Bitcoin has lots of fans, especially among millennials, and the news that trading Bitcoin futures is set to begin on Sunday at 6.00 PM via an exchange run by Cboe Global Markets Inc. made them cheer with more enthusiasm than usual. Also, the US economy is doing great, the stock market is breaking record after record, Bitcoin price went through the roof, so what’s up with the catastrophic title?
Well, according to Deutsche Bank, one of the most worrying things about 2018 is a Bitcoin crash, together with other nasty things, such as rising inflation, a possible hot war with North Korea or the results of the Russia collusion investigation, courtesy of special counsel Robert Mueller. These three omens are just a few, as Deutsche Bank imagined no less than thirty risks for financial markets in 2018, but let’s stick to Bitcoin. Speaking of Bitcoin’s unparalleled volatility, Deutsche Bank’s chief international economist has said during an appearance on CNBC’s Trading Nation :
“you wonder where prices will even be by the end of 2017,”.
It’s mainly because it (Bitcoin price volatility) is something that I think financial markets so far have been discounting as a small issue. We do worry a bit that it could become more systemic, in particular, if the current trends continue into 2018.”
There are 3 dangerous elements that involve cryptocurrencies:
1.) Government Intervention: Its covetous nature will inevitably lead to enforcing taxes, fees and regulatory requirements for revenue gain and its need to control its subjects (that’s you). Plus, that’s a huge incentive to switch to digital currency, so they can monitor every transaction from everyone everywhere.
2.) Hacking: Which has been seen in both Bitcoin and Ethereum: with the tap of a few keys, bam, your wallet depleted.
3.) Electronic Digital Crisis: Disruptions in the grid through viruses (think Stuxnet), EMP, or other nefarious forces foreign or domestic and of course, any natural disastrous phenomena.
Any of these will effect ‘confidence’, which is the major driving force to the blockchain exchange.
Just something to consider.
Like almost all speculative run ups, this one is almost certainly headed for a spectacular crash. Imagine if you will an entity created to avoid regulation and oversight with no intrinsic value, supposedly now worth something North of $15,000. No I can’t.
And speaking of trading Bitcoin futures, the utility of Bitcoin is mostly hiding transnational transactions from government entities. The value of bitcoins is the number of dollars or other spendable currency that bitcoins can be sold for. With such low utility, value investors will not be futures customers, so it’s all a game of popularity, which can be fickle to say the least.