Skip to main content

Bitcoin crosses $100 mark in latest surge

Bitcoin, the virtual currency on everyone's lips, surged through the $100 mark this week. 

Bitcoin is currently trading at $117.2 on Mt. Gox (click through for current quotes and market depth), one of the most liquid bitcoin exchanges. Having traded near $15 in early January, bitcoins are now up over 750 percent in US dollar terms year to date. 


Here's a chart of the bitcoin/Euro price, currently at €92.18 on Mt. Gox. Interest in the bitcoin market recently exploded across Europe as Cyprus' banking crisis led savers to wonder if their bank deposits would be seized to help bail out ailing banks. 

Bitcoin charts


As the New Yorker explains in their piece on, "The Bitcoin Boom": 

"...That a number of panicked Europeans appear to have reckoned the wildly volatile, vulnerable, and tiny bitcoin market a preferable alternative to their own banking system, even temporarily, signals a serious widening of the cracks between the northern and southern E.U. countries in the wake of the euro-zone debt crisis. 

It also illustrates the broader collapse of trust that is threatening the world of global banking and fiat money. The weakness in existing currencies stems from lack of faith in institutions—particularly central banks, which are often in league with commercial and investment banks. 

When a government bails out a failed bank or insurance company—in essence, by printing money—the net effect is that the currency as a whole is debased, in favor of a few and at the literal expense of everyone else, which amounts to a fair description of today’s global financial system. Hence the sudden appeal of bitcoins, which appear, for the moment, at least, to be immune to the machinations of inept or crooked bankers and politicians." 

I've been reading and tweeting about bitcoins and the future of virtual currencies quite a bit in recent months. Recent events seem to have sparked a great deal of interest in this area, even for those (like myself) who have yet to transact in the virtual currency market. 

We've seen a previous boom and bust cycle in Bitcoin prices, with a passing media frenzy ("it's a bubble!", "an unregulated ponzi scheme!") to match. The last peak in Google web search interest came in June 2011, amidst official alarm over the "untraceable peer-to-peer currency's" alleged role in online money laundering and the drug trade. 

Bitcoin Google Trends interest


Now that we're seeing a near-parabolic rise in bitcoin prices across the globe, we can probably expect another new peak and cyclical crash (or maybe a slightly calmer consolidation period) to follow soon.

However, if the decentralized issuance of bitcoins remains steady over time, we could see a flourishing market for virtual currencies develop longer-term. Whether it's Bitcoin or some other innovation that stands the test of time, we'll be watching this trend with interest. On that note, I'll leave with you with the following quotes.     


Labels:

Popular posts from this blog

Lessons from Hedge Fund Market Wizards: Scott Ramsey

Today we continue our series, "Lessons from Hedge Fund Market Wizards" , with a look at Jack Schwager's interview with Scott Ramsey of Denali Asset Management.  Ramsey, a futures trader and CTA who works on the island of St. Croix, spoke to Schwager about his first foray into the markets, his evolution as a trader, and the process he stands by to protect and grow his clients' money. 1) . Ramsey started trading in college. He was roped into the OTC metals market via a broker's ad in the Wall St. Journal. The broker charged customers a flat fee to buy and sell as much as they wanted in a particular market for six month. At the time, Scott was a novice and didn't know about futures, so he traded metals in this fashion through the inflationary run-up of the late 1970s. 2) . Scott had to rethink his trading strategy after he bought silver at $50 an oz., only to watch it collapse to $26 following a long string of limit-down days. He sold as soon as the market...
Read more

Round trip stocks: momentum booms and busts

" No tree grows to Heaven ." - Old proverb adopted by Wall Street. What happens to hot momentum stocks when their rocket fuel runs out? How long can they continue to fly before they come crashing back down to earth? Why is the stock that you paid $100 a share for now trading at $39? These are questions that many novice traders and investors may be struggling with in the wake of the most recent market correction. Momentum stocks have been hit hard as the Nasdaq 100 and Russell 2000 indices have moved lower in recent weeks. Caught unaware by the recent slide, some traders may be wondering when their beaten-down stocks will snap back and allow them to exit with smaller losses (or even reach the mythical "break even" point).  While growth stocks still firmly within their uptrends may form constructive technical bases and move higher after this correction, others may experience sharper pullbacks or break down into full "stage 4" declines (see chart below...
Read more

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...
Read more