BITCOIN: $1 Million, $0 & Bubbles(?)

Bitcoin Bubble

OpEd by Bill Taylor, CEO of FintekNews

Unless you have just awakened from a year long deep sleep, emerged from a dark cave, or maybe have had your headphones over your ears way too long, you surely know cryptocurrencies (led by bitcoin) are hot. Futures on bitcoin are now real and bubbles are blowing all over. OR, maybe you ARE aware of bitcoins, futures, bubbles and all the related media overhype and you really want to put the headphones on, crawl into that dark cave and sleep. Sounds tempting, right?

So let’s just dive into these media buzzing beehives of “expert” thoughts and opinions. Keep in mind that in the bitcoin world anybody that owns a bitcoin and is at least 20 years old is an expert.  Oh, and if they own one of the other digital coins, like ethereum, litecoin, etc, then they are a cryptocurrency expert. BUT, as more and more “older” established financial type folks jump on the bitcoin bus, then the price projection conversation gets really interesting. Like, when your neighbor’s nephew’s daughter says bitcoin is going to $100K it just doesn’t carry the same weight as when James Altucher predicts $1M.

Now, of course, we have two bitcoin prediction camps (bulls & bears) that are VERY convicted that they are right. And boy oh boy (or, girl oh girl……we are gender neutral here) do these camps have convictions. So on the extreme ends, will bitcoin be $0 or $1M?

Of course we should all be aware that the “bears” and $0 predictors did NOT buy any bitcoin at $.01, $100, $1,000, $5,000 or never for that matter and are either… a) jealous; b) embarrassed (cause they are supposed to be smart); c) old; or, d) all the previous.

In the other corner, the “bulls” are generally made up of the folks that invented the blockchain and basically ALL the financial technology that has revolutionized the world. In other words, great “street cred”.  Who ya gonna pick for your team?

So where IS bitcoin heading (yeah, really)? I think the best answer is where the market becomes very efficient, meaning when the buyers and sellers just plain agree that “this is where we want to be”. Maybe it’s when the final bitcoin is mined? What is “the magic number” (price) for bitcoin? Well anyone can speculate on a value (and have) so let me throw out MY brilliant (yeah, I am as good as anybody) analysis. Just like there are valuations based on a gold relationship, a percentage of global money supply, a barrel of oil, etc let’s get real simple. How about if it took one (1) bitcoin to buy;

  • A Ferrari……………….a bitcoin is worth roughly $250K
  • A round trip First Class ticket on Emirates Air from New York to Dubai…………………….a bitcoin is worth roughly $26,650
  • An ocean front condo in Miami…………………roughly $1, 750,000
  • A one (1) bedroom studio apartment in San Francisco………………$17,000,000 (close, right? Sadly funny)
  • A 14” pizza supreme from Domino’s……………………$14.99
  • A venti mocha latte from Starbucks………………………..$4.95
  • A night on the town (money no object) in Fargo, North Dakota…………………….roughly $55.00

Anyway, you get the idea. So, will bitcoin go to $1 Million? To zero? Who knows. I will enter the “pool” and call for bitcoin to go to $172,399.62, and my calculations are “proprietary”.

So, is bitcoin (or ANY of the other cryptocurrencies) in a bubble? Before I even enter that door, WHAT IS A BUBBLE?  That is such an “overused” word and is tossed around at just about anything. The only bubbles I totally embrace are the ones that come after popping the cork on good champagne. Even mediocre champagne has some nice bubbles for that matter.

Now, while I’m on that subject, here is an idea to end the bubble predictions (and “bubble yellers”) until they really mean something (like never). I propose that ANYONE who says something (like bitcoin, stocks, oil, etc) is a bubble must GO SHORT that asset using their OWN MONEY. Yeah, not just writing about it, saying it or any fancy other ways, Put up your own money if you call something a bubble. Certainly that will eliminate a whole lot of bubble babble. And IF anyone DID actually call bitcoin in a bubble at, say $500, AND got short…………well they have been punished enough and are probably being very quiet now.

Now, is bitcoin a bubble? (not talking, I’m short of cash). Is bitcoin going to $0? Uh, probably not. Where is bitcoin going? We will know years after it gets there…..certainly NOT before. In the meantime, bitcoin and the cryptocurrencies are THE most exciting new investments/assets/etc to come along……EVER!

Bill Taylor is a 30 year veteran of the Chicago financial markets, former hedge fund manager, and CEO of FintekNews.  He writes a daily column entitled “Bitcoin vs Gold” and is currently launching a Gibraltar-based cryptocurrency hedge fund and ICO.