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Citadel's Ken Griffin Says Bitcoin ‘Bubble’ May End in Tears

65 points by openmosix 9y ago

bfrog 9y ago
Honestly at this point if it collapses, it could be the trigger for a market pull back
desireco42 9y ago
Financial movers and shakers are trying to spook people and delay inevitable until they can grasp what is happening. There will definitely be a lot of corrections, but I see stable future for bitcoin as an asset.
- wglb 9y ago
  And people who are genuinely concerned: https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto-part-ii-fractional-reserve-marmot/ https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto... How can this possibly scale of the net value of created bitcoins grows at the rate of $10 billion dollars per day?
  - deleted 9y ago
    [deleted]
  - desireco42 9y ago
    "As a final note: this is not a Bitcoin obituary; Bitcoin will be fine. However, its price may change a bit. " So he is saying the same thing. Only he thinks there will be single event, I see this as a series of corrections and bitcoin will become more of an asset then a currency.
rubbingalcohol 9y ago
It may just as well end in tears for the nay-sayers who were too chicken shit to buy in while teenagers got rich off decentralized currency.
- the_cat_kittles 9y ago
  since there really arent that many fundamentals to bitcoin's value, at least obvious ones to me, i think its mostly a gamble. not that that is bad or good. just that i dont think its worth attributing to much credit or blame to winning and losing parties. ive followed it since it was a dollar in 2011... i still dont know what makes it go up and down except hype, china banning or unbanning it, and exchange thefts. someone got rich off beanie babies, are the people who didn't "too chicken shit" too?
  - flignats 9y ago
    There are many obvious fundamentals to cryptocurrencies. This is a revolution, this is huge.
    - mattchristen 9y ago
      And what might the obvious ones be?
      - luxuryballs 9y ago
        I think it's obvious that he's just pumping bitcoin
        flignats 9y ago
        pumping bitcoin, lol - you don't get it.
        rubbingalcohol 9y ago
        Yeah after people on Hacker News find out about Bitcoin the price will skyrocket and imma cash out
      - clavalle 9y ago
        Cost and ease of transaction. Difficult to steal or confiscate. Confidence of transaction completion in a low trust environment. I'm sure there are more but those are three off the top of my head.
lostmsu 9y ago
I may end today in tears.
mc42 9y ago
Several years ago during the MTGox collapse, /r/bitcoin over on reddit had a suicide hotline pinned to the top as multiple evangelicals had sunken their life savings into BTC. It's going to be a very difficult situation if / when BTC crashes again, and it won't end well for just about anyone. Edit: changed "has" to "as", as it was a typo.
- schnevets 9y ago
  Given the recent uptick in posts about people investing their life savings into bitcoin and bragging to friends and relatives about their wealth, it seems like the community hasn't learned anything from past turbulent times.
  - koonsolo 9y ago
    I guess such people are not able to hold on to their money for long anyway.
Matt_Mickiewicz 9y ago
"May" = pointing out a possibility vs. making a prediction. Ken Griffin "may" find a $10 bill on the street today. He "may" see his stock portfolio flash crash 30% this week. Why is this even news?
- elsewhen 9y ago
  The mainstream audience is trying to get their heads around this new asset class and when reputable and respected members of the financial industry say anything about cryptocurrency, it is likely to get a lot of pageviews.
Tenobrus 9y ago
Literally the same line about tulips has been repeated for the last 4 years. It's probably true, but at this point I'm curious why anyone is interested in yet another article saying exactly the same thing with no new information, content, evidence, anything.
- leggomylibro 9y ago
  You can lose a lot of money being right at the wrong time.
- nxsynonym 9y ago
  Ironically, the news works in the same way as BTC prices. There doesn't have to be any intrinsic value as long as people are talking about it. The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed. When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
  - chucksmash 9y ago
    > It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed. No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
- dnautics 9y ago
  people are idiots. The tulip bubble (and most every bubble since) have ended in a lot of tears because of leveraged trading. While there is some leveraging going on in the cryptocurrency market today, it's far less than any we've seen of late (and far less than the tulip bubble). If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.
baxtr 9y ago
My thinking is this: bitcoin and other digital currencies are becoming more and more “popular” (literally). More and more “ordinary” people start investing, the barriers of participation are coming down. As long as there is a large enough pool of people willing to join the party, prices will continue to rise. The question is when to pull out. I always get nervous when cab drivers start giving me free stock advice. Hasn’t happened yet with coins. So: way to go!
- wslh 9y ago
  Just Coinbase added 100k accounts last week: https://www.cnbc.com/2017/11/25/bitcoin-tops-8700-to-record-high-as-coinbase-adds-100000-users.html https://www.cnbc.com/2017/11/25/bitcoin-tops-8700-to-record-... I have been talking with a lot of this "ordinary" people who started investing in cryptocurrencies and I am scared.
  - viraptor 9y ago
    Depends... is it accounts for people who opened them to invest now, or is it for those who want to be prepared for the crash and some quick gains.
    - wslh 9y ago
      Most of the people I talk with have no idea about the risks involved and they cannot time the market.
  - tzakrajs 9y ago
    I've got people on my Facebook feed posting regularly about how we all need to buy BTC now while it is on the rise. They brag about their winnings and encourage others to play too...
