Questioning if Bitcoin is Worthless

While I now hear of predications that Bitcoin will reach $100,000, I don’t hear many asking what if Bitcoin is worthless?

Overnight;

Ripple has fallen 40%
Ethereum has declined 7%
Litecoin has sunk 11%
EOS has retreated 20%

On 18 of the past 60 days, Bitcoin has risen or fallen 4% or more from its previous day’s close.

Currencies (or the “heir apparent’s”) shouldn’t be moving that much and if they are, it’s not a healthy sign.

After all, Bitcoin is already 11 years old.

(note: isn’t it funny that cryptocurrencies are being quoted and traded against that ‘old enemy’ being the fiat currency)

If crypto currencies aren’t ‘influenced’ by a government then how will we make economic adjustments for inflation?

If we start using Bitcoin to pay for food, fuel and rent, will inflation (or deflation) no longer exist?

If there isn’t any inflation, revenues, expenses, deficits, surpluses and perhaps taxes connected, how do I value a cryptocurrency?

Is it part of a greater fool theory?
Are we relying in the pure speculative value of the currency?

Is it there ‘scarcity’ of units issued which allows cryptocurrencies to rise or retain their value?

For it can’t scarcity of actual currencies, as there are 180 fiat currencies in the world (the top 10 are 90% of FX trade), while there are estimates of between 4,000 and 7,000 cryptocurrencies existing and 1,000 have been reported to have failed.

December 24, 2020
by Rob Zdravevski
rob@karriasset.com.au

Reading the Bitcoin signals

In this October 9th, 2020 post I highlighted the 10 year low in Bitcoin volatility (BVOL) and in 6 out of 7 previous times that we saw an extreme low in BVOL, the price of Bitcoin rallied ‘notably’.

Since then it has risen from the $10,800 mark to $19,200…….or 78% in 8 weeks.

The BVOL story has also changed. It has risen from 29 to 71.

December 2, 2020
by Rob Zdravevski
rob@karriasset.com.au

A 3-sigma event in Bitcoin

A week ago I wrote this about Bitcoin’s price action.

The arrival of the Bitcoin cavalry saw it trade to 3 standard deviations above its weekly mean and thus it’s logical to assume that the ‘fat part of the trade’ has been seen.

Such a 3-sigma event is expected approximately every 3 years.

Earlier this week, it lurched a $1,000 higher to reach $19,500 before falling 11% in the past 2 days.

As I write this, it’s now trading at $17,180.

Whether you consider Bitcoin a currency (which is different to a store of value) or a speculative digital asset, its underlying price volatility makes it a most fascinating asset to monitor, both mathematically and behaviourally.

Over the next couple months, I expect Bitcoin to trade back to the $13,500 level and notwithstanding any upheaval, likely to hold $12,000 as illustrated by the trend lines in the chart below.

Incidentally, over the past 2 days ,XRP and Ethereum (other cryptocurrencies) have fallen 24% and 15% respectively.

November 27, 2020
by Rob Zdravevski
rob@karriasset.com.au

Weekly Bitcoin price with 3 standard deviation Bollinger Bands

Bitcoin is silently screaming

A month ago, I wrote the post linked below, the currencies mentioned have held their supports as did Bitcoin.

Since then, Bitcoin has advanced 40% in the past 30 days.

https://robzdravevski.com/2020/10/05/short-term-aud-fx-range/

November 5, 2020
by Rob Zdravevski
rob@karriasset.com.au

Low Bitcoin volatility leads to a violent move

I am studying Bitcoin volatility and have found that the its 30 day historical volatility has fallen to its lowest level in my 10 years of data.

6 out of 7 times when its fallen to similar levels Bitcoin has rallied notably.

Last night, Bitcoin rose 3% or $300. It is currently trading at $10,878.

And Bitcoin’s correlation to the S&P 500 is ‘growing’.

The weekly chart below paints a clearer picture.

October 9, 2020
by Rob Zdravevski
rob@karriasset.com.au

Short Bitcoin Call

A quick note to followers – Making a call, Short Bitcoin at current price of $9,320.

Targets are $8,300, then $8,170 and $7,200

Will add to the short at $9,430.
Stop loss will be set at $9,600.

A break in AUDJPY below 0.7160, then 0.7130 aids the short thesis, which includes plenty of cross-asset correlations.

#bitcoin #btc #crypto #cryptocurrency

June 12, 2020
by Rob Zdravevski

Subscribe to my blog: www.robzdravevski.com
Drop me an email: rob@karriasset.com.au
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Bitcoin & SPX correlation

Doesn’t Bitcoin (the blue line) seem to have a leading correlation to the S&P 500 ?

 

 

Bitcoin – Not A Passing Fad

I love how crypto coins are making governments nervous.

Personally I’m not a user of it, but I can understand its allure to the nonconformists, to those who like to be considered as “early adopters” and those who just don’t want to be traced.

Bitcoin proponents are looking for ways to have their virtual currency legitimised (in terms of acceptance) but at the same time, government will want to regulate it based around protecting the consumer but the real reason will be so that they can tax it.

Ya Gotta Know How To Tax ‘Em

Government knows how to tax petrol (gasoline), cigarettes, ownership of land, income, sales of goods and capital gains realised on the sale of assets.

This is why I think Electric Vehicles (EV’s) don’t stand a chance of real success. Government support of EV’s is a mere sideshow to appease the “Green Lobby” and until government learns how to tax the electricity trickle from the powerpoint in your garage, then EV’s won’t become too popular. Interestingly,  New Jersey, Colorado, Texas, Arizona, and Virginia have all prohibited Tesla from selling cars in their states, mainly because that their direct internet selling model pisses off the incumbent dealership model ( see an older post from 2013, http://wp.me/p1d84Y-mr ) but it probably didn’t help when a couple Tesla’s were bought using Bitcoin.

Battle Is Just Beginning

U.S. tax authorities have classified Bitcoin as property, which the “crypto industry” doesn’t like.

The Aust. Taxation Office is now trying to figure out taxation guidelines surrounding Bitcoin and other crypto currencies.

An Aussie tax partner has said that under Aust. GST laws, Bitcoin wouldn’t be classified as money as it is not backed by a government. That must be annoying for the government.

Nervousness exists because Bitcoin and other crypto currencies have become a money supply which is not controlled by the state in its currently acceptable fiat format.

It cuts out the middle man!

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