Last week, at a banking conference hosted by Barclays, JPMorgan CEO Jamie Dimon condemned bitcoin and offered ill-founded arguments to delegitimze bitcoin. Dimon went as far to state that governments should close or shut down bitcoin as a whole.
Many mainstream news networks including CNBC that covered the event criticized Dimon for his comments on bitcoin and his clear lack of knowledge in bitcoin and cryptocurrencies in general. Brian Kelly, a long-time CNBC analyst and prominent portfolio manager, stated on CNBC’s Fast Money:
“I think Jamie Dimon is wrong. One, the genie is out of the bottle here. And also, Dimon talked about how governments are going to shut it down. Bitcoin is designed to go around governments. That is exactly what it was designed for and you are starting to see that. Jamie even said in his comments that if you are in Venezuela, it might be good to use bitcoin to go around the government, which is exactly the point.”
Kelly emphasized that Dimon directly contradicted his point by justifying the purpose of bitcoin in regions like Venezuela that have poor banking standards and unreliable financial service providers. More importantly, Kelly depicted Dimon’s misunderstanding of the decentralized nature of bitcoin. If Venezuelan users can utilize bitcoin to send transactions as a way to go around the government, so can users in the US, Europe and Asia. Because the structure of bitcoin and all of the relevant people that operate bitcoin including miners, node operators and developers are distributed, it is virtually not possible to shut bitcoin down.
At the conference in which Dimon spoke, Chamath Palihapitiya, a prominent venture capitalist and the owner of the Golden State Warriors, also refuted Dimon’s claims. Palihapitiya dismissed Dimon’s criticism of bitcoin and his description of the digital currency as a “fraud,” as he stated:
“Absolutely not [bitcoin is not a fraud]. It cannot be a fraud. What countries can constrain today is how it [bitcoin] is effectively traded but it cannot be controlled. It is a fundamentally distributed system that exists peer to peer. And so to the extent that you can basically eliminate the will and the actions of every single person in the world, you can eliminate it. But in the absence of that, the genie is fundamentally out of the bottle.”
Palihapitiya’s explanation and praise on bitcoin and its structure was very similar to that of the Bank of Finland. In its latest research discussion paper, Bank of Finland, the central bank of Finland, encouraged economists to study the “marvelous” structure of bitcoin. JPMorgan and many other financial institutions have been working to create blockchain-based systems. Yet, after billions of dollars in investment, not a single successful commercial blockchain system has been released. That is because they lack the decentralized nature of bitcoin.
More importantly, as bitcoin expert Andreas Antonopoulos previously explained, bitcoin synergizes with other technologies such as Schnorr signatures, advanced elliptic curve applications and ring signatures. The blockchain merely operates as a database system within bitcoin. Hence, when Dimon stated that governments should close down bitcoin, he likely thought under the premise that bitcoin’s blockchain is operated by a central entity as many permissioned blockchain networks are.
But, an increasing number of traders and casual investors are beginning to appreciate the decentralization of bitcoin. In fact, trusted sources including bitcoin developer Andrew DeSantis and bitcoin investor IamNomad revealed that various bank accounts of JPMorgan Securities Ltd. purchased bitcoin earlier this week. Analyst Tone Vays stated that it was likely the clients of JPMorgan that bought massive amounts of bitcoin through a bitcoin exchange traded note provider in the Swedish stock market.
— Joseph Young (@iamjosephyoung) September 16, 2017
Despite the strong condemnation on bitcoin by the CEO of JPMorgan and other well respected economists such as Peter Schiff, a rapidly increasing number of people are starting to understand what bitcoin is, what it offers and what it is capable of. It is not a centralized platform which governments can shut down, it is a decentralized financial system that will co-exist with the global banking industry until it becomes the global financial network.
Notable Bitcoin Price Growth Events in October
October has been an interesting month for Bitcoin, with growth of about 40% so far, breaking a market cap of over $101,881,681,652.
But if you are looking at Bitcoin long-term, this is more than just numbers now. Yes, Bitcoin did experience some explosive growth this month (and has been this entire year), but we shouldn’t let that distract us from some of the main components that will fuel Bitcoin’s growth in the long-term.
