Bitcoins All Time High Price

Why are Bitcoin prices rising exponentially? I think this is “retail” buying all with a fear of missing out (FOMO). I mean, who wouldn’t look at this chart and think “now is the time to buy?”

 

Anecdotally I can say that Coinbase has been trading at higher prices relative to other exchanges over the past several days even weeks.  Coinbase is arguably the easiest platform for “retail” investors to buy Bitcoin. News broke recently that Coinbase now has more users than charles schwab.

This tells me that the small retail buyers are pushing in trying to get in on the action. For reasons I’ve discussed earlier its impossible to try and call a top – even a temporary top.  Big dips have happened, but there have been buyers eagerly awaiting entry. This is reinforcing new buyers who feel getting into bitcoin is a “can’t lose” proposition. Maybe these buyers are right and we’re witnessing a paradigm shift to Bitcoin as the new “money”. Or, maybe prices have gotten ahead of themselves. Who knows.

Anyone that claims to knows what happens next is a liar. Just don’t trade with more than you can afford to lose, and enjoy the ride.

This Guys Math Says Bitcoin Put in a High

I like to read different methods of pricing bitcoin. I came across this one on reddit which points to $7,500 as a top. Permanent or short term top, who knows. But his logic is interesting. Remember – see both sides.

From Reddit

Bitcoin Will Crash Below $3000. https://bitcointalk.org/index.php?topic=2396770.0

Bitcoin rises from $611, June 2016, to the current price of near $8000. This is an exponential rally, a rise with an accelerated rates. Such a rally defines a market bubble as it will very quickly reach a level that cannot be sustained – when the bubble must burst crashing the market. The past examples are the Dutch Tulip Bubble of 1637 and the Dot.com bubble of 2000. Such bubbles always bring prices to levels where it started.

That exponential markets must crash may be just a simple law of nature. In order for such inflated prices to be maintained, there must be some support from the underlying fiat money supply. The maintenance of trading volume means generally a greater money supply allocation to such a market; it is likely such cannot be maintained at a point in time causing the market to burst.

I have done an exponential curve fit of bitcoin prices from 2016/10/6/611 to 2017/11/16/7843. Extrapolation of the exponential curve (y = A exp (kx)) is done and the figures shown below.

Data: coindesk.com 1 year data number of points = 25 curve fit : y = 501.428 exp (0.006268 x)

2016/10/6/611 0, 611 2016/11/19/751 44, 751 2016/12/26/903 81, 903 2017/1/26/915 112, 915 2017/2/26/1180 143, 1180 2017/3/16/1173 161, 1173 2017/4/23/1284 199, 1284 2017/6/1/2452 238, 2452 2017/6/28/2584 265, 2584 2017/7/30/2746 297, 2746 2017/8/19/4206 317, 4206 2017/8/26/4387 324, 4387 2017/9/11/4190 340, 4190 2017/9/13/3874 342, 3874 2017/9/22/3603 351, 3603 2017/9/28/4185 357, 4185 2017/9/30/4353 359, 4353 2017/10/6/4370 365, 4370 2017/10/12/5439 371, 5439 2017/10/24/5519 383, 5519 2017/10/28/5733 387, 5733 2017/10/31/6447 390, 6447 2017/11/9/7146 399, 7146 2017/11/15/7280 405, 7280 2017/11/16/7843 406, 7843

days 0, 2017-11-16, $6389 days 10, 2017-11-26, $6802 days 20, 2017-12-6, $7242 days 30, 2017-12-16, $7710 days 60, 2018-1-15, $9306 days 90, 2018-2-14, $11231 days 120, 2018-3-16, $13555 days 150, 2018-4-15, $16359 days 180, 2018-5-15, $19744 days 210, 2018-6-14, $23829 days 240, 2018-7-14, $28759 days 270, 2018-8-13, $34708 days 300, 2018-9-12, $41889 days 330, 2018-10-12, $50556 days 360, 2018-11-11, $61015 days 540, 2019-5-10, $188558 days 720, 2019-11-6, $582704 days 900, 2020-5-4, $1800738 days 1080, 2020-10-31, $5564849 days 1260, 2021-4-29, $17197135 days 1440, 2021-10-26, $53144558 days 1620, 2022-4-24, $164233406 days 1800, 2022-10-21, $507532895

The extrapolation data may be used to predict when the bitcoin bubble may burst. The method is to make use of proof by contradiction. It makes an assertion X; then it uses deduction logic starting from X to arrive at other statements of truth. If if arrives at a statement such as : 3 < 2, which is clearly false, then a contradiction exists refuting the assertion X. We can us this method on the extrapolation data.

