have a sustainable long-term future, it must become a real currency that is widely used, but many would argue that it is already being surpassed by better and newer options.  In fact, one top cryptocurrency expert recent stated that the old Bitcoin network “is as good as unusable”

Emil Oldenburg, the co-founder of Bitcoin.com – one of the world’s largest sites devoted to the cryptocurrency – recently called the cryptocurrency the “most risky investment you can make,” after he switched to bitcoin cash, which he considers to be the future.

 

"The old bitcoin network is as good as unusable,” said in an interview with Swedish tech site Breakit.

That certainly doesn’t sound promising, but so far that hasn’t stopped the price of Bitcoin from heading into the stratosphere. 

So far in 2017 the price of Bitcoin has risen more than 1,400%, and that number is extremely impressive no matter how you look at it.

Of course virtually all of that “digital wealth” could disappear in just a matter of days during a major crash.  The CEO of Patriarch Equity, Eric Schiffer, believers that Bitcoin investments are eventually heading for “a thermonuclear death”

“I think bitcoin is a ‘tower of death,’” Schiffer says. “It is going to result in the imminent death of your investment – a thermonuclear death.

 

“Right now we are looking at a financial bubble that is bigger than the tulip craze and I believe that we are headed for a bitcoin crash that will supersede any financial worries of the 21st century,” he added. “People are going to be shocked when they try to liquify their bitcoins.”

Schiffer might be right.

After all, Bitcoin and other cryptocurrencies don’t have any intrinsic value.  Essentially, they are nothing more than digital creations that only have value because people think they have value.

But those that got in back at the beginning and have cashed out now have made enormous amounts of money, and nobody can deny that.

With every form of “investing”, they are winners and there are losers.  Unfortunately, those that chose to jump in at the height of the madness could end up losing very big.  The following comes from Wolf Richter

Betting on cryptos is a peculiar form of online gambling on a global scale that requires a consensus among participants that they only buy, and that you cannot ever cash out, and now that some folks are trying to cash out, the bets for everyone else are souring. The same dynamics that pushed prices up have reversed and are causing them to crash.

But what if the naysayers are wrong?

What if this current “Bitcoin crash” is just a bump in the road on the way to $40,000?

Years ago, the price of Bitcoin crashed 75 percent at one point.  What would have happened if the early investors had all bailed out then instead of holding on until now?

Those that sold Bitcoin at $12,000 might end up really kicking themselves if the price of Bitcoin does hit $40,000 by the end of next year, and that is exactly what some top experts are projecting

Billionaire investors and highly respected analysts including hedge fund investor Mike Novogratz, prominent financial analyst Max Keiser, and Fundstrat’s Tom Lee stated that the price of bitcoin will likely surpass the $40,000 margin by the end of 2018, and achieve a $1 trillion market cap.

And let us not forget that big names such as John McAfee and James Altucher are predicting that the price of Bitcoin will eventually reach one million dollars.

To me, this is absolutely fascinating.  On the one side, you have financial experts that believe that Bitcoin is going to zero, and on the other side you have financial experts that are projecting that someday a single Bitcoin will be worth one million dollars.

I don’t know which side will ultimately prevail, but it will be a lot of fun to watch how everything plays out.

*  *  *

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Comments

PirateKing Dsyno Tue, 12/26/2017 - 11:17 Permalink

Because they are fucking idiots who don't have any idea what they are writing about."with the price of Bitcoin so high there is a tremendous incentive for Bitcoin miners to produce as many as possible right now."No jackass, that's not how the block reward works.  You can't choose to mine more just because the price is high, it's not an actual fucking mine.

In reply to by Dsyno

Dukes PirateKing Tue, 12/26/2017 - 12:06 Permalink

Saw an article on Yahoo the other day that claimed North Korea was using Bitcoin mining and/or trading to fund their nuclear ambitions. I read it as setting the stage for some sort of take down or regulation of Bitcoin and other crypto's.  If it's used for transacting on the "dark web" a la Silk Road and also for evil states nuclear programs, how much longer can it remain a legal, usable thing?  TPTB will take complete control of it before long.  