  - lowbloodsugar 9y ago
    Came up at family gathering over Thanksgiving. The masses know about it because of its massive increase in value and are all afraid that they are missing out.
bg4 9y ago
Be scared when everyone is greedy, be greedy when everyone is scared.
- IncRnd 9y ago
  That's so true...
- 1001101 9y ago
  This time is different.
  - tfmatt 9y ago
    sarcasm?
sireat 9y ago
There is no question this is yet another bubble due for a pullback because there are no fundamentals supporting it. Bonus points if one can point to a well researched article on positive catalysts for BTC in 2018. Only thing is no one knows when and how deep the pullback will be. It could go up to 12-15k and then drop to 3-5k. Or it could go up to 20k and drop to 1k. No one knows. Disclaimer: I've only mined and sold my BTC since 2011 no speculation.
- glbrew 9y ago
  Well technically you are speculating by paying for the energy to mine the coins. You could take that money and save it as cash/M1 if you didn't want to speculate.
- strong_silent_t 9y ago
  I think there are two main drivers of price increase in 2018: - me-too buyers drawn by the huge 2017 increases - investors that have a mandate to seek out high-risk investments for a certain %age of their portfolio, and are gradually overcoming technical and regulatory barriers ( https://www.bloomberg.com/news/articles/2017-11-16/bitcoin-exchange-wants-to-be-digital-safe-house-for-hedge-funds https://www.bloomberg.com/news/articles/2017-11-16/bitcoin-e... ) For a decrease - MtGox style failure of a company holding a lot of coins - crypto-diversification as other projects get stronger
  - moosey 9y ago
    Another possibility for a decrease: A major holder of bitcoins tries to pull more than can be converted into a national currency. This basically topples what I equate to a ponzi scheme when people find out that it doesn't convert so easily back and forth at current evaluation, and reduces the value enough that others fearful of loss start to try to convert as well. I think that this is probably the most likely scenario where people discover that bitcoin, as a currency, is a bad idea: deflationary currencies cannot succeed (the rate of creation goes down while population goes up, so it must be deflationary). Further, it shows that bitcoin as a commodity/investment doesn't work, because to be honest there is nothing backing it up. What recourse do you have when the bitcoins you bought at 10k are now worth 1k? What real gain/loss has occurred that the rest of the GDP need concern itself with? Philosophically, I believe that bitcoin has presented an interesting technological breakthrough, but the implementation of production is off. I do believe that in the future that we'll see national currencies using blockchain technology. In the meantime, I'm not going to worry about it, and I'm not getting involved. If some of my friends become wealthy for it, then great for them, but I'm not particularly keen on 'get rich quick' or market timing schemes.
wslh 9y ago
I found very interesting the community discourse change from having a currency to use for sending transactions anywhere and with tiny fees to Bitcoin is a value reserve like Gold. The last assertion existed before but companies like BitPay, Coinbase and others were oriented to the former use case.
alkonaut 9y ago
If a viable cryptocurrency that doesn’t use massive amounts of energy for its transactions would come along, wouldn’t that pose a huge risk to btc? At that point, shouldn’t btc just be “outlawed” (to the extent it can be, e.g target exchanges, banning payment in physical stores and similar). It should go the way of incandescent light bulbs.
- jerkstate 9y ago
  it doesn't look like it right now, there are dozens of cryptocurrencies with better technology than bitcoin (including proof-of-stake), but lower public awareness and therefore lower market size.
hbosch 9y ago
At some point, bitcoin is going to have to be worth more than just n USD... right? Other than buying in and cashing out, what is bitcoin useful for right now? What makes BTC today better than my cash? I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it? Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?
- abritinthebay 9y ago
  If it’s to survive long term yes. It does have to be valued as for than an investment vehicle. But it isn’t, and while it does get used to buy things it’s hardly the most common use. Which is why most critics liken it to investments, and why it’s a problem.
  - dnautics 9y ago
    > If it’s to survive long term yes. It does have to be valued as for than an investment vehicle. Question: On what principles do you base this assertion?
    - free_everybody 9y ago
      Probably the intuition that a pyramid model investment can't continue indefinitely without some sort of inherent value of the trinket being sold? Then again, maybe that doesn't even matter.
      - dnautics 9y ago
        1) Inherent value is a fiction. There is no such thing as value without intervening human judgement. Besides which by any sane and consistent definition cryptocurrencies have inherent value (decentralized trust mechanism... Not gonna judge whether or not it's worth the current valuations of cryptos... It's just nonzero) 2) We're living in strange times.
alehul 9y ago
I'd agree with this sentiment. Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely. The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up. The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.
- bertjk 9y ago
  For every case where you used the word "investment", I think it would be more correct to use the term "speculation".
  - cbuq 9y ago
    When is an investment not speculation?
- umanwizard 9y ago
  Counterpoint: it is difficult and expensive to buy or sell gold, and it can't easily be used as a currency (at least not in the modern world). However, it has held its value remarkably well.
frgtpsswrdlame 9y ago
Alright guys, let's plot. How can we crash Bitcoin? Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you. So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?
- empath75 9y ago