Assertion : Bitcoin can reach $507,532,895 in five years, by 2022.

Unlike in mathematics, we cannot here make deterministic deduction using pure logic. We can only make a judgment based on our common sense and intuition and say how likely something may happen.

Most of us very likely would dismiss bitcoin at $507,532,895 by 2022. So we try other extrapolation figures. Say we also dismiss $5,564,849 in 2020, 3 years from now. So when is this bitcoin bubble likely to burst.

The price based on the exponential trend has the figure $6389, days 0, 2017-11-16. We are now doing at $7800 at this point which seems too high above trend. In the least there should be a significant correction – or it may even mean this:

Bitcoin bubble may burst any time now.

:

 

Something Stinks About Bitcoin Selloff/Bitcoin Cash Rise

What follows is all a guess – conjecture.

Bitcoin was due for its Segwit2x hard fork around November 14th. The price heading into the end of last week was all time highs around $7,500 USD.  The  proposed fork caused some controversy and there was bickering for months. On one side was existing Bitcoin supporters, and a separate small but influential group formed by the “New York Agreement“(NYA). The NYA gang included some of the biggest names, most pioneers in Bitcoin who carry much influence.

They also most likely have stacks of Bitcoin (just google their names) held for years. That most likely means they hold Bitcoin Cash coins from the fork several months ago. Suddenly these 6 write a note, calling off the fork.

This is what they said (emphasis mine):

“Our goal has always been a smooth upgrade for Bitcoin,” a group of leaders in bitcoin development told members of the SegWit2x mailing list Wednesday. “Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth. This was never the goal of Segwit2x.”

First there is a quick spike of a few hundred dollars. This would seem to make sense as now there is more certainty for Bitcoin. Suddenly, however the price tanks.

Bitcoin Price Crash
Bitcoin price crash following segwit2x cancellation

Bitcoin Cash immediately starts to take off.

Bitcoin Cash Price after Segwit2z
Bitcoin Cash Price after Segwit2x

Here is a theory – I have no proof of this. You have a core group of Bitcoin “elite” with giant pockets of both Bitcoin and Bitcoin cash. To “protect Bitcoin” they call of the segwit2x fork and immediately start dumping Bitcoin and buying Bitcoin Cash. They already own Bitcoin Cash from the fork in August 2017, and they are selling Bitcoin at all time highs. Tweets and blog posts suddenly start shooting out everywhere announcing the “death of Bitcoin” and volumes spike through the roof.

Sounds nuts, right. Well guys did this is stocks in the 1920’s (read here). Basically a bunch of guys would get together and start pumping up a stock, pushing out fake information. That got greedy speculators on board ad caused them to run the price up. The guys on the inside would then dump.

Who knows if this is what happened. Its all very strange, but I suspect well find out in the coming weeks.

 

 

Bitcoin Fork Called Off, Price…Drops??

The bitcoin hard fork knows as Segwit2x was “called off” today causing a sudden price spike then drop.

The strange thing about this is that the fork was a major point of dispute for those in the Bitcoin community and posed some risks. One would think that when you eliminate a risk the price would go higher, but not here.

This says to me that people were piling in ahead of the fork in anticipation of a “dividend” and nothing more. That tells me that greed is driving price, and its a bit concerning.

Bitcoin FOMO Pushes Prices Past $5,000

Why the Bitcoin Price Surged Through $5,000

Everyone seeks to assign a reason to price moves. Early this morning Bitcoin started on a tear on heavy volume moving from $4,800 to >$5,100 on heavy volume. There was no news release that appeared as a catalyst, so it appears that “FOMO” (Fear of Missing Out) is driving price. While I don’t love technical analysis, it can provide useful.

As you can see in the Bitcoin chart below, volume has been growing and is very strong on this last push up. $5,000 is a psychological barrier (people think in big, round numbers) and once through that it started a “buying panic”.

Bitcoin Price Passes the $5,000 Mark

Hedge Funder Mike Novogratz predicted bitcoin $10k is right around the corner based simply on the mass of instituions coming in. While we don’t offer trading advice its clear that Wall Street and their big dollars are pushing into Bitcoin. See here. And here.

