In the last few weeks, the pricing action in the cryptos has become somewhat manic. Yet while everyone is wondering whether Bitcoin is a bubble or not, it’s interesting to see that one of the more outspoken critics in J.P. Morgan has silently been changing its tune.
Certainly speculative money has entered the market. Gone are the days where the price barely moves. Instead when investors are wondering if Bitcoin will break through $13,000 per coin, the price ends up jumping to $14,000 or $15,000.
Meanwhile, despite J.P. Morgan CEO Jamie Dimon’s prior claims that Bitcoin is a bubble and anyone who buys it is “stupid”, the bank continues to get more involved. According to the Wall Street Journal J.P. Morgan is now considering getting involved in the upcoming Bitcoin CME futures trading, as well as making it accessible to its clients.
Which is perhaps just further evidence that it’s wise to do your own research and watch what the banks do rather than what they say. After all, while Dimon sees it as a fraud, computer expert and Apple cofounder Steve Wozniak gushes about the technical capabilities of the crypto sector as a whole.
“Elsewhere in the discussion, Wozniak added that when he first learned about bitcoin, he admired its mathematical properties but did not understand how the blockchain worked. However, now that he thoroughly understands it, he is a major proponent of both blockchain technology and cryptocurrency.
In addition to bitcoin, he says that he is excited about smart contracts platforms like Ethereum. He believes that smart contracts will open up as many possibilities as the “tens of thousands of [software] programs” that no one could have imagined before the invention of computers.
“There is a lot more to this cryptocurrency than just the Bitcoin,” he concluded.”
Given the interest that is building in the sector, the volatility is not likely to slow down anytime soon. Which makes it an incredibly challenging environment in which to do short-term trading.
However what can simplify many decisions is really thinking about what experts like Wozniak and others have said. And then consider Bitcoin adoption is still only around 1%.
If we really are seeing the beginning of money flowing from the failing debt-based system into cryptos as a superior alternative, prices would have to continue to rise. Keep in mind that the total value of the world stock markets is about $69 trillion, and if just 1/69th of that money left the stock markets and flowed to the cryptos, the $450 billion market would have to triple.
Certainly deciding whether to get involved in cryptos at current levels isn’t an easy decision. But taking what the bank said with a grain of salt and looking at the underlying fundamentals gives you more solid base from which to decide.
After all, with Price Waterhouse Coopers now accepting payment in Bitcoin, some business preferring Bitcoin over Visa due to lower fees, and foreign government turning to cryptos as their paper currencies fail, there’s evidence to suggest the rise in pricing will continue.
December 11, 2017