Crypto - Time to Get Excited Again?
Is the long winter for Bitcoin and others finally over?
Image by Pete Linforth from Pixabay
I haven't been deliberately ignoring Bitcoin and other cryptocurrencies.
There just hasn't much progress to get excited and write about.
I still view them as assets that may - or may not - go up terrifically in price, hopefully before I die.
I still hold the Bitcoin and Ethereum I bought during the late 2017 crypto bull market. I did stake my Ethereum, and that earned me a little.
I am still buying it just by charging my living expenses to my Gemini credit card, and getting 1% back as Bitcoin (Many other coins are available, but I prefer to stick with the "blue chip" crypto - Bitcoin.)
When Coinbase introduces a new coin by giving away a few dollars of it if you pass a brief, informative quiz, I always do that, and I still have those coins.
I still have some coin in a defi project, but am guilty of ignoring that. One day I'll have to take time to look at that again.
I'm still looking forward to BTC reaching the $1 million mark many have predicted for it.
In the Meantime . . .
Today, Bitcoin hit $35,000, the highest its price has been for quite some time. (The peak is $68,789, reached November 10, 2021 - so the winter has lasted two years.)
In October, Bitcoin rose 28%. Just last week alone, it rose 14%, and other cryptos also went up.
In other signs that interest in crypto is on the way up:
* Bitcoin Exchange Traded Funds are on close at hand
* Crypto investment funds are receiving more cash than since mid-2022
Through the BTC ETFs, Wall Street is getting into cryptocurrencies. That promises to bring billions of dollars into the field.
We're hoping the major institutions are going to save us all by making tokens safe again, and bring increased regulation from the government.
Wall Street wants sustainable products to sell to investors. Exchange Traded Funds are easier for ordinary investors to buy and sell than opening your own account at online exchanges such as Coinbase and Gemini. Plus, they'll enable large institutions, hedge funds, mutual funds, private offices and pension funds to invest in cryptos.
Forget about silly meme coins, overpriced NFTs (I hope you all bought some of the fantastic ones of Donald Trump.) and scandals.
Sam Bankman-Fried's fraud trial is winding down, and he'll probably spend many long decades in jail, as he deserves. (Guilty on all counts.)
So we're ready to put all that unpleasantness behind us, right?
Crypto's total market cap has risen to over $1.25 trillion. Plus, the volume of crypto trading is up 99%.
Other Factors Behind the Price Rise
* The stock market has had a terrible last three months
* Gold is higher, almost $2,000 per ounce
* Israel/Hamas war in the Gaza Strip, and the prospects for wider war
* Renewed inflation
All that seems to indicate BTC has become a "safe haven" for investors seeking a flight to quality.
The prospect of government regulation and Wall Street adoption of BTC and other cryptos must be making the inventor of BTC - if they're actually dead (nobody knows who it is) - spin in their graves.
Bitcoin was invented in the wake of the Great Recession of 2008 precisely because its early adopters HATED Wall Street.
And they wished to bypass governments altogether, not abide by regulations.
Also, Bitcoin was invented as a currency people would actually spend like cash, not as a new asset class where the IRS wants you to pay capital gains taxes if you do spend any.
But, even without the IRS, Bitcoin would be an inconvenient form of money simply because its price is so volatile.
Also, inflation - at least in the United States - is coming down. The 2024 Social Security cost of living increase is far lower than the 2023 COLA.
This does tie BTC in with gold, in that many people see Bitcoin as a hedge against inflation.
I for one don't hold with this assessment, at least in the long run.
In the long run, gold is NOT a good hedge against inflation.
The gold bugs don't tell the whole story.
In 1975 when Americans were allowed to own gold again, the price was around $150 per ounce.
The Dow Jones Industrial Average was then around 1,000 or so, maybe lower.
After a terrible three months, the DJIA currently stands at 33,000 - 33 times higher.
At $2,000 per ounce, gold is only 13X higher than it was in 1975.
The reasons why are fairly obvious.
Gold is driven mainly by demand, although it does have practical uses for dentistry and jewelry.
Bitcoin is purely driven by demand. The underlying blockchain technology holds the potential to cut massive amounts of record-keeping and fraud, but BTC itself is of no use if nobody wants to spend or accept it.
I, like other early enthusiasts, believe BTC will eventually reach $1 million and beyond. If Wall Street ETFs push BTC to $1 million or even anything close, bring it on!
But I am not relying on BTC to become my own lotto jackpot.
The stock market is comprised of companies selling goods and services. They are in the best position to defend their economic interests during inflationary times.
Conclusion
I maintain the most efficient way to financial freedom is to buy stocks that pay dividends, and reinvest the dividends until you can live on them. Then keep reinvesting at least a sizable percentage of dividends so you stay ahead of inflation.
Bitcoin, like gold, does not pay dividends, so it's speculative at best.
Speculate if you wish with a small fraction of your cash, but don't neglect investing in stocks that pay dividends.
Trump Trial Clarification
This is not worth a full article, but I can’t let it just go.
As I write, the New York civil fraud trial against Donnie Boy, Don Jr and Eric Trump is ongoing.
I just heard Eric lie his fucking ass off to reporters, and can’t let it go without comment.
He is claiming he left determination of building fair market values up to his “accountants.”
Either he’s too stupid to be managing a business, or he believes Daddy’s followers are too stupid to understand how stupid that is.
It’s NOT up to “accountants” to come up with fair market values.
“Fair market value” means exactly what it sounds like - the price a building would sell for if put on the market TODAY.
Any business that would give that job to accountants deserves to go out of business.
It’s the job of accountants to track money, other assets and debts - NOT to estimate the fair market value of any given building.
If you buy a building for $20 million, it’s the accountant’s job to put it on the books. Over time, accountants have to apply depreciation and so on. That is all based on the $20 million you bought the building for. It’s in the past, NOT today.
The balance sheet will then show the building’s “book value.”
Book value is an accounting term. It has NOTHING to do with current market value. It’s based on what a business paid for a building, which could be last year or 50 years ago.
Current market value is based on TODAY’S market. (Funny how that works, huh?) Usually, in good times, current fair market value will be higher than book value, but there’s no rule that makes that always true. In bad times, book value could be higher than current market value.
Also, it’s important to remember this trial is about commercial real estate, not residential. The value of your house is based on recent comparable home sales. Commercial buildings are like businesses. It doesn’t matter how big and beautiful they are - their value is based on their net profits.
Accountants DO calculate net profits, but NOT how much that translates into market value. Businesses are “worth” their annual net profit X a certain number of years. That’s more in good years, not so many in bad years.
For Eric to say he relies on accountants to determine current market value of Trump Org’s buildings is like admitting he’s too ignorant of business to run anything larger than a hotdog stand.
And he wouldn’t, except he picked a rich though corrupt daddy.
My widowed mother's investments enabled her to live a comfortable lifestyle for over 50 years, beating the pants off the Wall Street gurus even though she couldn't have read a balance sheet to save her life.
Find out how.
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