  The futures market coming online in a few weeks will almost certainly crash it.
  - frgtpsswrdlame 9y ago
    How so?
- AnimalMuppet 9y ago
  The normal way this goes is: Asset X has good fundamental utility/value. Investors see that, and put money in X. X goes up. That's not a bubble. Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in. The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money. This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X. So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
bertomartin 9y ago
Headlines like these give me confidence that it will keep going. It may crash, however, most people would be caught off-guard...these things aren't telegraphed, plus, what's the motive? To save me money? or to make more money for himself?
colemannugent 9y ago
What really underlies this issue is whether you think Bitcoin is over or undervalued. Griffin leads off saying this is a bubble understanding that the people at Blomberg already believe this. Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff. Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate. I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued. I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.
- akvadrako 9y ago
  Well it's obvious Bitcoin is a bubble. It's basically unusable as a currency or payment processor and the only markets that use it are very small. It's not even a good choice for those use cases.
Tossrock 9y ago
Since I see a lot of people posting that there is no legitimate use case for Bitcoin, let me point out that the global remittance market is over $500 billion per year. Being able to cheaply and easily move money between countries is a huge need, and bitcoin is good at that. This isn't even touching grey-area financial services like evading capital controls, routing around artificially pegged currencies (ie what's happening Argentina), etc. This isn't to say that there isn't a big ugly correction coming, but it's not accurate to say that Bitcoin has no value/purpose.
- maxerickson 9y ago
  What do the people accepting the money in Argentina do with it? How do they get Bitcoin to begin with? Is value moving out of Argentina in a way that has little to do with Bitcoin?
  - Tossrock 9y ago
    There's an interesting NYT article about all of those questions: "Can Bitcoin Conquer Argentina?" (2015) - https://nyti.ms/1JRVRmL https://nyti.ms/1JRVRmL
- papabrown 9y ago
  I used to believe that as well. I have business and family in other countries and the traditional approaches were way too expensive ($50 for a bank wire, $X fee plus horrible exchange rates via Moneygram, etc). I used Bitcoin a few times to move money from my US accounts to my overseas accounts where I could then transfer it in local currency through the local banking systems. But then it started taking longer and longer for bitcoin transactions to clear. And the price was often moving during this window between when I bought in one currency and I could sell in another currency. Now I just use TransferWise. Less hassle. Costs are much more reasonable (a few bucks for small amounts) and I don't have to have do multiple transactions to get money from Point A to Point B.
  - Tossrock 9y ago
    Very interesting, thanks for sharing. I also experienced the long confirmation time issue, but it seems to have settled down after the segwit fork, which allowed more transactions per block.
whataretensors 9y ago
Banker says banking alternatives are not good. Color me surprised.
sergiotapia 9y ago
Bitcoin is going mainstream just now, at $9800/btc it's STILL early stage. At this point it will just continue growing because of finite amount and mainstream adoption. I wouldn't be surprised to see BTC reach $50,000 by December next year.
free_everybody 9y ago
Why are bitcoin prices going up? Because there's no reason why they should go down. People who buy bitcoin are largely trying to buy in "early". This raises the price, which makes other people want to be in "early". This raises the price, etc etc etc. Bitcoin has legitimate uses, but most people who buy crypto don't plan to use it. They plan to sell it. And they rely on the newcomers to inflate the price. Very much a pyramid type model. I think the most real threat is legislation restricting its handling. Until then, bitcoin price is not going to stop rising.
wol_ 9y ago
sure, sure. i've been hearing it for years, the same bubble talk and questions about it's utility. the same nobodies yelling about tulips and and pyramid schemes. i expect this low effort discourse but it is pathetic to see this unsubstantiated bullshit discussed in any seriousness. unfortunately i expect more stories like his as wall street comes to grips with this technology. i'm sure there will be efforts to undermine and manipulate the market but as long as bitcoin continues to be censorship resistant and decentralized there is not a damn thing anybody can do to stop its spread. every simpleton thinks they have some unique insight on why it will not work while the smart people have been working on improvements to the protocol.
root_axis 9y ago
Bitcoin let's you send peer to peer payments online without going through a financial institution; that's what the whitepaper says it was designed to do, and that is what it does. We can all agree on that. I think everyone can also agree that there is some utility in that capability. The question now becomes, what is the relationship between that utility and the quantity of bitcoin owned? I think the answer is clear: there is none, and based on that, I think it's safe to conclude that this gigantic rally based on a desire to own bitcoin is very likely a bubble.
skydv 9y ago
If I was given 1 satoshi every time I hear some old fart is preaching Bitcoin doomsday I would be a trillionaire. I can summarize it without even reading into I don't get Bitcoin, why don't they all use banks instead, banks are cool because I use them and I am def cool. Bitcoin is not supported by anything, look at that nice cool bank where we used to fuck whores, USD is backed by all that coolness, Bitcoin is backed only by math and I don't get math. But tbh fees are now ridiculous, I think Bitcoin will crash soon

