You’ve got to love Kuroda.
On Thursday, after leaving the Bank of Japan’s lunatic monetary policy unchanged as expected, the world’s foremost authority on the type of currency debasement that’s effectively making cryptocurrency bulls’ argument for them delivered his assessment of Bitcoin at the post-meeting presser. And this being Kuroda, it did not disappoint when it comes to comedic value.
“The rise [in bitcoin] is undoubtedly abnormal,” he said during the media conference, adding that “Bitcoin is used not as a means of settlement but rather as pure speculation.”
But that was hardly the punchline. Rather, the punchline came when the famously jovial BoJ Governor Kuroda-splained why he thinks Bitcoin might be out of control. To wit, from the same press conference:
Bitcoin’s price looks abnormally high if you graph it.
Yes it does. Of course so does the BoJ’s balance sheet. [Note: for some members of the crypto community who aren’t familiar with Kuroda, it might not be immediately apparent why that is so funny, so in order to appreciate it, just read this]
Meanwhile, remember how Bitcoin futs were persistently trading at a premium to spot after the Cboe launch? And remember how that began to disappear leading up to the launch of the CME product? Yeah well now, futures are trading at a discount to spot.
That’s not great. “Most directly, this implies that those trading futures believe bitcoin will settle at a lower price in January relative to where it’s trading right now,” Bloomberg’s Mark Cudmore writes on Thursday, before noting that “it should be emphasized that this is unlikely to be a perfect indicator in isolation since the futures are cash-settled and therefore not a foolproof vehicle for those attempting a bear-attack on bitcoin.”
Throw in the readily apparent bid for bitcoin cash and the fact that thanks to the holiday shopping season, retail investors are likely to be a bit short on disposable income available for speculating in cryptocurrencies and this is a bearish setup.
Oh, and this:
Nooooooooooo
E*TRADE WEBSITE SHOWS CBOE BITCOIN FUTURES `NOW AVAILABLE'
— Heisenberg Report (@heisenbergrpt) December 21, 2017
Anyone who wanted to cash out on their Bitcoin is facing a huge tax liability this year if they do so. Come January 1, 2018 at 12:00:01AM ET, the first thing I will be doing is not kissing my wife but watching the drama unfold as Bitcoin millionaires seek to cash out over coinbase.
Course, still long Bitcoin, but this will be fun to watch (till the wife slaps me).
Rudy
why is it January 1 that matters? is it just to delay paying taxes a year? or like on cnbs where they seem to have concluded that no one should sell in Dec but wait until january….or is it something in the tax code now?
Just pushing taxes a year out. This happens in plenty of markets, but Bitcoin is so thinly traded and the 2017 run-up was so steep that gains-taking is more likely, in my view, and the impact of this gains-taking will be enormous.
My personal belief is that Bitcoin is already trending down because of this. There are also no forseeable positive catalysts ahead as well.
I’m personally a great example: I bought a little bitcoin in July (roughly 1% of net worth) which has now turned into a 2.5% of net worth investment. So I’m tempted to take some gains off the table and de-risk, right?
But I could delay the impact of taxes by one year if I just wait ten more days….
And so begins the race to the bottom.
thanks for the response. if one has profits of 150, paying taxes at 25% today will put the gain back to 112.50 so you go from 250 in value today to 211.5 in cash. that 38.5 in taxes translates into a 15.4% deline…..so to be ‘ahead’ selling in january, you must be able to sell inside of a 15% price decline. if you pay more in taxes you could handle a bigger price dip. it also sounds like your outlook is for a large-ish decline.
given all the talk about delaying taxes, they always leave out the impact of price fluctuations/outlook. give me some feedback if you feel I am looking at this wrong, but ive never been as enthusiastic as others about delaying taxes in this manner…..matching losses and gains is a diff topic though.
I think you’re on point, but this is an irrational market where your rational math may not necessarily apply. Just something to keep in mind.
Or hedge with futs and screw price sensitivity
Short Bitcoin long Bitcoin Cash