Why Bitcoin blast past $4400 again
The Bitcoin market has shot back up through US$4400 again just 2 weeks after the double hit of Jamie Dimon’s “fraud” call, and then the news of China closing down exchanges. News over the weekend showed both the power of a peer to peer network and also the growing acceptance at the highest level (Mr Dimon possibly excluded).
Firstly, whilst China has shut down some of the biggest exchanges, Chinese traders have highlighted the beauty of a distributed ledger and a monetary asset with no intermediary. Whilst exchanges may be shut, the Chinese traders have simply turned to peer-to-peer marketplaces such as LocalBitcoins.com and messenger applications to trade directly with each other, negating the need for an exchange.
We then heard from Christine Lagarde, the head of the IMF, who said the likes of bitcoin “... can replace national monies, conventional financial intermediation, and even puts a question mark on the fractional banking model we know today.” She acknowledged the current shortcomings of many crypto’s are all fixable over time and provided this salient reminder to the ‘old guard’ who dismiss it:
"Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies."
We then had reports out of the Wall Street Journal that Goldman Sachs are taking a different view to Mr Dimon and looking to deal directly in crypto currencies, joining the now more than 70 hedge funds active in investing in crypto currencies.
Just back to Jamie Dimon speaking on behalf of his J P Morgan… There was evidence presented shortly after his statements showing that very same J P Morgan buying crypto in large volumes. Whilst they would most likely, and maybe correctly, argue they were buying for their clients at their request, one can’t help but wonder if the very same J P Morgan who is massively short silver futures but massively long physical silver holdings is playing its usual, alleged, tricks….
Irrespective it would seem bitcoin and other crypto’s are proving yet again they are resilient, real, disruptive and not going away lightly. And this demand driven price action all on just 0.3% of the world owning it….