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Ex-CFTC Chair: Trump Admin Coordinated to Pop 2017 Bitcoin Bubble

Former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarclo says that the Trump administration coordinated to pop the Bitcoin bubble of late 2017.

They did this by introducing Bitcoin futures on the Chicago Mercantile Exchange (CME). Specifically, Giancarlo says:

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”

The theory was that institutional money would tame the rapidly rising price of Bitcoin on the spot markets, as Giancarlo says: “We believed that, should bitcoin futures go forward, it would allow institutional money to bring discipline to the value of the cash market. And that’s exactly what happened.”

Indeed, the Bitcoin bubble of 2017 peaked at USD 20,000 a day before the launch of Bitcoin futures on CME, after which point the price of Bitcoin began to crash, precipitating the bear market of 2018.

Apparently this decision was driven by the events of the 2008 Great Recession, when a massive economic bubble collapsed and caused widespread loss. Regulators believed that it was safer to pop the Bitcoin bubble than to let it inflate to its maximum size, since then when it pops the losses would be less. Of course, cryptocurrency users, traders, and investors who collectively lost hundreds of billions of USD when the 2017 Bitcoin bubble popped probably disagree with this ideology, since perhaps the bear market would have not been as severe if CME Bitcoin futures were never introduced.

 

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Saifedean Ammous Says Bitcoin “Completely New Animal”, Built to Soar

Saifedean Ammous Says Bitcoin

The latest Tweetstorm to hit the crypto space sees famed Bitcoin economist and author of The Bitcoin Standard, Saifedean Ammous, insist that the world’s most used cryptocurrency cannot be compared to bubbles and is a “completely new animal” that is designed to rise in value with unprecedented pace.

It all started with a fairly innocent and common question about Bitcoin:

Is Bitcoin a bubble?
How does it compare to history’s famous bubbles? And what can we learn from this comparison?

— Saifedean Ammous (@saifedean) March 24, 2019

After several reactions from followers, Ammous then responded with a comparison of the housing bubble in the US grow about 200% since the late 1980s to the early 2000s, before shrinking 40% in the few years after. He followed that up with what he said was the “nocoiner favorite” Dutch tulip bubble of 1634, in which prices rose 60-fold in two years before crashing below the original price. He then posted a chart of the 1929 Great Depression in the US, showing how the stock market grew 500% in ten years before crashing to its original value.

Ammous argued that Bitcoin, on the other hand, has risen 200,000,000% before crashing to about 30,000,000% of its value, then proceeded to say:

“… nothing has ever risen as fast and as much as Bitcoin has risen.”

Bitcoin is not only incomparable to bubbles, its fast rise is also incomparable to the most successful companies and innovators. As far as I can tell, nothing has ever risen as fast and as much as Bitcoin has risen. pic.twitter.com/nywEGMsJHV

— Saifedean Ammous (@saifedean) March 24, 2019

The author believes that the key differentiation factor for Bitcoin is its built-in difficulty adjustment, that sets it apart from all its comparisons of monetary assets.

However, despite believing in Bitcoin being in a class of its own, Ammous warns that past patterns should not be relied on to repeat themselves and that a continued rise in value was not a guarantee.

“It can fail, or demand could disappear for many reasons. It could crash 90% from here and not recover in 20 years. Betting serious money on something so volatile is stupid and dangerous. If you do it, don’t blame me!”

 

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Price Poor Metric to Judge Bitcoin, Says CoinShares

Digital asset management company CoinShare’s chief strategist Meltem Demirors featured on CNBC’s Fast Money on Monday, where she discussed the problematic nature of judging Bitcoin on price alone.

Demirors offered that actual utilization may be a better alternative metric for institutional and retail investors to consider, which she put down as the real struggle right now. Although she said that it is not yet clear when or how Bitcoin may regain its value, the best way to predict this is by determining solid metrics that best fit Bitcoin.

The strategist noted that ”real traction” is imminent but a lot is relying on analysis to find the key metrics that will drive growth.

She compared cryptocurrency with similar innovative enterprises such as Intel, Amazon, and Microsoft in the early days of internet stocks, noting that it took Amazon nine years to recover from its initial price high during the dotcom bubble, Intel 15 years, and Microsoft 17 years.

Such as these early internet stocks, Demirors said that the real traction for Bitcoin will come with time. The late 2017 price run can be put down to “fear of mission out” (FOMO), which caused a similar type of speculative bubble, she said. With that bubble burst, real businesses with real-life use applications are being developed in the space.

As she put it: “New technologies that shift the paradigm take a long time to really understand.”

This goes to what she described as a key issue right now in the lack of a coherent narrative from the cryptocurrency community. With institutional interest in the space growing, Demirors said that this could well be an opportune time for Bitcoin, but it is not being considered a store of value because of the poorly-relayed narrative.

Bitcoin (BTC) currently sits at USD 6,038.18 after struggling this year to make significant gains compared with last years highs of nearly USD 20,000.

 

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