Dead or alive?

Thursday, 6th December 2018

Dead or alive?

If you make a habit of reading the financial press, you’ll know that right now every man and his dog is talking about inverted yield curves in the US – and what that means for the global economy and markets….

We’ll leave them to get on with that….

But me? I can’t take my eyes off Bitcoin. The carnage continues….

Down now through the $4000 barrier and trading earlier this morning as low as $3680, this is the crash that keeps on rolling….

The weak-kneed crypto speculators have been well-and-truly shaken out of the market now. Those buy-and-hold merchants that remain are surely made of iron….

  • The hideous spectacle….

Bitcoin is coming down the mountain like one of those Olympic skiers who lose control at speeds of 80 to 90mph….

One moment they are shooting across the snow like bullets….

Suddenly they wobble and lose control. And the next minute they are  tumbling down the hillside in a high-speed tangle of arms, legs, sticks and skis….

It’s bone-breaking stuff and a hideous spectacle to watch….

When will it stop? Will it stop? Or is this thing going to hit rock-bottom with a sickening thump?

Maybe it will. Maybe it won’t. Time will tell….

But I am not the only ghoul on the mountainside watching this horror-show unfold. And many are in fear of the worst….

  • The death spiral?

‘Bitcoin is close to becoming worthless….’

That was the headline in an opinion piece published on MarketWatch earlier this week….

The argument is that now the Bitcoin price has fallen below the cost of mining new coins, there is no incentive for miners to mine….

This loss of momentum will thrust Bitcoin into a death spiral – the one which we are apparently witnessing right now….

…. A death spiral from which Bitcoin will not recover….  A death spiral that will ultimately render Bitcoin worthless and clean-out investors who are sticking out the ride….

Hamish McRae writes on business and financial issues for the Independent newspaper – and he is singing a similar song….

‘One of two things is happening. We may be seeing a re-pricing of this asset class, or we may be catching an early signal that it will completely disappear: that cryptocurrencies are worth nothing at all, zero, zilch….’ 

Nouriel Roubini, a Professor at New York University and CEO of Roubini Macro Associates, is also known as Dr Doom….

He’s been on Twitter declaring that cryptos are bust for good….

‘With BTC down almost 80% from peak (from 20K to 4K) & all other cryptocurrencies down 80% to 99% I rest my case that this crypto bubble went bust for good. I feel vindicated. So, I will take a break for a few days from this toxic Crypto Twitter. Waste of time to convince zealots….’

Michael J Casey, Chairman of CoinDesk’s Advisory Board, is calling it ‘Crypto winter…’

He’s feeling regretful too. Last year he was saying that he thought mainstream interest in crypto was constructive….

Now he’s not so sure. ‘I don’t think I fairly accounted for the lasting societal effect of so many others losing their shirts….’

One effect, of course, is that distrust has set in – like rust. The big crash has burnt plenty of fingers.

It will take a long-time for crypto to regain the faith. If indeed it ever does. Tulips never quite hit the heights again, did they?

  • Any reasons to be cheerful?

There are may other pundits, experts and commentators queuing up to declare Bitcoin deceased….

And many of those that were so keen this time last year to extol the virtues and charms of Bitcoin and other cryptocurrencies are now curiously quiet….

In quiet moments of my own, I often wonder what poor old John McAfee must be thinking….

Last summer he said he would eat his own genitalia live on national television in America if Bitcoin didn’t go to $250,000 inside of 3-years….

Right now, those look like the rash words of a raving lunatic….

My advice to John would be to book a one-way passage to Outer Mongolia and to lie low. And to switch off his Twitter account….

Bitcoin won’t be going to $250,000 any time soon. But let’s not be too quick to declare it dead as it continues its hideous tumble down the mountainside….

Amidst all the bad news, and gloom and negativity there are still bright spots of hope that suggest there could still be life in Bitcoin yet. That it might have a future….

  • Keep an eye on this trend….

Go to Google Trends, for example. When you get there, type in ‘Bitcoin’….

What you should see is a chart – a chart that measures interest in Bitcoin on Google over time….

This time last year, Google Trends measured interest in Bitcoin at 100.  That was the high-point of interest – based on search activity on Google – and coincided with the top of the Bitcoin market….

Since then, interest has been marked down as low as 8 and sits at 10 right now. That’s quite a drop off….

If the price action alone were not sufficient proof that Bitcoin has fallen from grace in breathtaking style, the Google Trends figure confirms it….

But this chart is worth keeping your eye on. Last week the Google Trends figure got up to 15 – the highest figure since back in April….

Maybe the rise in interest was down to simple train-wreck admirers – eager to see as much of the mangled wreckage as possible….

Or just maybe Bitcoin has fallen far enough to start attracting the interest of investors – like me – who might be interested in a small-stakes speculation in Bitcoin at a hugely reduced price….

When that Google Trends figure starts to rise again, that might just be the time to go in….

More reasons to be cheerful next week….

That’s how it looks from here….

All the best,

Dave Gibson

Money Truths