Bitcoin soars again on Amazon, Google news

How does that old Kenny Rogers song go?

“You got to know when to hold them, know when to fold them…” Continue reading

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Dimon trashes bitcoin, but is OK with CDSs

JPMorgan’s chief Jamie Dimon in a seemingly unprovoked response took on bitcoin again Tuesday at banking conference in Manhattan.

Tuesday, America’s shadow president as some have called him, belittled his daughter in order to trash bitcoin. Dimon said that his daughter purchased some bitcoin, concluding “it went up and she thinks she is a genius.”

But he went on to say he would fire any trader who bought bitcoin just for being stupid.

It’s a shame Dimon did not have the same outlook when it came to his traders  buying credit default swaps in London in 2012 when the bank lost more than $7 billion on the London Whale trade.

Look, I’ve met Jamie Dimon, and interviewed him. He has strong opinions on government and regulations. He makes no bones about how great America is and he does not suffer fools lightly.

And to be honest, he could be dead on with bitcoin. It’s not a great stretch to think governments would crackdown on untaxable money moving around the globe, but let’s not forget that Dimon has written checks totaling more than $21 billion in penalties and fines to Uncle Sam because his traders were stupid with packaging mortgages or manipulating commodities during and shortly after the Great Recession.

While bitcoin has fallen below $4,000 since his statements, bitcoin is up a mere 1,100% since the JPM chief trashed it in 2015 at the same conference. Dimon admitted he does not know how high the crypto could go before the crash saying, “it could hit $100,000 before it drops.”

There’s no way to know who will be right on any investment, and yes there will always be pain when markets crash. But for Dimon to say bitcoin is a joke and compare it to the tulip craze is so far off base, since his firm is using blockchain technology right now and  developing it for broader applications.

For a man who hates government over regulating banking, his words on a crackdown in the crypto space ring hollow to me.

IMF eyeing blockchain for roll out of SDR to replace US dollar: Rickards

I was talking to a currency trader, Thursday on the train going home. He knows I’m a business editor at a large paper in New York City.

He was telling me how Fx traders were not taking any positions after the end of this year. How the markets were constricting and said it was a huge problem and perhaps a bigger story.

I asked why? Was there a global currency coming or perhaps a reset?

All he could tell me as we got off the train was that I should look into it.

I researched over the weekend, and could not come up with anything. Now admittedly, I don’t usually look that deep into the currency trading world. It’s a closed community that’s not very transparent or accessible.

However this morning I did see that James Rickards, author of “Currency War,” among other titles and cited here before, put out an open letter to President Trump warning him of problems in the US dollar.

The nutshell of the letter is that beginning Jan. 2018 the International Monetary Fund — using blockchain technology, which is the same technology that bitcoin and other cryptocurrencies use, will be issuing Special Drawing Rights (SDR) as a new world currency to replace the dollar.

Now I find his letter highly doubtful given the quick timing of implementation, however I have this currency trader from Deutsche Bank telling me there are problems in the Fx markets, prior to the paper being published.

So I have two sources essentially saying the same thing.

Rickards does cite white papers and statements from IMF chief Christine Lagarde talking about SDRs and certainly Rickards has a long history of talking up the SDR as a world currency, replacing the dollar.

So what does this mean in the big picture? Rickards writes:

Just look what happened the last time we had a big change in our global financial system. In 1971, Nixon announced the U.S. would no longer officially trade dollars for gold. That created a lot of uncertainties, turning that decade into a nightmare for stock investors.

 

Take a look… the Dow Jones, an index of “stable” blue chip stocks (the kind most retirees like to hold), was cut in half. Stock investors bailed out of the market and, for the most part, didn’t come back for a decade.

 

I expect something similar once Distributed Ledgers go live.

The transition from a U.S. dollar system to a new system dominated by SDRs will be messy. Stocks will collapse… and will stay down.

 

There will be no recovery this time, because the U.S. government won’t be able to come to the rescue like they did in 2008.

 

You [President Trump] won’t even have funding for normal operations, let alone enough funds to save stock investors.

 

There has been a plenty of selling of the dollar recently, but that’s against other currencies like the euro and pound, If the IMF’s plan is true those currencies would also be devalued, so that is not a good indication of the plan.

Unless you figure in a currency trading scenario where the 800-lbs gorilla is the dollar and it is weakened, then all other currencies in the world will gain.

If crude can be traded in any currency, then there is big trouble in not only the currency market — a small backwater trading operation — but Treasury trading will implode.

That’s where Rickard’s nightmare scenario comes to fruition.


9-11-01: Never Forget

BTC marches to $5K as BIT fund gets flack

During Labor Day weekend could see $5,000 bitcoin pricing as the cryptocurrency rose above $4,800 early Friday morning.

The price rise came across most digital currencies as Asian markets continue to pile in as a hedge on North Korean missile firing concerns.

Thursday afternoon famed short seller Andrew Left, who made his bones by taking down Valeant Pharma, came out ripping into the Bitcoin Investment Trust.

The Bitcoin Investment Trust, founded in 2015, is a fund run by Grayscale Investments and designed to track bitcoin’s market moves. BIT holds 174,174 bitcoins, which equates to a total value of about $830 million, according Thursday’s close.

Left points out that BIT has a market value of $1.8 billion, which is more than twice the underlying value the asset — bitcoin.

“That alone is completely ridiculous, but on top of that they don’t even have insurance for the bitcoin that they are custodians of,” Left said on CNBC.

Many have called into question the value and premiums paid to get into BIT.

“For investors buying into the fund, such large premiums are a disaster waiting to happen,” Sumit Roy, an analyst at ETF.comwarned.

Left only had this comment on bitcoin’s value. “I’m not here to opine on the future of bitcoin…but the higher things go the thinner the air becomes.”

Mt. Gox founder, Mark Karpeles begins fraud trial in Tokyo

After a brief aside yesterday to explain the bizarre circumstances of my hospitalization, we’ll get back to the financial news and thank you for all the kind messages.

The trial of former Mt. Gox chief executive officer Mark Karpeles began Tuesday in Tokyo. He is charged with embezzlement and fraud stemming from the collapse of then the world’s most-active trading platform for buying and selling digital currencies.

Almost  850,000 bitcoins – then worth about $500M — were stolen in a hack disclosed in February 2014, along with $28 million in cash from the exchange’s bank accounts. In today’s falling bitcoin price the same amount would be valued at just under $2B.

Karpeles, a 32-year-old Frenchman, has pleaded not guilty to the charges, but acknowledges the transfers. This is the first time he has addressed the charges publicly after the bankruptcy filing in 2014.

“I swear to God that I am innocent,” he said in Japanese to the three-judge panel hearing his case, according to the pool report.

No word on how long the trial will last, but in its bankruptcy filing Gox reported that about 200,000 bitcoin were recovered after the alleged hack.