65 points by openmosix 9y ago

Honestly at this point if it collapses, it could be the trigger for a market pull back

Financial movers and shakers are trying to spook people and delay inevitable until they can grasp what is happening. There will definitely be a lot of corrections, but I see stable future for bitcoin as an asset.

wglb 9y ago
And people who are genuinely concerned: https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto-part-ii-fractional-reserve-marmot/ https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto... How can this possibly scale of the net value of created bitcoins grows at the rate of $10 billion dollars per day?
- deleted 9y ago
  [deleted]
- desireco42 9y ago
  "As a final note: this is not a Bitcoin obituary; Bitcoin will be fine. However, its price may change a bit. " So he is saying the same thing. Only he thinks there will be single event, I see this as a series of corrections and bitcoin will become more of an asset then a currency.

rubbingalcohol 9y ago

It may just as well end in tears for the nay-sayers who were too chicken shit to buy in while teenagers got rich off decentralized currency.

the_cat_kittles 9y ago
since there really arent that many fundamentals to bitcoin's value, at least obvious ones to me, i think its mostly a gamble. not that that is bad or good. just that i dont think its worth attributing to much credit or blame to winning and losing parties. ive followed it since it was a dollar in 2011... i still dont know what makes it go up and down except hype, china banning or unbanning it, and exchange thefts. someone got rich off beanie babies, are the people who didn't "too chicken shit" too?
- flignats 9y ago
  There are many obvious fundamentals to cryptocurrencies. This is a revolution, this is huge.
  - mattchristen 9y ago
    And what might the obvious ones be?
    - luxuryballs 9y ago
      I think it's obvious that he's just pumping bitcoin
      - flignats 9y ago
        pumping bitcoin, lol - you don't get it.
      - rubbingalcohol 9y ago
        Yeah after people on Hacker News find out about Bitcoin the price will skyrocket and imma cash out
    - clavalle 9y ago
      Cost and ease of transaction. Difficult to steal or confiscate. Confidence of transaction completion in a low trust environment. I'm sure there are more but those are three off the top of my head.

