Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
World Stock Market Indices: What Will Happen in 2020 – 2022 - 25th Feb 18
Will We See A Cryptocurrency Wipeout This 2018? - 25th Feb 18
Stock Market Volatility Attributed to 'Shenanigans' - 24th Feb 18
Reintroducing The Concept Of Stock Market Investing Risk - 24th Feb 18
How Global Growth and Infrastructure are Driving Commodities - 24th Feb 18
Tips to Get Financing for a New Business - 24th Feb 18
Heavy Police Presence at Resumption of Sheffield Street Tree Fellings Protests - 24th Feb 18
Why You Should NOT Sub4Sub Free Youtube Subscribers - YTpals, Subpals, SubmeNow Test Results - 23rd Feb 18
One Belt, One Road, One Direction for Precious Metals - 23rd Feb 18
Gold’s Curious Sentiment - 23rd Feb 18
Relationship Between Crude Oil and U.S. Dollar in February 2018 - 23rd Feb 18
Why The Next Oil Boom Will Be Fueled By Blockchain - 23rd Feb 18
Gold Bull and Bear Markets - 23rd Feb 18
Why Recent Lows Are Crucial for US Dollar - 23rd Feb 18
Will Bitcoin be Larger Than NEO in 2018? - 23rd Feb 18
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

The Coming Crypto-Crisis?

Currencies / BlockChain Sep 01, 2017 - 06:43 PM GMT

By: Brady_Willett

Currencies

Since 2008 there has been a widespread increase in debt around the globe, central bankers have printed and experimented with direct asset purchases like never before, and there have been many dangerous bubble-like oddities in the marketplace worthy of attention (i.e. student debt, subprime auto, junk bonds, housing, etc.).  Nevertheless, despite the record increase in paper wealth since 1Q09 there has been no unifying ‘mania’ for the grumpily inclined to ceaselessly growl about.  That is, perhaps, until now:

“Bitcoin Cash’s price nearly doubled within its first 24 hours, surging from roughly $394 to $757…”  Forbes


Some digital currencies have increased 40-fold this year alone ~ Bloomberg

Since the beginning of the year the cryptocurrency market has gone from $20 billion to more than $170 billion (please note the estimated size of the market can change quickly).  Along with this impressive growth has been the launch of initial coin offerings (or ICOs), which, by some accounts, are occurring “at least one ICO per day at the moment”.  As if these mania-like occurrences were not enough, many people, including the likes of Cramer, think the best could be yet to come.

Faithful techies think in coming decades one digital coin will be worth $500,000.  WSJ

At risk of stating the obvious, the recent price growth in many cryptocurrencies (see chart) is not normal and entirely unsustainable.  Quite frankly, the very idea that a cryptocurrency – supposedly born because of a “mistrust of official money” – can be trusted after they skyrocket by  4,600+% in a year is absurd.  The reality is that if there wasn’t so much ‘stupid money’ floating around in the world there would not be an endless stream of ICOs – cryptocurrencies have wildly benefited from the free-wheeling monetary policies they supposedly, in theory, should help police.

As for the size of the market, while $170 billion is noteworthy this is still less than 2% the size of the gold market and a rounding error compared to the amount of leveraged fiat money floating around the world.  Accordingly, the very idea that an isolated mania in cryptocurrencies represents a current threat to central bankers doesn’t make a lot of sense.  Bitcoin, the king-pin of crypto, has been around for less than 9-years and has yet to live through a global economic downturn or financial calamity.  Is Bitcoin really going to take its growing band of ICO misfits and trample the current fiat money system?  Really?

Conclusions

For ‘sound money’/free market advocates the allure of crypto is palpable: if, somehow-someway, the cryptocurrency phenomenon could be harnessed and safely scaled it is possible that this disruptive technology could help subvert the reckless fiat monetary system.  In theory this is a wonderful idea (and gold has served an anti-fiat purpose for a long time).  Unfortunately, the purveyors of finance around the globe are firmly in bed with central banks, and central bankers rather adore the current fiat money system the way it is.

As any good precious metals owner can attest to, central bankers and/or Wall Street will do anything and everything to punish the competition.  And while cryptocurrencies are not a major threat to fiat yet, they are a competitor nonetheless.  Alas, the last thing any central banker that likes to print and any government that likes to borrow wants during the next crisis is investors piling into cryptocurrencies.  To ensure this doesn’t happen tactics to delegitimize/regulate the cryptocurrency market during the next price collapse could be the order of the day.  Other tactics, should crypto continue to be fashionable, may also be deployed.

In short, once a niche-like hobby for the tech savvy dreamers, cryptocurrencies are currently having their day in the sun.  Don’t expect this to last.  As speculators continue to chase gains and powerful monetary forces plot their attack, the cryptocurrency market will, without doubt, implode. The only question is when and how large of a disruption this implosion will be.

By Brady Willett
FallStreet.com

FallStreet.com was launched in January of 2000 with the mandate of providing an alternative opinion on the U.S. equity markets.  In the context of an uncritical herd euphoria that characterizes the mainstream media, Fallstreet strives to provide investors with the information they need to make informed investment decisions. To that end, we provide a clearinghouse for bearish and value-oriented investment information, independent research, and an investment newsletter containing specific company selections.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules