Fundstrat bullish about Bitcoin for 2019

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Fundstrat Global Advisors, co-founded by Tom Lee, has just published a report claiming that Bitcoin prices will reach $36,000 by the end of 2019. How has it arrived at such a bold prediction? Fundstrat says the answer is mining costs.

Fundstrat’s Quantamental Strategist, Sam Doctor, analysed the relationship between Bitcoin mining costs and price, to come up with the prediction that the price range will fall somewhere between $20,000 and $64,000 next year.

He based his calculations on a Bitcoin Price to Mining Breakeven Cost Metric, known as P/BE, which he claims has “proven a reliable long-term support level.”

A statement from Tom Lee, published on Twitter, said: “We expect the mining economy to grow over the next several years, and project a BTC price of ~$36,000 by year end 2019 based on the historical average 1.8x P/BE multiple.”

The Twitter statement also points out that the rise in electricity costs is slowing and use of power is becoming more efficient as larger rigs with a higher hash power per watt, are now appearing. Plus, mining operations are getting bigger, bringing the benefits of scalability to the scenario.

However, he did point out that there was one risk to the prediction: “a material shift in the trajectory of hash power could change the P/BE support level of BTC price.”

It is interesting that Tom Lee’s personal prediction for BTC was $25,000 by the end of 2018 and both Lee and Fundstrat have been bullish about BTC this year. They also issued a statement in April, saying that 82% of institutional investors believe the price had now bottomed out.

If you own BTC and both Fundstrat and Lee are correct than it will be worth holding on to them for some time to come.

 

 

 

 

 

 

Crypto tribes threaten power of unity

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The crypto sphere is becoming a little like a football league table. Owners decide to give their allegiance to a particular ‘team’: let’s say Bitcoin is Real Madrid, and that’s your main team, and your friend likes ETH, let’s call it Arsenal. However, is being part of the Bitcoin fan club, and therefore competing with ETH supporters a healthy way to develop the potential of cryptocurrency?

People have a tendency to take a ‘tribal’ approach to pretty much everything, from dietary choices, to coffee brands, to football teams. But, it isn’t very helpful for crypto. Here’s why.

The cypherpunks had a beautiful idea

Privacy, free speech, and the ability to act as an autonomous individual are increasingly under attack, but decentralisation can protect these. Let us not forget that blockchain technology arose out of a community of cypherpunks who wanted more freedoms. Yet, it looks as though the crypto community now is just going to bow its head to the centralised institutions and retreat into the same old narrow-minded worldview.

As Kent Barton describes it in Medium: “The prevailing question has insidiously morphed from “how can we make the world a better place?” to “how can we defeat other blockchain platforms?”

He also argues that tribalism in the crypto sphere, “distracts the community from the crucial work of building scalable technologies that people will want to use.” And he adds, “Personal attacks and outright trolling make the environment uncomfortable or even untenable for newcomers.”

Social media channels have developed an “Us vs Them” discourse and influencers, like rocks stars, with their adoring fans fight it out with other influencers for the Top Dog spot.

Let’s show some respect

Measured and respectful discussion about the merits of various cryptocurrencies have been replaced with increasingly emotions attacks form the ‘opposition.’

Bartons says: “To an outsider, it must seem ludicrous to watch countless smart minds working on blockchain technology — developers, entrepreneurs, and other enthusiasts gifted with an ability to think outside the box and see a vision for a better future — descend into internecine bickering.”

And all the while the team battles are at the forefront of activity, the less time is being devoted to advancing the blockchain, and it is probably fair to say that this boils down to it being all about the money; not about cryptocurrency itself, but making millions and billions of fiat currency out of cryptocurrency. And that takes everyone back to the status quo before the blockchain emerged as tool for a real revolution that could make the world a better place and take power away from those who have had control of it for too long.

Say goodbye to the zero-sum game

Tribalism in crypto, particularly the desire to see one platform emerge as the winner at the expense of another will mean that we continue to be the slaves of power-holders, rather than channelling the power of the blockchain so that the people can reclaim power for themselves – at least some of it.