- Not only did the price break $6,000 per Bitcoin for the first time ever, we started to see Bitcoin’s market cap rate surpass that of big banks such as Goldman Sachs ($93 billion) and Morgan Stanley ($89 billion). While comparing the market capitalization of a cryptocurrency with that of publicly traded companies doesn’t make much financial sense, it’s entertaining to watch financial institutions stress out about Bitcoin.
For example, the CEO of JPMorgan Chase Jamie Dimon can’t stop talking about Bitcoin and venting his frustration with the topic by calling Bitcoin a “fraud” and threatening to fire any employee trading it for the simple reason of “being stupid”.
We also saw Goldman Sachs state that Bitcoin is not the “new gold” in terms of currency, calling it volatile and the methods of storage vulnerable. Goldman Sachs also stated that precious metals like gold are still the best way to store value-long term. While this may be historically accurate, the world hasn’t seen anything like Bitcoin before. Understanding Bitcoin’s growth a matter of equipping yourself with the perspective and ideology that Bitcoin (or if/when whatever cryptocurrency evolves to take its place) can play a substantial long-term role in how society views money.
Traditional financial institutions such as investment banks are at an interesting point. Cryptocurrencies such as Bitcoin and Ripple are inherent threats to the very foundation that these multi-hundred-billion dollar companies operate on, and they can’t be defeated because of their decentralized nature. Additionally, many of the same banks that are threatened are also investors looking to reap the rewards of Bitcoin’s explosive growth, and also are incubating similar blockchain concepts to not get left in the dust.
- People are starting to look at Bitcoin as an oasis of solidity in an otherwise tumultuous alt-coin market.
In September, we saw an unprecedented crackdown on ICOs and alt-coins by government entities. China and South Korea outright banned the sales of ICOs, and the United States warned investors to be skeptical. While there are hundreds (soon to be thousands) of dubious ICOs, this crackdown did have effects on how investors view legitimate alt-coins. For this reason, many investors flocked to Bitcoin and were able to enjoy some solid growth in October.
So, that brings up the question of whether Bitcoin will be a source of stability in the future. Although the price has gone up a lot this month, that doesn’t make it any less volatile.
- Bitcoin still has a long way to go. One of the key pieces of news in October that influenced the writing of this piece was the prediction that Bitcoin will hit $27,000 in four months by an avid cryptocurrency investor and enthusiast called Trace Mayer. While Twitter is filled with all kinds of Bitcoin hooplah, Mayer’s prediction was based on a simple 200 day moving average. This 200 day moving average would put Bitcoin well over $27,000.
Four months is close enough in the future to anticipate, so I’m really interested to see where BTC ends up between then and now. The counter-argument against this would be that Bitcoin may just be experience a state of exponential growth and will cool off, but that’s what people have been saying for years.
It’s also important to note that Bitcoin’s main competitors for value storage and a medium of exchange are the US Dollar and gold. Bitcoin was able to earn a market capitalization of over $100 billion in just a few short years, but this hardly holds a candle to its competitors. The US Dollar money supply circles around $12,500 billion. All the gold that has ever been mined is worth around $8,000 billion.
This means that Bitcoin, this innovative new technology with exponential growth is only around 1% of its two main competitors. This leaves Bitcoin a long way to grow, and I personally don’t think it’s going to slow down anytime soon.
By all means, this isn’t a conclusive argument for where Bitcoin’s price will end up. These are just a few points I want to bring up regardless of whatever you choose to do with your money.
There are a handful good of arguments on both sides of the Bitcoin growth discussion, but it all comes down to how well you can either respond to short-term events, or how cemented you are in your long-term beliefs.
Personally, I don’t recommend day-trading or trying to “game” exchanges for the simple fact that losing money sucks, and this is an easy way to lose money.
However, what I can advocate is the thorough research of the fundamental factors influencing the growth of particular cryptocurrencies and how the world responds to it. For example, in October we saw investment banks start commenting more about Bitcoin (which at the very least hints at more media coverage), how many users decided to stick with Bitcoin instead of liquidating for fiat during rough alt-coin times, and some explosive growth that backs up the lofty price goal assumptions by crypto enthusiasts.
