Just More FUD: Citadel CEO Wary of Bitcoin Bubble

Citadel CEO warns that confusion between Bitcoin and its Blockchain could burst the bubble.

With the $11,000 milestone newly etched onto its belt, Bitcoin continues its rise in value while a chorus of voices sings contrasting melodies. For some, the Bitcoin price surge over the past two weeks has been nothing short of miraculous, vindicating “outlandish” predictions made months ago. The more-wary pundits are staying at an arm’s length, watching nervously as what they describe as a bubble continues to grow.

Speaking to CNBC's Leslie Picker earlier this week, Citadel hedge fund founder and CEO Ken Griffin echoed the sentiments of JPMorgan CEO Jamie Dimon, likening Bitcoin to the historical ‘Dutch tulip bulb mania’ in the 1600s. Griffin’s main concern is that people enticed by the hype of the Bitcoin bull run don’t have an understanding of the intrinsic value of the Blockchain technology it is based on.

"Blockchain's a very interesting technology that will have some very profound applications for society over the years to come.”

The billionaire is concerned that the average person on the street is simply trying to ride the wave, without understanding the applications of Blockchain technology. He suggests that the hype could end badly for some:

"I get very worried that people that are buying Bitcoins don't really understand what they're participating in other than the headline stories that it keeps going higher and I want to make sure I don't miss this opportunity to make some money.”

"So is it a fraud? No. But these bubbles tend to end in tears. And I worry about how this bubble might end."

When does the run end

There is no telling if and when Bitcoin’s rise in value will come to an end. The likes American broadcaster Max Keiser have suggested a $100,000 high in the coming years, while slightly more conservative estimates of a $40,000 high from fund manager Mike Novogratz still boggle the mind.

Conventional markets, in their simplest form, are dictated by supply and demand. While Bitcoin’s cap is 21 mln, analysts predict that its downfall could be further forks in the Blockchain in the future.

However, as the suspended SegWit2x fork proved, the community of developers, miners and traders have to reach a consensus before hard, telling changes are made to the Blockchain.

Source: Coin Telegraph




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Experts Answer Question: “How Did Bitcoin Reach $10,000?”

With Bitcoin having hit the magical $10,000 mark, experts chime in on how we got here.

In January this year, $1,000 was the milestone Bitcoin owners were eager to reach. The digital currency hit that, overcame it and increased ten-fold to over $10,000. This year has been filled with good news for digital currency, from another Asian market boom, to Bitcoin’s integration with the Square App, the launching of regulated futures markets and growing mainstream adoption. Despite being laughed off for years, Bitcoin is only just beginning to become a force to be reckoned with in the global economy.

Cointelegraph had the opportunity to speak with several experts and ask them the question: “How did Bitcoin get to $10,000?” We have shared their responses below.

Institutional money

Hedge funds, pension funds, family offices and the like have shown extraordinary interest in Bitcoin this year. Such “institutions” control vast amounts of money. As an example, the UK-based hedge fund Man Group, which has expressed interest in trading Bitcoin, controls assets exceeding $100 bln.

Simon Yu, CEO of StormX, said:

“The Bitcoin price is at an all-time high is due to institutional money finally starting to flow into the cryptocurrency market. Recently, announcements from the South Korean Bank Hyosung in support of Bitcoin, from CME Group announcing they'll be launching a Bitcoin futures market, and from Square Cash announcing Bitcoin will be supported caused bullish behavior in the market, pointing to a major shift.

“The general public is starting to realize Cryptocurrency is beginning to be adopted to mainstream markets and will continue an upward trend as they see the potential for more companies to adopt cryptocurrency.”

Christopher Grey, COO of Caplinked, agrees with Yu’s statements, but is far less Bullish in the matter:

“Investors unfamiliar with crypto are piling new money into Bitcoin right now, making the situation highly unstable as investors expect the price of Bitcoin to keep going up. Any declines could be exaggerated dramatically because they are not stable owners of Crypto.

“Alternatively, the price could continue to rise parabolically, drawing in enormous sums in the tens of billions of dollars from other risky liquid investments like growth stocks and junk bonds. This could cause the prices of those investments to weaken as a result of this liquidity moving out of them and into Crypto.”

