Bitcoin Bottom In?

Too often dismissed as a fad for geeks and criminals, Bitcoin and more importantly the blockchain technology it harnesses received two substantial shots in the arm of legitimacy and permanency last week.

Firstly that canny Wall St billionaire legend, Michael Novogratz who we reported last October announced the establishment of a dedicated crypto currency ‘merchant bank’, put that fund on hold in late December citing:

“To be clear, we delayed launching a hedge fund with outside investors capital last week because we didn’t like market conditions for new investors. In no way does it mean we are less bullish the crypto markets.”

It was a masterstroke call as bitcoin then had one of its bigger corrections in its history.  Whilst likely only temporary, it’s never a nice first experience for an investor.

Well, he’s back and now raising $250m to start it.  From last year:

"I have over 30 percent of my net worth in crypto assets.  We have venture bets, ICOs, tokens, investments in funds, mining and advisory.  We also trade very actively.  We are making a large long term bet on crypto."

We then had the US Senate Banking Committee hearing last week, with testimony from the chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, and the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, ostensibly on the potential dangers of digital currencies as investments.

The result however was a huge boost for Bitcoin, other cryptos and the blockchain as a whole with both the senate and those testifying giving both acceptance and noting its value.  There was even an insightful take on the age old problem of separating bitcoin and the blockchain with Giancarlo stating (courtesy of Fortune):

“It’s important to remember that if there were no Bitcoin, there would be no distributed ledger technology,”

And

“Sixty-six million tons of American soybeans were just handled through a blockchain transaction by the Dreyfus company to China. So Bitcoin is now being used, it’s being used in our American transportation and logistics system,” Giancarlo said, professing that his niece is a so-called cryptocurrency HODLer. “I think this distributed ledger technology has enormous potential. Now how it will be realized, when it will be realized are challenges, and those we can’t say.”

“I hope people pursue it vigorously,” Clayton, who was nominated by President Donald Trump, added about Blockchain.

Their focus was instead on stamping out fraud.  Amusingly one asked the question of the focus on crypto fraud when routinely we see big banks fined billions of dollars for constant manipulation and fraudulent acts…

On fraud, Giancarlo said:

“We intend to be very aggressive, if nothing else, so that people like my niece can have some security that there aren’t fraudsters and manipulators out there—and there are a lot, too many, far too many of them,”

We often query the market gyrations on announcements around regulation in Asia in particular.  Bitcoin and many (though certainly not all) other cryptos are legitimate investments and regulation should be welcomed not feared if you are a legitimate investor.  

Coincidentally or not the USD6500 bottom seemed to be found on this news and the price of bitcoin has been rising since.  That said, only hindsight can confirm bottoms…