Am I missing something here? Bitcoin broke the psychological price barrier of $10,000 USD today hovering around that price for most of the day. It seems Bitcoin's price continues to rise despite those who criticize it.
It's anyone's guess why bitcoin seems impervious to the media criticizing it, fund managers who bad mouth it, governments who try to regulate it, and laws passed to control it. Perhaps the naysayers are just ignorant of what bitcoin is and how it works. The protocol is sound and seemingly unstoppable.
Institutional investors and speculators are raising their greedy heads from the trough as Chicago Mercantile Exchange prepares to sell futures of bitcoin, the very notion of which baffles me.
While this could have some influence on the recent price increase it may be for psychological reasons rather than sound economic reasons. Selling futures could shed a more legitimate light on Bitcoin from a traditional investors vantage point, but it remains to be seen if it will really bring more money into the space.
Starting the second week of December 2017 CME customers will be able to sign contracts to sell bitcoins for an agreed upon USD value at a future date.
Once that contract expires, the customer can make up the difference between the current selling price of Bitcoin and the previously established price, either receiving money or having to pay it out. Basically, it's gambling on the price.
But this doesn't actually bring money into the Bitcoin ecosystem and more closely resembles a side bet off the books. Once the contracts expire that could be a different story depending on how well people's bets panned out.
How can this be driving the price of Bitcoin?
Here's the part that makes me wonder if these so-called professional investors really understand what they're doing or even understand bitcoin at all.
Buying futures in Bitcoin simply means that people will be able to speculate on Bitcoin without actually buying any bitcoins, limiting their exposure and the risk of having their bitcoins stolen.
That means that investors buying Bitcoin futures will not be driving the price up because they are not buying Bitcoins.
Bloomberg’s Matt Levine explains the paradox at play perfectly:
I thought the same thing when the Winklevoss twins’ pitched the SEC their bitcoin ETF startup.
Why buy a derivative of Bitcoin when you can own the actual Bitcoin? Am I missing something here? A 6-year old could see this.
Personally, I'll just hold the real deal and watch the show.
Many people would prefer to buy a derivative for many reasons, but mostly because they don't know how to actually buy the real BTC, they are afraid of the technology, they think they can be hacked... They rather buy something that they already known and are familiar with...
Many people simply are afraid to changes, afraid to something new, but they don't want to miss this BTC rocket... This will bring money (at least indirectly) into BTC that other way would not have come...
Another reason is greed, these people may want to buy much more BTC of what they actually can, there is around 16,7 millions of BTC circulating (More than half of total possible existence), so these corporations and institutions wants a bigger piece of the cake now that they are arriving late to the party...
A very good point about corporations leveraging for a bigger slice of the pie this late in the game. It's going to be interesting to watch the show.
feels good right :P hardy can't remember anymore how it felt when it was at 2000 :P
It feels really good. Like a box of possibilities was just opened in the room filling the air with a pungent aroma of a bright future.
https://steemit.com/bitcoin/@pawsdog/bitcoin-short-opportunity
https://steemit.com/bitcoin/@pawsdog/if-i-were-a-bitcoin-whale
LOL. That's funny!
I can remember around August/September when bitcoin dropped a few thousand down to ~ 2900 USD. People kept saying that it would continue downward and here we are almost 6 months later with it almost 4 times that original price.
The question I keep asking is, why does it keep going ever higher at such a crazy rate? Is it actually a result of the sudden and volcanic media exposure or is there something else going on? I think its safe to assume that BTC is not like any other economy in the world so it's a little futile to say it will crash using conventional wisdom.
It is remarkable how resilient it is. I hope they can get the fees down as I have watched those grow as well.
Today, I bought a gym membership from a friend of mine and paid them in Ethereum and was very impressed with the low fees (.21 cents) and fast confirmation. (couple minutes) But as a store of value, Bitcoin is rocking it. Way better than a bank account.
Yeah, I mean people still have hopes that ETH will surpass BTC one day, and from a technical standpoint is a better coin in many ways. I guess part of it is the lack of exposure that ETH has compared to BTC and of course the other part are all of the ICOs.
I remember when ETH was just $5 a coin about a year ago.
is a good news
Great post! I agree with everything you said.. and the most important about BTC futures is that is a step closer to legitimize it... Is amazing how BTC keeps surprising me.. I'm super optimistic about it, but was not expecting 10k before year end.. wow
In January 2017 I predicted $6,000 by year's end. So, yes, wow!
I disagree with Matt Levine here or at least he's missing the point of Bitcoin Futures.
Hedge funds who want to invest in Bitcoin can't because there's no maximum lost when investing in Bitcoin directly while theoretically Bitcoin Futures will guarantee a maximum lost thus hedge funds will be able to invest while also guaranteeing a maximum % lost if a lost was to occur.
I'm not sure if I'm wrong or not nor do I know who Matt is but this seems pretty basic stuff but very important stuff. The manager of a hedge funds of around 100B said they would invest in Bitcoin Futures money that can be invested right now.
Again, I don't have any sources on the maximum lost thing for hedge funds and that would need to be verified.
I remembered when one bitcoin was 150usd,my friends forced me to just buy 2,i was procrastinating, see my life now 😢 😢 😢 😁 😀 😀, life is a teacher, the more you live, the more you learn.