We Have to Talk About Bitcoin Again
It hasn’t been a day since our last bitcoin article, but the world’s leading cryptocurrency has soared to fresh all-time highs yet again. This time, prices approached $6,200 for the first time ever.
Bitcoin’s Bull Market
BTC/USD touched a session high of $6,180.00, bringing its total market cap to $103 billion. Prices were last seen hovering around $6,100, according to Bitstamp.
The rally on Saturday came less than 24 hours after the bulls tested the waters near $6,000. Analysts are almost certain that prices can still go higher, making a compelling case for investors who are still on the sidelines of the crypto rally. FundStrat Global Advisor’s Tom Lee believes prices could top $25,000 over the next five years. In fact, he says this is a conservative estimate.
Bitcoin’s epic run has dwarfed Wall Street’s post-election rally, and has defied repeated warnings from big banks and policymakers.
Bitcoin Gold’s Private Fork
Coinbase made a startling revelation Friday in its FAQ section, where it claimed that Bitcoin Gold (BTG) has already privately forked. The private fork occurred “at a point known only to the Bitcoin Gold development team.” The newly minted digital currency will be made publicly available when the Bitcoin blockchain reaches block no. 491,407. That’s estimated to occur Wednesday.
Bitcoin Gold isn’t your typical fork in the traditional sense of the term. The Wednesday fork date is when the first Genesis block will be mined. The Bitcoin network will have no part in this process whatsoever.
Market participants are still skeptical whether BTG is legitimate. The code has not been made available, and its developers have already mined tens of thousands of blocks.
BTG’s reluctance to release its code publicly is a “major security risk,” according to Coinbase. As such, the U.S.-based exchange will not support the new coin. The broker remains committed to adding support for the Segwit2x hard fork in November.
“After the fork, we will enable access when we have determined each blockchain is secure and stable,” Coinbase Dan Romero said in a blog post earlier this month. “We expect this to happen within a few days after the fork, but it may take longer if additional risks emerge.”
Featured image courtesy of Shutterstock.
Long-Term Cryptocurrency Analysis: Bitcoin Outshines Altcoins Again
The most valuable coin had another encouraging week, as it emerged from a brief but violent correction, just to reach new highs towards the end of the week, draining capital from altcoins. The total value of the market is stagnating near the all-time high, but BTC crossed the $100 billion mark as it surged past the $6000 price level, controlling 58% of the market.
With the long-term MACD clearly being overbought, and as the long-term target has been hit, investors should now be looking for exit points, even as the short-term uptrend is intact. The range projection target of the recent correction is found at $7000, but correction risks are already high, and only small positions should be kept in the current setup.
BTC/USD, Daily Chart Analysis
Most of the major altcoins are trading in narrow ranges this weekend after a slightly bearish week, as the optimism surrounding Ethereum’s major update faded and the second largest coin re-entered its previous range.
Litecoin, Dash, and Monero are still looking encouraging despite the lengthy correction, while the recently, while the relatively weak Ethereum Classic IOTA continue to show worrying signs. As the Bitcoin long trade is getting stretched, let’s see the how the daily charts of the altcoins are shaping up.
- Trade Recommendation: Stellar October 23, 2017
- Crypto-Friendly Japan Mulling ICO Ban? October 23, 2017
- Trade Recommendation: Lisk October 23, 2017
- More Powerful than an Emperor October 23, 2017
- Small Cap Trading Frenzy Drives Penny Stocks In October October 23, 2017
- Asian Market Update – Monday: Tokyo Gains after Election Landslide, Minor Losses in China, S. Korea October 23, 2017
- Ether Prices Fall Below $300 Amid Technical Breakdown October 23, 2017
- Buy FDS, PPC, BERY, and IIVI for the short-term October 22, 2017
- Notable Bitcoin Price Growth Events in October October 22, 2017
- Trade Recommendation: Monero October 22, 2017
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