There’s no end to the excitement in the cryptocurrency space! In the last 30 days, we have seen all-time highs in Bitcoin, Ethereum, and other cryptos, followed by drops averaging 25% in value in just days.
If you have been tracking cryptos for any length of time, you know by now that Bitcoin (and other cryptos) are volatile. It is not unusual to see 5% to 10% swings in a single day, sometimes more. The good news is that volatility is one of the reasons that Bitcoin has rapidly quadrupled this year alone. (There are lots of other positive reasons too.)
What we are seeing right now is a pullback, and for many, a great buying opportunity. Although $1,000 Bitcoin was considered a great price back in January, and approached $5,000 just last month, the current pullback actually shows the strength of Bitcoin. Bitcoin seems to have found a new “support” level, a price that represents a “higher low” than just a few months ago — in fact, much higher. It seems that Bitcoin doesn’t want to go much lower that the high $3,000s at this point, due to the continued demand for cryptos as people grow their portfolios and new investors jump in.
Recent news reports have also caused some concern, especially those who do not really understand cryptos and the future of digital money. Last week, China banned all ICOs within the country. However, I did not find this announcement very surprising. China has a long history of controlling its currency and its citizens’ use of it. ICOs, or Initial Coin Offerings, are generally not legal in the US either, except in certain circumstances.
ICOs can be seen as the equivalent of a “private placement” investment in the US. This is a type of investment that is not regulated by the SEC (Securities and Exchange Commission), and is therefore only available to “qualified/accredited investors”. Those are people who have at least $1 MILLION in liquid assets to invest (not including houses, cars, toys, retirement funds, etc.)
The Pot Calling the Kettle Black
This week, CEO of J.P Morgan Chase, Jamie Dimon, equated Bitcoin and cryptos with “tulip mania” that occurred in Holland in the 1600s. This is a strange and quaint reference, one that refers to a bubble in price. Clearly, he does not understand cryptos. Or, he has another agenda. (I’ll let you be the judge.)
Dimon is at the helm of the largest bank in the United States. He has also avoided every litigation and criminal accusation that has come his way, from the $10s of BILLIONS lost by the so-called London Whale in 2012, to the Bernie Madoff scandal where his bank, under his watch, allowed $100s of BILLIONS to be swindled. And, his bank received more BILLIONS during the Great Recession bailout in 2009.
He seems to have a short, or selective, memory when it comes to his organization’s own “high crimes and misdemeanors”. As such, his word has very little importance or relevance in the crypto world. In fact, his opinions are generally considered to be the opposite of what is actually happening in the world by crypto experts.
Dimon is not a visionary. He is a crony capitalist, one that does not operate in a free market, but rather in a highly manipulated market where his bank never loses. Well, not until Bitcoin and the threat of money moving back into the hands of its rightful owners, those that earned it. (I can hear my Libertarian friends cheering.)
More Regulation is Coming
As for regulation, yes, expect more. Lots more. Some proposals will succeed and some will not. Banks will cry foul, at least those that even know about Bitcoin. Central banks will continue to lose power, a process that started long before Bitcoin. And, world government will continue to lose control over their citizens by losing control over the money supply, again, something that Bitcoin did in fact help usher in.
Although these organizations are trying to reign in the crypto movement, it won’t work. The genie is already out of the bottle. There are many important and necessary reasons for cryptos, such as preserving people’s’ wealth in high-inflationary places like Venezuela and Argentina, allowing people’s’ money to move across country borders without the government permission for countries like China, and allowing the over 3 BILLION “unbanked” people in the world to have access to financial services through the blockchain, something they never had before.
Stay the Course
Although not every crypto will survive — in fact, I believe that most will not — the top cryptocurrencies with relevant reasons to exist will continue. Of those, I believe that Bitcoin and Ethereum will lead the way.
Remember that hardly anyone knew about the internet just 25 years ago. Yet today, it is indispensable in our business and personal lives. The same will be true of cryptocurrencies in the years ahead. And, I believe the valuations of cryptos will grow to staggering levels by today’s measures.
CBNC’s Jim Cramer, host of the Mad Money show, said he believes one Bitcoin could be worth $1 MILLION some day. I think he’s right!
As the expression goes, “a rising tide lifts all boats”. That’s what I see for cryptos today and into the future!