Well, depending on where you get your prices, Bitcoin is sitting near all-time highs on Friday morning.
“Bitcoin has spent a better part of the last week undulating roughly sideways amid sharp gains in alternative currencies,” Coindesk writes. Here’s what “roughly sideways” means:
Yes, “roughly sideways” – in a $2,000 range. Here’s futures versus spot:
Of course Coindesk is right. When it comes to meteoric gains, Bitcoin has been supplanted (for the time being) by Litecoin and Ethereum, which have skyrocketed over the past week:
This decision is probably gas on the fire:
Come one, come all — @TheTerminal has officially added ether, litecoin and ripple pricing pic.twitter.com/RDGchH5QEP
— Lily Katz (@LilyKatz) December 14, 2017
On Thursday, we brought you the rather disconcerting news that startups are now lending against Bitcoin collateral. That, we insist, is a recipe for disaster. “Bitcoin cynics should beware though: this process is only starting, so the bitcoin rally isn’t likely to be over yet,” Bloomberg’s Mark Cumdore warns on Friday morning.
We would agree. Because retail investors are probably just getting their feet wet in this thing. Also on Thursday, Deutsche Bank described the extent to which the Bitcoin market is being propped up by leveraged Japanese traders or, in market parlance, “Mrs. Watanabe.” In the same note, Deutsche writes the following:
Cryptocurrency such as Bitcoin that have pure distributed systems do not have an underlying value like precious metals. Value is not guaranteed by an issuer because there is no issuer. The value of cryptocurrency is thus entirely based on the belief that it can be exchanged for goods or sovereign currencies. While valuation of exchange rates between legal tender and cryptocurrency should be the vital factor, it is retail investors (including “Mr. Watanabe”) who are currently carrying out price discovery.
Meanwhile, the above-mentioned Mark Cudmore notes one factor that could help to explain why Bitcoin has “calmed down” over the last week could be “Christmas expenses taking out the marginal retail buyer.” That would be ironic because after all, according to multiple sources it was Thanksgiving dinner that prompted the surge of retail interest which ultimately helped drive prices to nearly $20,000 on Coinbase after the holiday.
Recall this from CNBC contributor Brian Kelly:
Anecdotally, everyone I have talked to in the cryptocurrency community has said that Thanksgiving table discussion was all about bitcoin, and that inspired many family members to buy bitcoin. I suspect that pattern was repeated across tables everywhere.
And this from WSJ:
Paul Joseph Spelce, a 22-year-old graduate student in New York, was one of the newcomers who bought in. Over Thanksgiving dinner with friends last week, the conversation was dominated by talk of bitcoin. “Even this woman who didn’t have a computer at home couldn’t stop talking about how bitcoin was going to reach $10,000 soon,” Mr. Spelce said.
The idea that the holiday shopping season is having an effect on retail demand “may sound tenuous, but it’s bitcoin we’re talking about here, not a serious financial asset,” Cudmore goes on to write. “It’s the ultimate tool of speculation, which means it hoovers up disposable income,”
Agreed. But this seems to miss one important consideration: how many people have asked Santa for Bitcoin this year?
And if he delivers, when will that giant buy order hit the exchanges?
I was going to give BitCoin this year, but could not find suitable gift wrapping materials.