Mwaah-haaah-haaah! Gotcha, suckers!
Bitcoin BTCUSD, -17.24% turned around and slammed the betting public’s fingers in the door — yet again — on Thursday, crashing more than $3,000, or 23%, from the previous day’s peak in a matter of hours.
The cryptocurrency’s sharp turnaround came after days of big gains had started to draw the Main Street speculators back into the trade.
Funny how that works, isn’t it?
We should have known something was up, because the “bitcoin analysts” had started appearing again across the media.
Is there an easier title anywhere than “bitcoin analyst”? All you need is a plausible manner, a good line in jargon about “digital currencies,” “nodes” and the like … and the ability to appear in public and talk total nonsense until someone tells you to stop.
The bitcoin analysts have come out of hibernation in recent weeks, as the cryptocurrency — left for dead in 2018 — had apparently started rising from the dead again.
Bitcoin nearly quadrupled this year, rising from $3,700 to Wednesday’s $13,850, with most of the surge coming in the past few weeks.
Naturally, the bitcoin analysts were appearing everywhere pretending they knew why this was happening.
“Oh, it’s all about the next ‘halving,’ ” they said.
Sure it is, Jack. (Don’t ask what the “halving” is.)
“Oh, it’s a bet against the dollar.”
Of course it is, Jill. “Bitcoin” is a safe-haven bet against the greenback, didn’t you know?
“Oh, it’s because Facebook FB, +0.98% is ‘legitimizing’ the digital currency ‘space’ by launching its own currency, ‘Libra.’ ”
Yes, sure, that’s what usually drives up prices in an open market — an imminent, massive increase in supply from a much bigger competitor.
“Oh, it’s to do with ‘institutional buying.’ ”
Sure. Pension funds everywhere are loading up on bitcoin. I can’t wait to see the lawsuits in about five years’ time.
Naturally, this latest round of explanations came with the usual auction of outlandish predictions. Bitcoin is going to $20,000. It’s going to $100,000. Pick a number. Have a guess.
You can’t be proven wrong, for the same reason you can’t be proven right. There is no “right” answer.
One good use
Bitcoin has no intrinsic value as an asset. Never had. It yields no cash, generates no income and serves no useful legal purpose.
It is most useful for money-laundering. If you need to get your money out of the country, fast, bitcoin is a pretty good way to do it.
I road-tested it back in the Big Bitcoin Bubble of December 2017, buying bitcoin from a machine in London, England, with pounds sterling, then using them online to buy a gold krugerrand in the U.S. for delivery to my office. It worked pretty well.
You could probably use bitcoin to bribe your kid’s way into college, though I suspect gold coins would be better.
Funnily enough, the latest big surge in bitcoin started just around the time protests kicked off in Hong Kong over an extradition law involving mainland China.
Are Hong Kongers using bitcoin to get their money away from Beijing before a crackdown? Who knows?
What could possibly go wrong?
Maybe it’s a great way to get access to those famous Nigerian prince bank accounts. Maybe he hasn’t left me $4 billion. Maybe he’s left me $4 billion in bitcoin.
Just send money. (Dollars, please).
Bet the farm
Every time I hear a “bitcoin analyst” give another wild prediction about where the digital currency is headed, I want to reply: OK, sunshine — don’t just tell me, bet on it.
You think bitcoin is heading for $20,000, or $50,000? Great. Mortgage your home and bet the stack in the futures market. Go on. Make yourself rich. Good luck.
Bitcoin is an entity with a strictly limited supply. There are only so many “bitcoins” around. So, by definition, any rise in demand will drive up the price. There’s no mystery to it. More demand, same supply: Prices go up. Bingo.
Various hedge funds and speculators, apparently taking leave of their senses, were betting heavily against the digital currency’s price on the CME futures exchange. So maybe some of the recent spike was just a “short squeeze.”
Meanwhile, stop kicking yourself for missing the earlier bitcoin rally, or getting in too late. You should be kicking yourself for missing out on “XMax.”Coinmarketcap.com, a crypto site, says this obscure “cryptocurrency” has rocketed 850% in a week!
Wow — just think! If only you’d put your life savings into “XMax.”
Is it too late? Is there “more room to run”? We’ll hear from an analyst, coming up after the break!
Meanwhile, according to Coinmarketcap, there are now 2,300 “cryptocurrencies” in existence, with a total market value — as of Thursday afternoon — of $311 billion.
No, I’m not kidding.
KO, -0.08% Which would you rather own?
Meanwhile, Coinmarketcap says a third of the entire cryptocurrency market changed hands in the past 24 hours. Yes, this is a long-term investment.
I don’t get why these bitcoin analysts who really understand this “space” even have to work for a living. If they knew what is about to happen and why, why aren’t they rich yet?
Brett Arends is a MarketWatch columnist.