Bitcoin collapsed on Monday, although “collapse” is a relative term when you’re talking about something that’s quadrupled over the space of a year.
At one point, “digital gold” was on track for its biggest two-day slide since March.
But don’t fret too much, because Guggenheim’s Scott Minerd said it’s just a “setback” — a “flesh wound,” if you’re a Monty Python fan.
“Bitcoin’s parabolic rise is unsustainable in the near term,” he said, in a tweet timestamped eight minutes to midnight on the east coast. “Vulnerable to a setback.”
Minerd, you’ll recall, told Bloomberg Television last month that Guggenheim’s “fundamental work” suggested Bitcoin could be valued at up to $400,000.
I lampooned that in these pages, and I’d like to say I was justified in doing so. It’s not about whether Bitcoin can make it to nearly half a million dollars. Rather, it’s about the notion that Bitcoin, a thing which doesn’t exist in any real sense, has no internal rate of return, and no logical connection to any economic cycle, can be “fundamentally” valued.
As you can see in the figure (above), the combined Sunday-Monday decline was more than 20% at one juncture.
I shouldn’t have to say this, but I do: “Stores of value” (and some, if not all, of Bitcoin’s proponents have described it as such), don’t generally suffer two-day declines of 20% or more. If they did, the world would be better off on a barter system.
Importantly, it’s not even possible to know whether the chart above is 100% accurate. It’s basically accurate. But given the myriad avenues down which one can drive to obtain a Bitcoin quote, it could be more or less accurate depending on what avenue someone else drove down to get their Bitcoin quote.
I’m sure crypto proponents will insist there’s a standard. And, yes, Bloomberg has what’s supposed to be a reliable price. But the fact is, by the time you read this, the entire story could have changed. It could be up 20%.
Isn’t that what makes it fun? Well, sure. And that, more than anything else, underscores my overarching narrative vis-à-vis Bitcoin. Like gambling and skydiving, it can be exhilarating. But, also like gambling and skydiving, it can be dangerous.
“The target technical upside of $35,000 has been exceeded,” Minerd said. “Time to take some money off the table.”
That’s coming from a man who helps oversee $233 billion in total assets.
To be fair, maybe Scott was tweeting from a locale where it wasn’t actually midnight. That is: Perhaps it only appeared to those on the Eastern Seaboard that he was watching the digital token late into Sunday evening. But it’s at least possible that Minerd was up at 11:52 PM staring at Bitcoin.
“Institutional interest” indeed.
When I was on the floor and otherwise involved with open-outcry commodities 50 years ago we used to say in our lighter moments – which came very often back then – that we would trade any shit they put up there, “as long as it stuck to the wall” Bitcoin fails to reach that standard as it isn’t even real, it is hypothetical – it doesn’t exist, Many of us learned to trade with the dogs or the trotters – is Bitcoin a step up or just anorther mechanical rabbit?
I can’t tell whose capital is plunging faster – Bitcoin’s or trump’s…
Personally, I’ve been at least willing to take a speculative flyer on Bitcoin, but not trump – he always struck me as having guaranteed downside. It’ll be interesting to see if either comes back by 2024.
Maybe, but Trump did stick to the wall in 2016.
Efforts are underway to scrape him off the wall. Not sure where the scapings will wind up.
I have been a vocal opponent of btc for a long time. If institutional adoption is really here to stay, i could conceive of it replacing fiat ccy in certain applications. My main concern is whether gov’t makes this illegal. I think they should, don’t get me wrong, but i am really not sure they will. At 100bn market cap, it could be ignored, but can the same be said at 1tn? How about 10tn? At what point does it become ‘too big to fail’? With the interconnectedness of the globe, is it really possible that something wipes out the electrical grid and destroys the blockchain? Doubtful. My line of reasoning also makes me look less favorably at gold. There’s no good reason why the gold/silver ratio is 76:1; that is purely market driving the price with no fundamental basis. Silver is also pretty rare, is more useful, and most production is used up in industry (something like 400 of 600mm oz annual production gets used up, then 100mm oz for jewellry, and 100mm oz in funds/ETFs). Greater fool, ‘scarcity’, fiat debasement… Tough questions, honestly. The conversation is less straightforward than it was a year ago.