lostmsu 9y ago

I may end today in tears.

mc42 9y ago

Several years ago during the MTGox collapse, /r/bitcoin over on reddit had a suicide hotline pinned to the top as multiple evangelicals had sunken their life savings into BTC. It's going to be a very difficult situation if / when BTC crashes again, and it won't end well for just about anyone. Edit: changed "has" to "as", as it was a typo.

schnevets 9y ago
Given the recent uptick in posts about people investing their life savings into bitcoin and bragging to friends and relatives about their wealth, it seems like the community hasn't learned anything from past turbulent times.
- koonsolo 9y ago
  I guess such people are not able to hold on to their money for long anyway.

Matt_Mickiewicz 9y ago

"May" = pointing out a possibility vs. making a prediction. Ken Griffin "may" find a $10 bill on the street today. He "may" see his stock portfolio flash crash 30% this week. Why is this even news?

elsewhen 9y ago
The mainstream audience is trying to get their heads around this new asset class and when reputable and respected members of the financial industry say anything about cryptocurrency, it is likely to get a lot of pageviews.

Tenobrus 9y ago

Literally the same line about tulips has been repeated for the last 4 years. It's probably true, but at this point I'm curious why anyone is interested in yet another article saying exactly the same thing with no new information, content, evidence, anything.

leggomylibro 9y ago
You can lose a lot of money being right at the wrong time.
nxsynonym 9y ago
Ironically, the news works in the same way as BTC prices. There doesn't have to be any intrinsic value as long as people are talking about it. The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed. When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
- chucksmash 9y ago
  > It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed. No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
dnautics 9y ago
people are idiots. The tulip bubble (and most every bubble since) have ended in a lot of tears because of leveraged trading. While there is some leveraging going on in the cryptocurrency market today, it's far less than any we've seen of late (and far less than the tulip bubble). If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.

baxtr 9y ago

My thinking is this: bitcoin and other digital currencies are becoming more and more “popular” (literally). More and more “ordinary” people start investing, the barriers of participation are coming down. As long as there is a large enough pool of people willing to join the party, prices will continue to rise. The question is when to pull out. I always get nervous when cab drivers start giving me free stock advice. Hasn’t happened yet with coins. So: way to go!

wslh 9y ago
Just Coinbase added 100k accounts last week: https://www.cnbc.com/2017/11/25/bitcoin-tops-8700-to-record-high-as-coinbase-adds-100000-users.html https://www.cnbc.com/2017/11/25/bitcoin-tops-8700-to-record-... I have been talking with a lot of this "ordinary" people who started investing in cryptocurrencies and I am scared.
- viraptor 9y ago
  Depends... is it accounts for people who opened them to invest now, or is it for those who want to be prepared for the crash and some quick gains.
  - wslh 9y ago
    Most of the people I talk with have no idea about the risks involved and they cannot time the market.
- tzakrajs 9y ago
  I've got people on my Facebook feed posting regularly about how we all need to buy BTC now while it is on the rise. They brag about their winnings and encourage others to play too...
- lowbloodsugar 9y ago
  Came up at family gathering over Thanksgiving. The masses know about it because of its massive increase in value and are all afraid that they are missing out.

bg4 9y ago

Be scared when everyone is greedy, be greedy when everyone is scared.

IncRnd 9y ago
That's so true...
1001101 9y ago
This time is different.
- tfmatt 9y ago
  sarcasm?

sireat 9y ago

There is no question this is yet another bubble due for a pullback because there are no fundamentals supporting it. Bonus points if one can point to a well researched article on positive catalysts for BTC in 2018. Only thing is no one knows when and how deep the pullback will be. It could go up to 12-15k and then drop to 3-5k. Or it could go up to 20k and drop to 1k. No one knows. Disclaimer: I've only mined and sold my BTC since 2011 no speculation.