We will miss this opportunity by only supporting one team – it’s time to be an O.G. crypto fan and support the whole blockchain ecosystem rather than continue this zero-sum game.

 

 

 

Is the crypto market history repeating itself?

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At the turn of the twentieth century, Jesse Livermore wrote a book titled “Reminiscences of a Stock Operator.” It’s about his life as a trader. One of the things he said back in 1900 was this:

 “When you read contemporary accounts of booms or panics the one thing that strikes you most forcibly is how little either stock speculation or stock speculators to-day differ from yesterday. The game does not change and neither does human nature.”

And he also wrote: “I used to think that people were more gullible in the l860’s and ’70’s than in the 1900’s. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.”

Doesn’t this sound familiar? It does to me. It’s pretty much what people are writing about the cryptocurrency market. It’s a bubble, it’s a Ponzi scheme, it’s another boom and bust.

But the most important point he makes is this: that the game doesn’t change and neither does human nature.

The derivatives market provides us with a good example of the sameness between what is happening in crypto now and markets of the past. A derivative is “an arrangement or product (such as a future, option, or warrant) whose value derives from and is dependent on the value of an underlying asset, such as a commodity, currency, or security.” Derivatives trading has been around since ancient Mesopotamia. For example, a tablet from 1809 BC documents a Mesopotamian merchant borrowing silver, promising to replay it with sesame seeds “according to the going rate” after six months.

The Briitish South Sea Company of 1711 led to a wave of new joint-stock companies with dubious business plans that created one of the first bubbles, alongside the Dutch tulip fever.

What emerged from this was the realisation that derivatives, and now the crypto market, need governance and regulation. Self-policing must be encouraged, and work in tandem with government-enforced rules. Bad actors must be kicked out of the market, just as they were in early days of the London Stock Exchange.

 

 

 

Has George Soros changed his mind?

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Back in January 2018, the multi-billionaire announced that cryptocurrencies were a ‘bubble’. He hasn’t been the only one to say this, of course. However, in the last week he seems to have quite radically changed his mind about this, as his ‘family office’, valued at $26 billion, has announced via Bloomberg and other media outlets, that it plans to trade digital assets.

Soros Fund Management, which is based in New York, and its macro investing division headed by Adam Fisher, got the green light internally to trade in digital currencies, although Bloomberg says he has yet to actually make a trade.

When Soros spoke at the World Economic Forum at the beginning of the year, he was scathing about crypto and claimed it could never function as a viable currency. He also said: “As long as you have dictatorships on the rise you will have a different ending, because the rulers in those countries will turn to Bitcoin to build a nest egg abroad.” This is similar to the many, many commentators on cryptocurrencies who have tried to tarnish the reputation of Bitcoin and other altcoins by connecting crypto with either the nefarious dark net, or with those who seek to beat the system in some way.

However, he didn’t predict what would happen to the cryptocurrency in the first quarter of 2018. The precipitous drop in the Bitcoin market cap sent some, like hedge fund manager Mike Novogratz, scurrying away from trading in cryptocurrency. For example, Novogratz decided against setting up a crypto fund, but has pursued links with a merchant bank that focuses on cryptocurrencies and blockchain technology ventures.

But other hedge fund managers in macro investing have been turning towards it as hedge fund profits slide. John Burbank is one example, He closed hi main hedge fund and “plans to raise $150 million for two funds investing in digital currencies,” says Bloomberg.

And Soros has been betting on cryptocurrencies, even if it is by a roundabout route. At the end of 2017, his firm acquired a large stake in Overstock.com, which is an online discount company. It accepts payment in cryptocurrencies and was the first major retailer to do so. Overstock then announced it would launch a digital currency exchange and an ICO, but this awakened the SEC last month, and it is investigating the proposals. Consequently, Overstock’s share price dropped.

Nevertheless, let’s remember that George Soros had, and still has, skin in the game, whilst warning the world that Bitcoin et al, are in a ‘bubble’.