In reply to by PirateKing

Greyhat kochevnik Tue, 12/26/2017 - 12:34 Permalink

Most people don't understand the driving force behind Bitcoin."Like digital gold? Maybe. Does not have any intrinsic use like gold has in electronics or jewelry. But investors appear to be ascribing some value to it."As long as these investors and the traders can buy Real-Coke (tm) for Bitcoins, delivered to their mailboxes, Bitcoin will have an intrinsic value for them. As long as this works, no matter what others say, the will ascribe value to it. The bigger the Bitcoin acceptance in the drug market, the higher the value.If the "war on drugs" stops or is won, then the Bitcoin value will tend to zero. But how likely is an "end of war on drugs" scenario?

In reply to by kochevnik

null Greyhat Tue, 12/26/2017 - 13:00 Permalink

The drug money always had a safety in some currency ... but everyone wants USD.

Once USG even hints that it will scrutinize BTC transactions, the BTC advantage will dissipate. In fact, it probably already happened and they are just busting-out their monopoly-money bank by selling to retail. And retail obviously cannot value something which cannot be valued by professionals.

In reply to by Greyhat

Citxmech Greyhat Tue, 12/26/2017 - 13:00 Permalink

Cryptos' functionality in transacting business is its "inherent value."  The valuations you see are based upon speculation on the potential for the technology.  Nothing wrong with that - that's how new new tech gets traded at the cusp of adoption.Are we at the bear trap or bull trap?  Who knows?  It wouldn't be either if folks knew for sure - that's why there are trades to be made here.  Ante-up and place your bets.  If this market is going to work we need bulls and bears.Where the tech goes should be interesting though.  For you old-timers, did you back VHS or Betamax?

In reply to by Greyhat

kochevnik Citxmech Tue, 12/26/2017 - 15:19 Permalink

There is no inherent value in a container.  The value is your coins do not spill on the sidewalk for scavengers.  You confuse container with contained.  If gold and diamonds were 100% liquid you could trade money directly.  But even if you have two diamonds best to put them in bag.  Bag can be crypt, trustee account or something else

In reply to by Citxmech

Greyhat kochevnik Tue, 12/26/2017 - 18:43 Permalink

It's the same as with central bank printed notes, only trust makes them more than printed paper, gives them a value. We trust in the power of the state that says "this is legal tender". Paper / fiat money contains nothing but trust, bitcoins contain nothing but trust, without trust both are empty containers.Bitcoin is a western kind of hawala shadow fund transfer system. We just replaced trust in people by trust in the math behind a payment token generation system.The Bitcoin exchange rate can be calculated by summing up the money value of the goods traded via the Bitcoin transmission system and the time to cash the bitcoins used back in. If the size of the markets accepting Bitcoins for payment transmission grows faster than the number of bitcoins, then the bitcoin ./. money exchange rate goes up. If that transaction volume shrinks the rate goes down. Add some extra demand for dealers storing Bitcoins and speculation with them.As long as traders and investors can order Real-Coke(tm) with it they will believe in Bitcoins value, as a testable, working payment token. :) (When the Bitcoin price started skyrocketing i thought "What the fuck, did the cartels go digital?")

In reply to by kochevnik

midlife Greyhat Tue, 12/26/2017 - 20:14 Permalink

While Bitcoin is used on the black market predominately that's not its main source of value, in fact bitcoins blockchain is PUBLIC governments and the whole world can see where you sent that bitcoin if they know your BTC address. Bitcoin is used because it's the earliest ecoin to gain widespread adoption but as drug money realizes the privacy issue many are now beginning to demand other forums of ecurrency that are anonymous such as Monero,Dash,Zcoin.Hence there increase in price especially in the case of Monero as its basically what the entire currency is promoted as. Bitcoin eventually plans to address this in a fork to enable fungible mutability within the coin network providing some privacy.