glbrew 9y ago
Well technically you are speculating by paying for the energy to mine the coins. You could take that money and save it as cash/M1 if you didn't want to speculate.
strong_silent_t 9y ago
I think there are two main drivers of price increase in 2018: - me-too buyers drawn by the huge 2017 increases - investors that have a mandate to seek out high-risk investments for a certain %age of their portfolio, and are gradually overcoming technical and regulatory barriers ( https://www.bloomberg.com/news/articles/2017-11-16/bitcoin-exchange-wants-to-be-digital-safe-house-for-hedge-funds https://www.bloomberg.com/news/articles/2017-11-16/bitcoin-e... ) For a decrease - MtGox style failure of a company holding a lot of coins - crypto-diversification as other projects get stronger
- moosey 9y ago
  Another possibility for a decrease: A major holder of bitcoins tries to pull more than can be converted into a national currency. This basically topples what I equate to a ponzi scheme when people find out that it doesn't convert so easily back and forth at current evaluation, and reduces the value enough that others fearful of loss start to try to convert as well. I think that this is probably the most likely scenario where people discover that bitcoin, as a currency, is a bad idea: deflationary currencies cannot succeed (the rate of creation goes down while population goes up, so it must be deflationary). Further, it shows that bitcoin as a commodity/investment doesn't work, because to be honest there is nothing backing it up. What recourse do you have when the bitcoins you bought at 10k are now worth 1k? What real gain/loss has occurred that the rest of the GDP need concern itself with? Philosophically, I believe that bitcoin has presented an interesting technological breakthrough, but the implementation of production is off. I do believe that in the future that we'll see national currencies using blockchain technology. In the meantime, I'm not going to worry about it, and I'm not getting involved. If some of my friends become wealthy for it, then great for them, but I'm not particularly keen on 'get rich quick' or market timing schemes.

wslh 9y ago

I found very interesting the community discourse change from having a currency to use for sending transactions anywhere and with tiny fees to Bitcoin is a value reserve like Gold. The last assertion existed before but companies like BitPay, Coinbase and others were oriented to the former use case.

alkonaut 9y ago

If a viable cryptocurrency that doesn’t use massive amounts of energy for its transactions would come along, wouldn’t that pose a huge risk to btc? At that point, shouldn’t btc just be “outlawed” (to the extent it can be, e.g target exchanges, banning payment in physical stores and similar). It should go the way of incandescent light bulbs.

jerkstate 9y ago
it doesn't look like it right now, there are dozens of cryptocurrencies with better technology than bitcoin (including proof-of-stake), but lower public awareness and therefore lower market size.

hbosch 9y ago

At some point, bitcoin is going to have to be worth more than just n USD... right? Other than buying in and cashing out, what is bitcoin useful for right now? What makes BTC today better than my cash? I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it? Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?

abritinthebay 9y ago
If it’s to survive long term yes. It does have to be valued as for than an investment vehicle. But it isn’t, and while it does get used to buy things it’s hardly the most common use. Which is why most critics liken it to investments, and why it’s a problem.
- dnautics 9y ago
  > If it’s to survive long term yes. It does have to be valued as for than an investment vehicle. Question: On what principles do you base this assertion?
  - free_everybody 9y ago
    Probably the intuition that a pyramid model investment can't continue indefinitely without some sort of inherent value of the trinket being sold? Then again, maybe that doesn't even matter.
    - dnautics 9y ago
      1) Inherent value is a fiction. There is no such thing as value without intervening human judgement. Besides which by any sane and consistent definition cryptocurrencies have inherent value (decentralized trust mechanism... Not gonna judge whether or not it's worth the current valuations of cryptos... It's just nonzero) 2) We're living in strange times.

alehul 9y ago

I'd agree with this sentiment. Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely. The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up. The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.

bertjk 9y ago
For every case where you used the word "investment", I think it would be more correct to use the term "speculation".
- cbuq 9y ago
  When is an investment not speculation?
umanwizard 9y ago
Counterpoint: it is difficult and expensive to buy or sell gold, and it can't easily be used as a currency (at least not in the modern world). However, it has held its value remarkably well.

frgtpsswrdlame 9y ago

Alright guys, let's plot. How can we crash Bitcoin? Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you. So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?

empath75 9y ago
The futures market coming online in a few weeks will almost certainly crash it.
- frgtpsswrdlame 9y ago
  How so?
AnimalMuppet 9y ago
The normal way this goes is: Asset X has good fundamental utility/value. Investors see that, and put money in X. X goes up. That's not a bubble. Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in. The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money. This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X. So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?

bertomartin 9y ago

Headlines like these give me confidence that it will keep going. It may crash, however, most people would be caught off-guard...these things aren't telegraphed, plus, what's the motive? To save me money? or to make more money for himself?

colemannugent 9y ago

What really underlies this issue is whether you think Bitcoin is over or undervalued. Griffin leads off saying this is a bubble understanding that the people at Blomberg already believe this. Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff. Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate. I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued. I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.

akvadrako 9y ago
Well it's obvious Bitcoin is a bubble. It's basically unusable as a currency or payment processor and the only markets that use it are very small. It's not even a good choice for those use cases.