Harvard Economist Says Bitcoins a Bubble

He brings up some valid points, particularly:

  • Governments will let the private sector develop the technology and then usurp it for their own use
  • Its not easy for alt-coins to beat Bitcoins lead in credibility and scale

People continue to say that Bitcoins value is in its anonymity – its not really anonymous. The IRS uses software to track people using it now. You can’t discount the value of speed and also owning your own money. This means not having to rely on a bank.

As for the bubble talk – I don’t think Bitcoin is a bubble. But I think ICO’s are definitely a bubble. 

Read the Guardian Here:

Is the cryptocurrency bitcoin the biggest bubble in the world today, or a great investment bet on the cutting edge of new-age financial technology? My best guess is that in the long run, the technology will thrive, but that the price of bitcoin will collapse.

If you haven’t been following the bitcoin story, its price is up 600% over the past 12 months, and 1,600% in the past 24 months. At over $4,200 (as of 5 October), a single unit of the virtual currency is now worth more than three times an ounce of gold. Some bitcoin evangelists see it going far higher in the next few years.

What happens from here will depend a lot on how governments react. Will they tolerate anonymous payment systems that facilitate tax evasion and crime? Will they create digital currencies of their own? Another key question is how successfully bitcoin’s numerous “alt-coin” competitors can penetrate the market.

In principle, it is supremely easy to clone or improve on bitcoin’s technology. What is not so easy is to duplicate bitcoin’s established lead in credibility and the large ecosystem of applications that have built up around it.

For now, the regulatory environment remains a free-for-all. China’s government, concerned about the use of bitcoin in capital flight and tax evasion, has recently banned bitcoin exchanges. Japan, on the other hand, has enshrined bitcoin as legal tender, in an apparent bid to become the global centre of fintech.

Bitcoin price
Bitcoin price Photograph: Project Syndicate

The United States is taking tentative steps to follow Japan in regulating fintech, though the endgame is far from clear. Importantly, bitcoin does not need to win every battle to justify a sky-high price. Japan, the world’s third largest economy, has an extraordinarily high currency-to-income ratio (roughly 20%), so bitcoin’s success there is a major triumph.

As of early October, Ethereum’s market capitalisation stood at $28bn, versus $72bn for bitcoin. Ripple, a platform championed by the banking sector to slash transaction costs for interbank and overseas transfers, is a distant third at $9bn. Behind the top three are dozens of fledgling competitors.

Most experts agree that the ingenious technology behind virtual currencies may have broad applications for cybersecurity, which currently poses one of the biggest challenges to the stability of the global financial system. For many developers, the goal of achieving a cheaper, more secure payments mechanism has supplanted bitcoin’s ambition of replacing dollars.

But it is folly to think that bitcoin will ever be allowed to supplant central-bank-issued money. It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity. Of course, as I note in my recent book on past, present, and future currencies, governments that issue large-denomination bills also risk aiding tax evasion and crime. But cash at least has bulk, unlike virtual currency.

It will be interesting to see how the Japanese experiment evolves. The government has indicated that it will force bitcoin exchanges to be on the lookout for criminal activity and to collect information on deposit holders. Still, one can be sure that global tax evaders will seek ways to acquire bitcoin anonymously abroad and then launder their money through Japanese accounts. Carrying paper currency in and out of a country is a major cost for tax evaders and criminals; by embracing virtual currencies, Japan risks becoming a Switzerland-like tax haven – with the bank secrecy laws baked into the technology.

Were bitcoin stripped of its near-anonymity, it would be hard to justify its current price. Perhaps bitcoin speculators are betting that there will always be a consortium of rogue states allowing anonymous bitcoin usage, or even state actors such as North Korea that will exploit it.

Finally, it is hard to see what would stop central banks from creating their own digital currencies and using regulation to tilt the playing field until they win. The long history of currency tells us that what the private sector innovates, the state eventually regulates and appropriates. I have no idea where bitcoin’s price will go over the next couple years, but there is no reason to expect virtual currency to avoid a similar fate.

Kenneth Rogoff is professor of economics and public policy at Harvard University. He was the chief economist of the IMF from 2001 to 2003.

Why Bitcoin is Going Up & Alts Are Not

Bitcoin is on the move, up around 5% today while Alts (Ethereum, Litecoin, etc) have been stuck in the mud. As you can see here in this chart of Ethereum priced in Bitcoin, Ethereum has been going down. Why is this?