In reply to by Greyhat

midlife Mountainview Tue, 12/26/2017 - 20:19 Permalink

Bitcoin is just a speculators/investors market the avg. transaction fee for BTC (bitcoin) is around $15 and it can take up to 4 days for the order to process, buut because it's the first Cryptocurrency and therefor gets news coverage people flock to it in droves. Currently BTC is mined using ASIC technology primarily by china 95%+ by the same centralized miner group making them billions where do you think all those fees go? Also since it's ASIC it basically means avg. Joe can't profitibly ''mine'' it,i n fact you'd end up losing money if you were to use your standard GPU equipment.This is why I don't buy BTC and expect the giant to fall or at least quit gaining momentum once other superior alternative coins (altcoins) pick up traction. DoWN BTC!Here's a video for your viewing pleasure of a chinese BTC miner operation https://www.youtube.com/watch?v=K8kua5B5K3I

In reply to by Mountainview

affirmed_78 IH8OBAMA Tue, 12/26/2017 - 10:51 Permalink

Bitcoin is a simply a better form of money.  Once it has reached full scale, probably within 10-15 years, you'll be laughing at how we used to get our money from government.  Why would you want USD when you can have a decentralized, limited, censorship resistant form of money?  Governments will soon lose all power over citizens.  Taxes will no longer be forced, they'll be voluntary, because there will be no way to enforce the tax code.  What does that mean?  Less bloat, no more entitlements, no more wars.  Freedom.  

In reply to by IH8OBAMA

HillaryOdor affirmed_78 Tue, 12/26/2017 - 11:23 Permalink

"you'll be laughing at how we used to get our money from government"Right, because there are so many examples of cultures slowly turning away from statism and advancing free markets.Oh wait, it's just the opposite and markets typically only get liberalized in one of two scenarios, either in the context of a violent revolution or when dictatorial regimes (typically Marxist/Leninist) realize they are incapable of planning an entire economy themselves and they would be able to loot more by slightly opening markets up to more freedom, but never a free market of course.  That would just be crazy.  That's pretty much it, one of those two scenarios.  I would like to see some historical examples of a slow creep towards capitalism, but I've never heard of a single one.I need some of what you're smoking.

In reply to by affirmed_78

HillaryOdor Spaced Out Tue, 12/26/2017 - 11:48 Permalink

What time period? It must not have lasted very long.  What went wrong? I'm pretty sure my definition of capitalism is different than yours.  Capitalism to me is absense of state.  It is not simply privatization.  Defining capitalism as the existance of private property is rather meaningless.  It is a necessary but not sufficient condition for capitalism, as regulation leading to cartel formation is the exact opposite of a free market (as all state action is), regardless of the fact that cartels may be privately owned.  So when was the power of the state shrinking to any significant degree?

In reply to by Spaced Out

HillaryOdor Spaced Out Tue, 12/26/2017 - 13:04 Permalink

They may seem dumb but they are just rhetorical questions, designed to get you thinking for a change,  a fruitless endeavor I admit.Anyway you're the one who brought up this mythical period of creeping capitalism that never happened, the one you can't say anything else about because it doesn't actually exist and never happened unless you redefine what capitalism actually is.Maybe I just like to feel smart by probing the minds of inferiors such as yourself.  It's a cheap dopamine hit.

In reply to by Spaced Out

HillaryOdor Spaced Out Tue, 12/26/2017 - 13:25 Permalink

It also says a lot about you, for example that you don't know what the definition of the word "maybe" is, and you also can't spot a joke from a mile away.  It makes sense why you couldn't get "capitalism" if "maybe" is too big a challenge for you.  At least you didn't object to being my inferior.  I can only hope you know your true place in other areas of life as well.

In reply to by Spaced Out

HRClinton Ring_Of_Fire Tue, 12/26/2017 - 11:23 Permalink

I recall people like you, who also said: "Bitcoin to $1000, just cause people say it's worth it, haha".Had I listened to know-it-all chickenshits like you, I would be just as poor as you. As it is... I loaded up on BTC in the double digits, HODLed and am now worth millions. And you don't think that I hedged and diversified some of my BTC into other growth cryptos, or into hard AU bullion? The latter alone exceeds my initial Investments by 3x. That would be like  my unit price for AU being 3x its current manipulated price, i.e. @ 3 x $1280. Is your Au worth @ $3840?  No, nor anytime soon I'd imagine.What you got to say now, butthurt BiTCh?

In reply to by Ring_Of_Fire