Well, here we are the morning after Bitcoin futures launched on the CME and “mass hysteria” hasn’t taken hold. There are no “dogs and cats, living together” and no “human sacrifices.” Cue Bill Murray:
Bitcoin itself took a pretty dramatic turn for the worst following the launch and futures quickly converged with spot. Things stabilized after that:
Meanwhile, Ronnie Moas, founder of one-man research operation Standpoint Research, says Bitcoin has a date with “$300,000 to $400,000.” Here’s what he told CNBC:
Bitcoin is already up 500 percent since I recommended it in the beginning of July, and I’m looking for another 500 percent move from here.
The end-game on bitcoin is that it will hit $300,000 to $400,000 in my opinion, and it will be the most valuable currency in the world.
Tell us what you really think Ronnie. Here he is his apparently skyping into the network ahead of the CME launch on Sunday:
As sure as ol’ Ronnie is, UBS Chairman Axel Weber still has his doubts. You’ll recall that back in September, UBS penned a lengthy missive on cryptocurrencies, highlights from which you can peruse here.
Here are some excerpts from Weber’s weekend interview with NZZ am Sonntag (translated):
This week, a Bitcoin cost $ 17,000, four years ago it was $ 10. Is there a bubble threatening?
Bitcoins are not money for me. Because money has three functions to fulfill: it has to be a means of payment – as such, Bitcoin is not universally accepted. Second, money is a measure of value. But there are no prices that are written in Bitcoin. And third, it must be suitable as a store of value. Bitcoin does not fulfill this condition either, since the price of bitcoin is not stable. A fundamental disadvantage of Bitcoin is that the number of coins issued is limited.
Why the price goes through the ceiling with increasing demand?
This is precisely the design flaw: because there is no central bank and no issuer that has control over the supply of bitcoins, the value is determined solely by demand. Demand fluctuations therefore lead to huge price fluctuations in both directions. For traditional currencies, central banks are the lenders of last resort, which can prevent panic in the market – that’s not the case with Bitcoin.
According to your arguments, a future crash at Bitcoin is inevitable.
We have decided that we do not recommend Bitcoins as an investment to our clients. As a bank, we deliberately warned against this product because we do not consider it valuable and not sustainable. But we see great potential for the underlying technology, the blockchain.
Should the financial supervisors therefore take action?
As soon as retail investors invest, regulators are called for. For example, in the case of a hedge fund, the buyer receives a warning that he may lose his assets. There is nothing like that in Bitcoins. I would very much welcome a dispute between regulators and cryptocurrencies. This would help to steer the uncontrolled price increases in orderly.
There you go. But hey, what does Axel know that Ronnie on Skype doesn’t, right?
BitCoin can go to $400K or even higher – assuming an infinite number of traders with an infinite amount of capital – and no regulation, sudden reduction of disposable income, reduction of debt/loan abilities of traders, a major war, that the internet doesn’t suddenly go down and probably quite a few other things.
I suspect there are algorithms that if the number of potential traders can be estimated, their capital reserves, ability to assume risk, etc., etc., you can determine the maximum price any asset can achieve in a market – even a global market. It’s essentially a basic potential market calculation and is done with automobiles, new houses, etc. – but in all these market calculations, there is near zero possibility of governments producing counter products at lower cost and or regulating the respective private products out of existence. Failing to be able to accurately account for all of the max market variables that might affect BitCoin in the coming months – making guesses at the potential value it might achieve before reality takes effect – are ludicrous. It’s a gamble, let’s not pretend otherwise.