Bitcoin is Outpacing Ethereum

I’m going to add my speculation – my guess is that Bitcoin will continue to move up faster than Ethereum or litecoin for the foreseeable future. Don’t be a fool and trade on my opinion.

  1. Ethereum is “all about the ICO’s”. ICO’s creating selling pressure as people buy tokens, and those tokens are transferred back into Ethereum and sold for fiat. That fiat is used by the “businesses” which issues the tokens. In my opinion this creates major selling pressure on Ethereum.
  2. Litecoin – I just don’t get why we need it. At least yet. This whole pitch of “its Bitcoins silver” makes no sense. Bitcoin is still in its infancy. Yes its the gold standard of crypto but is it really not meeting peoples needs at this point? Lets face it – Litecoin was created as a competitor to BTC and Bitcoin is kicking its @$$.
  3. No other ALT has created that “killer app” or that “must use” case. Therefore its all just speculation. Bitcoin is the household name when it comes to crypto and that’s where the money – the big money – is going to be flowing.
  4. I think the more Bitcoin outperforms the more investors will be running to it as opposed to the alts. However if Bitcoin tanks you can bet selling will happen in the alts. Inherently this boosts Bitcoin the best crypto bet.

Thats my analysis. Could be (probably) wrong, but hopefully thought provoking.

At What Price is Bitcoin’s Intrinsic Value?

Estimating Bitcoin Prices

Disclaimer: These are just my thoughts, don’t trade on my speculation.

When trying to set a bottom price in Bitcoin – the price I view as “the bottom” I like to look at Bitcoin mining (go here to learn about mining). The process of mining itself isn’t what matters for this topic – just the cost to mine Bitcoin. Miners run computers which complete complex calculations to earn bitcoin. Computing takes electricity which is the “cost” to produce Bitcoin. When the price is high enough then miners make money. If any of the following happen then mining could become unprofitable:

  • Bitcoin price drops substantially
  • The price of electricity increases dramatically
  • The complexity of the calculation increases dramatically, requiring more computing power and therefore more electricity – aka Difficulty and Hashrate
  • Dramatic increase in mining competition

In a very dramatic scenario if the cost of mining Bitcoin was way above the price, then Bitcoin Miners would stop mining and the Bitcoin network would shut down.I want to stress at this point its highly, highly, highly improbable.

Bitcoin Miners Run the Show

Cutting to the point – many sites like this one allow you to enter in a bunch of variables and calculate “mining profitability”. The variables are very important for actual miners. I like to use the Bitcoin Mining breakeven price as the “bottom” in Bitcoin prices. For this exercise I just try to get a baseline.

My view is that the miners are the guys with millions of dollars in hardware aka major skin in the game. Therefore their breakeven price should be “defended”, meaning the Bitcoin price should stay above that mining breakeven level. Looking at it a different way (I am generalizing here) – if you can buy something for less than it costs to produce – thats a good deal, right? This is assuming there is major demand for that product/asset.

If the Bitcoin price was to stay below this level for an extended period then I think Bitcoin prices could fall further.

Bitcoin Price Breakeven Math

Currently CryptoCompare shows a 15% per day profitability in Bitcoin mining. This indicates that the breakeven price for miners is around $3,600 USD with Bitcoin currently trading at ~$4,000 USD.

In the last bitcoin selloff we went below this $3,600 number but bounced back and hung around that price. Could just be coincidence, who is to say for certain..

Bitcoin Mining Price
Bitcoin Breakeven Mining Price

There are obviously hundreds of other things to consider when determining the price of Bitcoin. Because its such a new market it can be tough to get a baseline value, and thats why I decided to post this outlining what I use.

Here is the List of Reasons Why are Bitcoin and Ethereum Price are Tanking

An amazing sh*t storm is the last few days is hitting Bitcoin and Ethereum prices:

Bitcoin tops Nasdaq in survey of world’s most crowded trade

Its popular now for investors to buy each and every dip in Bitcoin price, but also for hedge fund managers to talk about what a bubble Bitcoin is. Who knows which side is right – maybe its both.

I will say this chart from Bespoke Investments caught my eye:

My main issue with this is that Bitcoin is in its infancy and starting from zero. Many saying “its a bubble” follow the bitcoin price from 6 cents to the current level and say that simply based on the percentage return makes it a bubble.

Whats clear is that if you are a money manager it has to be painful if you missed this ride up.