Tossrock 9y ago

Since I see a lot of people posting that there is no legitimate use case for Bitcoin, let me point out that the global remittance market is over $500 billion per year. Being able to cheaply and easily move money between countries is a huge need, and bitcoin is good at that. This isn't even touching grey-area financial services like evading capital controls, routing around artificially pegged currencies (ie what's happening Argentina), etc. This isn't to say that there isn't a big ugly correction coming, but it's not accurate to say that Bitcoin has no value/purpose.

maxerickson 9y ago
What do the people accepting the money in Argentina do with it? How do they get Bitcoin to begin with? Is value moving out of Argentina in a way that has little to do with Bitcoin?
- Tossrock 9y ago
  There's an interesting NYT article about all of those questions: "Can Bitcoin Conquer Argentina?" (2015) - https://nyti.ms/1JRVRmL https://nyti.ms/1JRVRmL
papabrown 9y ago
I used to believe that as well. I have business and family in other countries and the traditional approaches were way too expensive ($50 for a bank wire, $X fee plus horrible exchange rates via Moneygram, etc). I used Bitcoin a few times to move money from my US accounts to my overseas accounts where I could then transfer it in local currency through the local banking systems. But then it started taking longer and longer for bitcoin transactions to clear. And the price was often moving during this window between when I bought in one currency and I could sell in another currency. Now I just use TransferWise. Less hassle. Costs are much more reasonable (a few bucks for small amounts) and I don't have to have do multiple transactions to get money from Point A to Point B.
- Tossrock 9y ago
  Very interesting, thanks for sharing. I also experienced the long confirmation time issue, but it seems to have settled down after the segwit fork, which allowed more transactions per block.

whataretensors 9y ago

Banker says banking alternatives are not good. Color me surprised.

sergiotapia 9y ago

Bitcoin is going mainstream just now, at $9800/btc it's STILL early stage. At this point it will just continue growing because of finite amount and mainstream adoption. I wouldn't be surprised to see BTC reach $50,000 by December next year.

free_everybody 9y ago

Why are bitcoin prices going up? Because there's no reason why they should go down. People who buy bitcoin are largely trying to buy in "early". This raises the price, which makes other people want to be in "early". This raises the price, etc etc etc. Bitcoin has legitimate uses, but most people who buy crypto don't plan to use it. They plan to sell it. And they rely on the newcomers to inflate the price. Very much a pyramid type model. I think the most real threat is legislation restricting its handling. Until then, bitcoin price is not going to stop rising.

wol_ 9y ago

sure, sure. i've been hearing it for years, the same bubble talk and questions about it's utility. the same nobodies yelling about tulips and and pyramid schemes. i expect this low effort discourse but it is pathetic to see this unsubstantiated bullshit discussed in any seriousness. unfortunately i expect more stories like his as wall street comes to grips with this technology. i'm sure there will be efforts to undermine and manipulate the market but as long as bitcoin continues to be censorship resistant and decentralized there is not a damn thing anybody can do to stop its spread. every simpleton thinks they have some unique insight on why it will not work while the smart people have been working on improvements to the protocol.

root_axis 9y ago

Bitcoin let's you send peer to peer payments online without going through a financial institution; that's what the whitepaper says it was designed to do, and that is what it does. We can all agree on that. I think everyone can also agree that there is some utility in that capability. The question now becomes, what is the relationship between that utility and the quantity of bitcoin owned? I think the answer is clear: there is none, and based on that, I think it's safe to conclude that this gigantic rally based on a desire to own bitcoin is very likely a bubble.

skydv 9y ago

If I was given 1 satoshi every time I hear some old fart is preaching Bitcoin doomsday I would be a trillionaire. I can summarize it without even reading into I don't get Bitcoin, why don't they all use banks instead, banks are cool because I use them and I am def cool. Bitcoin is not supported by anything, look at that nice cool bank where we used to fuck whores, USD is backed by all that coolness, Bitcoin is backed only by math and I don't get math. But tbh fees are now ridiculous, I think Bitcoin will crash soon