“Either way, this situation is not stable and cannot continue for an extended period of time. Something needs to give in one of the risk markets, as liquidity in these markets is not infinite and nothing here is being created, just moved from one risk market to another by speculators. This didn’t matter when total crypto value was small, but at these levels of hundreds of billions in value, it becomes a substantial user of global risk capital.”

Newcomers are still early adopters

In 2014, when Bitcoin hit its first real mainstream swing with Coinbase and other exchanges upping their user experience, people were already asking: “Is it too late get into Bitcoin?”

Those questions persist today, and recur every time Bitcoin’s price rises another $1,000. However, since only an estimated half-percent of the global population uses digital currency, there is still plenty of time to be an early adopter.

Jon Chou, CEO of Bee Token says:

“People often complain that it's too late to get into Bitcoin, that most of the early adopters have been in since 2010 and there's no more or little room for upside. I'll offer an alternative long term-angle; this is not financial advice. According to Blockchain.info, there are approximately 700,000 Bitcoin addresses as of November 2017.

“One of the main problems Bitcoin claims to solve is the issue of remittances, basically globally distributed access….Well, there are seven billion people in this world. Assuming a 10% penetration rate and if everyone owns just one address, then there are still 700 million address potentially in the future. That's a potential 1000x in user base. Regardless of fluctuations in price in the short term, it's important to realize how early we are in the Blockchain space as a whole.”

Sol Lederer, Blockchain Director at LOOMIA echoes Chou’s point, stating that Bitcoin is still in its infancy, and that Bitcoiners from 2010 and earlier are now starting to be vindicated rather than victimized.

“Long-time Bitcoiners finally feel vindicated that their currency that has been ridiculed for years, is at last being taken seriously. Naysayers may still say Bitcoin is a bubble, but very few would argue it’s worthless or a scam, yet only a year ago this was a common narrative.

“Bitcoin’s future is still uncertain; it faces the same serious technical challenges it has for years, and faces stiff competition from newer, more sophisticated Blockchains. But even if it were to crash, it’s apparent that Bitcoin is here to stay. Whether it trades at $10,000, $5,000, or $500, it’s not going away.”

Source: Coin Telegraph




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CCG Mining now offers open end contracts. Bitcoin, Ethereum, Zcash, Litecoin and others

Cointracking keeps track of all your coins automatically. Many exchanges and wallets supported

 

Oversupply of Bitcoin Will Burst the Bubble?

Bitcoin is a bubble that will pop because of oversupply, says one analyst.

A recent analysis regarding supply and demand suggests that the end of the Bitcoin bull run will come not as a result of lack of buyers but because of an overabundance of supply. The supply, according to the analyst, will come through new and varied ways to trade Bitcoin and from Bitcoin hard forks.

The analysis stems from the dot-com bubble in the late 1990s, when any company with .com in its name instantly received a huge market boost. However, the end of the dot-com bubble occurred when a huge number of new .com IPOs flooded the marketplace, many of which were unstable business models.

For a while the market absorbed them, but when the market finally corrected it pulled the rug out from all of those businesses and only the strong survived.

Whence Bitcoin supply?

One of the most important (and most repeated) features of Bitcoin is its limited supply. Ask anyone even remotely familiar with the cryptocurrency and they’ll tell you that only 21 mln Bitcoin will ever exist. With such limited supply, how could an oversupply ever  occur?

The answer is multifaceted. For starters, Bitcoin hard forks are now creating new derivatives from the original Bitcoin. For example, the Bitcoin Cash hard fork has now created an entirely new Bitcoin with a market cap of $26 bln. Whatever your politics on the BCH fork, the reality is that supply increased. The Bitcoin Gold and Bitcoin Diamond forks did the same.

Further, the issuance of Bitcoin futures may well be the cryptocurrency’s own undoing. Though hyped as an amazing mainstream adoption (true enough indeed), the reality that derivatives of Bitcoin will now be tradable may limit the depth of investment in the original and thin out the pool of investors. According to the analysis:

“…as the river of ways to invest in cryptocurrencies widens, the flood that has lifted the price of the Bitcoin will surely recede, and, as always, much faster than people expect."

Source: Coin Telegraph




My current recommendations:

HashFlare for automated Bitcoin cloud mining - Currently ROI in around 60 days only

Bitclub Network allows you to buy mining shares with daily payouts

CCG Mining now offers open end contracts. Bitcoin, Ethereum, Zcash, Litecoin and others

Cointracking keeps track of all your coins automatically. Many exchanges and wallets supported