From the Nasdaq:

Bitcoin tops Nasdaq in survey of world’s most crowded trade

     ft.com
Source: ft.com

Ominous omen? Bitcoin, the crypto currency that has exploded higher this year, has overtaken the also-buoyant Nasdaq Composite as the world’s most crowded trade, according to a closely watched survey released on Tuesday.

Some 26 per cent of investors polled by Bank of America Merrill Lynch in the first week of September said betting that bitcoin will rise is the most crowded trade of them all. That puts it ahead of 22 per cent voting for the Nasdaq and 21 per cent pointing to an anti-dollar wager. Nasdaq was pinned at about 30 per cent in the August survey.

Bitcoin has been garnering more mainstream appeal of late and has been catching the eye of risk-loving retail traders. It has surged from $968 to the dollar at the end of 2016 to above $5,000 last month, according to Coindesk data. It traded at $4,352.58 on Tuesday.

Notably, other crowded trades in recent history have not ended too well. The dollar was at the top for much of the start of this year, according to BofA Merrill. The currency has tumbled 10 per cent against six major trading partners since December 30.

 

 

From CNBC:

Bitcoin’s nearly five-fold climb in 2017 looks very similar to tech bubble surge

  • David Ader, chief macro strategist at Informa Financial Intelligence, shows how bitcoin’s gains resemble that of the Nasdaq Telecommunications Index before the tech bubble burst.
  • Bitcoin has gained nearly 400 percent this year, helped by increased interest from institutional investors.
  • However, digital currency expert Chris Burniske points out the market value of bitcoin is still a fraction of what stocks were during the dot-com boom.

Short seller Andrew Left targets Grayscale’s Bitcoin trust  

When charted, bitcoin‘s rapid gains resemble how stocks surged into the tech bubble before collapsing.

David Ader, chief macro strategist at Informa Financial Intelligence, matched a graph of the Nasdaq Telecommunications Index at its peak in 2000 to bitcoin’s five-year run to all-time highs.

“This is the price chart for an overly frothy market, in my opinion. I just don’t see anything quite as comparable to this in bubblelicious terms,” said Ader, a former top-rated bond market strategist.

Bitcoin climbed more than 3.7 percent Thursday to a record of $4,802.74, up nearly five times in price this year and about 67 percent higher for August, according to CoinDesk.

Source: Informa Financial Intelligence

“I think it’s going to come to a sorry ending,” Ader said. “I don’t know anybody who’s actually used a bitcoin for any purpose legal or otherwise. This looks like an overly frothy market and frothy markets lose their froth.”

Ader said he used the Nasdaq telecom index since many of those stocks led the Nasdaq composite’s overall gains during the tech bubble. The Nasdaq telecom index shot up more than 700 percent from 1995 to 2000, before collapsing 90 percent in the next two years. The index remains about 75 percent below its record high.

Bitcoin’s meteoric surge this year comes as many on Wall Street are becoming more interested in the digital currency and the blockchain technology behind it. New digital asset investment funds are rolling out and the Chicago Board Options Exchange is planning to launch bitcoin futures.

Many investors also bought bitcoin this month after it survived a relatively uneventful split on Aug. 1 into bitcoin and bitcoin cash, an alternative version supported by only a few developers. Bitcoin cash is up about 180 percent from its Aug. 1 low, to Thursday’s price of $588, according to CoinMarketCap.

However, bitcoin could split again this fall because there’s another upgrade proposal, and others have warned that the speculative forces behind bitcoin could quickly turn against it.

Here are a few of the alarm bells sounded this summer:

By percent change, analysis from Bespoke Investment Group shows how bitcoin’s surge has already well surpassed that of any major stock market bubble.

Source: Bespoke Investment Group

That said, some well-respected names on Wall Street have also issued positive reports on the digital currency.

Lee and Moas both reason that bitcoin can climb to those levels if even a fraction of the trillions of dollars in gold or other traditional investments move into the digital currency.

Bitcoin has a market value of about $78 billion, and digital currencies overall are worth $170 billion, according to CoinMarketCap.

That makes the value of all digital currencies less than 5 percent of the more than $4 trillion inflation-adjusted value of stocks during the tech and telecom boom, said Chris Burniske, author of the upcoming book, “Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond.”

“If people think this is the ‘big bubble,’ then they don’t have an appreciation for how big the idea of cryptoassets really is,” he said.

Many digital currency enthusiasts agree there is speculation in the digital currency. But they note that, just like the dot-com bubble, companies that were able to utilize the underlying technology then became global giants.