Thursday Afternoon Coin Clarity Check-Up: Don’t Worry: BTC Still Reaching Fresh Highs
How ya doing there crypto comrades? Stuff yourself with some nice turkey, ham, sweet potatoes and all that good stuff? Or, did you avoid the tradition and save yourself a few pounds and hours of heartburn instead? In any case, we hope your short week is coming (or came) to a smooth close and that you’re recovered from any bloating by the time you have to go back to work on Monday.
Here’s a run down of the major happening in crypto over the past few days. We thought we’d give you some exciting news to pump you up going into Friday, before you can finally slide into that long-deserved weekend. What might that include? The fact that the price of bitcoin finally broke $11,000 – and by a good amount – for starters. This is huge. I know we can’t stop talking about it but that’s because bitcoin is now simply the most single successful investment in the known history of the financial universe. That makes it a pretty big deal, so excuse us while we continue to marvel over this unprecedented spectacle with our collective jaws dropped.
More of Wall Street’s Old Guard Speak Out Against Bitcoin
As with every rising star that tends to attract a lot of new attention and money, in 2017 bitcoin finds itself attracting a new class of critics: Wall Street executives. The latest of which is outspoken billionaire investor Carl Icahn, whose words of wisdom are treated about on par with words of the gospel. Citing parallels to an obscure Missouri land value bubble in the 1700s as the reason he can’t endorse bitcoin as an investment, Icahn at least had the decency to admit the real reason that is keeping him from getting into cryptocurrency, stating, “I got to tell you honestly, I don’t understand it. I’m the last guy — I just don’t get it… I just stay out of something if I don’t understand it.” Which is generally a good rule to live by.
And there’s another good reason to fear a decline in BTC – as highlighted in several of our previous articles – the seemingly imminent burst of a dreaded price bubble. A “commodity bubble” is basically the event when the shot-calling “market makers” decide that the supply of a commodity outweighs its current demands, and make quick adjustments in their portfolios before telling the next guy of their suspicion. Sometimes this realization does not happen until well after the price of a commodity has climbed past unreasonable highs for which there is no fundamental basis on which to support such tremendous price levels. Not only critics, but rational thinkers believe a burst for a bitcoin bubble is imminent. Let’s go through some of the more prominent theories of the media:
- CNBC describes why bitcoin is perhaps the largest commodity bubble to ever have existed (we thought we knew that already). They also announced the results of a recent blockchain survey given to leaders of financial institutions from all around the globe. The survey concluded that about half of the participants saw bitcoin as a “fraud” while the other half considered themselves ready to embrace the opportunity. These results suggest a seismic division in which the world’s most powerful people view cryptocurrency and blockchain technology itself.
- The Telegraph declares bitcoin to be in a “pre-crash mania phase,” adding the caveat that this only holds true if bitcoin is indeed in a bubble to begin with. The article then proceeds to very clearly lay out the classic stages of the psychological phenomena behind what causes classic commodity bubbles, and then concludes by suggesting there are few ways in which bitcoin could escape this classic, historically well-documented cycle.
- The Telegraph also warned us to remember that U.S. federal regulators have the power to put the proverbial kibosh on cryptocurrency as a whole. Legislation to regulate cryptocurrency won’t necessarily happen necessarily through underhanded, privacy-invasive (and perhaps unconstitutional) means of IP blocking, traffic monitoring or other, newer surveillance techniques like blockchain forensics. It will happen through the slow, churning bureaucratic framework that implements any kind of complex federal law. In this case, the new target for financial legislative action will undoubtedly be cryptocurrency and/or blockchain-related activities, as they have sprung from a cryptographer’s toy to the talk of the town on Wall Street, with over a $170,000,000 market cap (as of the writing of this article).
Feds Come Down Like the Hammer of Thor on Coinbase
In another signal that the federal government is stepping up its intervention into suspected cryptocurrency-related crimes, the IRS recently rejected Coinbase’s bid to halt an un-authorized release of customer records. The IRS ignored appeals from America’s biggest exchange, in spite of the fact that Coinbase has been heavily compliant with regulatory constrictions not only at the federal level, but the state level as well. Nevertheless, the move has far-reaching implications that demonstrate the federal power of governance over relatively helpless companies like Coinbase.
Citing bitcoin as a threat to the stability of the financial system last week, the federal reserve also lent strong credence to the idea that world governments are preparing to heavily regulate and tax bitcoin, and if they can, all blockchain-inspired ideas to come with it. These announcements by the IRS leave many heavy Coinbase users rubbing their heads, wondering what kind of additional tax paperwork they may or may not have to file in the upcoming years.