Thursday Afternoon Coin Clarity Check-Up: Special Friday Morning Edition
Aloha to all you crypto-heads, happenstance readers or diligent truth seekers, and Happy Friday to you all. We’re a little bit late this week but we’ve been busy trying to wrap our heads around all the drama currently swirling in the world of cryptocurrency. How was your week? Glad to be done with work? Got any good plans for the weekend? Well, one thing’s for sure: we hope you held on to your bitcoin. Even though we are now tired of saying that we sound like a broken record for continuing to talk about new price highs for bitcoin, guess what? Yep. That’s right. You guessed it.
Bitcoin Reaches Yet Another High, Breaks $8016 on Bitfinex, $13,000+ in Zimbabwe
Depending on what exchange you go by for the “gold standard” of bitcoin prices (perhaps a term soon to be replaced by “bitcoin standard”), bitcoin reached yet another all-time high earlier this week, hitting $8016.50 on the popular exchange Bitfinex, and over $10,000 on smaller exchanges. Part due to the growing comfortability of bitcoin with the masses, and part due to the lure of seemingly ludicrous price predictions, there seems to be no stopping the mother of all cryptocurrencies, even if other major contenders suffered nasty plunges this week.
If you’re in war-torn Zimbabwe for whatever reason, you could find yourself paying up to $13,500 per bitcoin, as the military took power on Wednesday during a coup d’état, after decades of economic decline accompanied by massive inflation, thought to be largely due to the bungled dictatorship-type measures of President Robert Mugabe. A sudden grab of power by the country’s military created even more chaos and uncertainty in the country, forcing citizens capable of doing so to put any amount of money they could into bitcoin in fears of a total collapse of their already near-worthless currency.
Ways in Which the Bubble Could Burst
Without trying to damper your enthusiasm, you should be aware that there are a few factors which could have a negative impact on the price of bitcoin, and in the near future, too:
- A massive correction in the price of bitcoin is long overdue. As we have mentioned in previous articles, the skyrocketing, near-vertical price climb of BTC has already outdone the Dutch Tulip Bulb craze of the 1600s by several fold – and this was first reported in July, when the price of BTC was a piddling $2500. A chief investment officer of a Japanese bank recently put the correct price of BTC as low as $100 a coin – quite a grim statement – and further stated that the bank would only consider investing in bitcoin if it ever dropped to that price.
- The SEC approval of a Bitcoin ETF could let Wall Street “short sell” bitcoin. If you don’t know what short-selling is by now, but are heavily invested in bitcoin, this is a great time to learn. Short-selling is basically the opposite of “owning” a stock or commodity. Instead of purchasing a tradeable financial instrument, a short seller “borrows” shares (or in this case, bitcoins) from a lender, promising to purchase them back from the lender at what they hope to be a lower price. All the while, they are paying lending fees to the lender, which are usually small, and makes the art of short-selling quite lucrative to those who think the price of something is about to drop. For example, let’s say you decide to “short” 10 bitcoins at $8000 a pop. Then two weeks later, the price of BTC drops to $7000, and you buy back the 10 bitcoins to repay the lender. That means, minus lending fees, you are now sitting on a whopping profit of $10,000 (that’s $1,000 x 10 BTC).
- Banks outside of the U.S. are opening “bitcoin futures” markets. This would also give foreign investors the ability to bet against BTC, meaning they would not have to be registered to trade the upcoming U.S.-based bitcoin ETF (due to be launched before the year’s end) because they could do it through a bank in Switzerland – a country known for its loose financial laws and guaranteed anonymity/protection of investments stored within its borders. In a “futures market,” instead of short-selling a financial instrument (of which bitcoin is one), one is more-or-less placing a direct bet that it will either increase or decrease in value by a specified date. Word on the streets of Zurich is that Swiss and other non-U.S. based investors will likely use the opportunity to bet against the future of bitcoin, though we can’t say for certain this is a good idea.
American Express to Launch Blockchain-Based Payment System
Though not the first major financial institution of its kind to do so, Amex is certainly the largest to announce its indirect partnership with Ripple (XRP), through its direct partnership with the Spanish-owned bank Santander UK, which has already been using Ripple to increase its transaction settlement times and volumes for a couple of years.
The idea is to give customers the choice to blockchain-enabled payments if they should wish to enroll in pioneering program. This announcement gave Ripple an 8% gain over a 24-hour time period, though the financial industry-savvy coin is still far off its magnificently higher highs achieved in May 2017.
Ironic Story of the Day
In a rather humorous moment for everybody that does not work for the banking conglomerate or any of its hundreds of subsidiaries, JP Morgan was recently accused of several different charges of money laundering, only a month or so after CEO Jamie Dimon directly called bitcoin a tool for money laundering. A couple of weeks ago it was also revealed that branches owned by JP Morgan were secretly buying up large stashes of bitcoin, in direct contradiction to their boss’ claims that “any trader trading bitcoin (will be) fired for being stupid.”
Having learned from the aftermath of the Great Recession of 2008-09, witnessing the failure of the federal government to prosecute a single banker that contributed to the collapse (many of whom worked for firms that were short-selling their own financial instruments while simultaneously selling them to their customers), and after witnessing the comments by Dimon cause such an uproar in both bitcoin and Wall Street communities, we’re not certain there is any correlation between wealth and intelligence anymore; but if there is, there’s certainly no correlation between wealth and moral principles.