On the 30th of December 2016, I wrote that My Conviction Trades for 2017 [see http://bit.ly/2vQTv9T] were as follows
1. Long BITCOIN.
2. Long BITCOIN short Gold
Bitcoin started the year just above $1,000, and the overall growth now is approaching 900 percent. The cryptocurrency’s market capitalization has reached $145 billion [the total crypto currency market cap has soared to almost $275 billion]. Bitcoin is more valuable than major corporations like Siemens, Mastercard, British American Tobacco or McDonald’s. BITCOIN has been the top-performing currency every year since 2010, except 2014 and this Year at +900% the return has been parabolic [off the charts]. The Parabola was described thus by Thomas Pynchon
“But it is a curve each of them feels, unmistakably. It is the parabola. They must have guessed, once or twice -guessed and refused to believe -that everything, always, collectively, had been moving toward that purified shape latent in the sky, that shape of no surprise, no second chance, no return.’’ If you spend Your life deeply immersed in the markets, then it is necessary to sniff out these parabolic moves. And its Better to do Right than Say right as Edwin Lefevre noted nearly a century ago.
Or as T.S Eliot said in The Hollow Men
Between the idea
And the reality
Between the motion
And the act
Falls the Shadow
For Thine is the Kingdom
Lets return to the subject at hand. On the 3rd of March this year, the Price of #Bitcoin crossed the Gold price for the first time ever [refer my Trade 2. for the year]. Bitcoin hit $1,900 on 22nd May and $2900 on 7th June. In September Jamie Dimon of JP Morgan briefly stemmed its rise when he said 'you can't have a business where people can invent a currency out of thin air'.
By 1st November, Bitcoin was surging again after the Chicago Mercantile Exchange announced the launch of Bitcoin Futures contracts. On November 8th, 'Buy Bitcoin' Overtook 'Buy Gold' as an Online Search Phrase. As I file this report on Sundaymorning [and the grass is a luscious green after the short rains, outside my window], Bitcoin is all set to burst through $9,000,00.
The value of the second largest cryptocurrency Ethereum also smashed an all-time high of $485 on Saturday. Ethereum’s market capitalization is approaching $46 billion, and its gains this year have reached 5,000 percent. At the start of 2017, you could buy one token for $8.27, about 58 times less than the current price. This, you will agree, is mind-boggling inflation. In my experience, when I have found myself riding a Tiger by its Tail, the key issue is the getting off and not trying to run the Trade for every penny. I got off this Tiger. Interestingly, Bitcoin traded as high as $13,499.00 in Zimbabwe last week, but that speaks to the complete dislocation of that economy.
Mr. Novogratz who has raised $500m for a Crypto currency Fund said, "Bitcoin has value because people say it has value." and "Bitcoin you can look at as digital gold." Mr. Gartman said on bitcoin: "this is a market for criminals and millennials" Th mining of bitcoins now uses more electricity than Ireland or Nigeria. Our Central Bank Dr. Njoroge said he thinks bitcoin a pyramid scheme JP Morgan's Jamie Dimon called bitcoin a "fraud" in September and said it "won't end well." The Guardian spoke about the 8 fold price inflation and pronounced
''Since it is only widely used as a currency in drug deals or for ransom payments, there is either a huge boom in criminal activities outside the world of cryptocurrencies, or one within unregulated exchanges where these tokens are traded''
''One of the few men to get out in time before the Wall Street crash of 1929 did so – legend has it – because he was offered a stock tip by the boy who shined his shoes. He immediately sold all his holdings. If the mania for gambling on the stock market had reached down to the children on the streets, the bubble must have been due to pop at any moment. The corresponding moment for the cryptocurrency bubble will only be discernible in retrospect, but we have some pretty strong candidates already. The endorsement of one project by the reality TV star Paris Hilton has already happened''
There are many cryptocurrency schemes which are sold on the same grounds as the greatest South Sea Bubble prospectus: “For carrying on an undertaking of great advantage, but nobody to know what it is.”
My Investment Thesis at the start of the year was that Bitcoin was going to get main-streamed in 2017. It has main-streamed beyond my wildest dreams, therefore, I am now sidelined.
Let me leave you with Hunter S. Thompson '' “Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming “Wow! What a Ride!”