$10,000 bitcoin can’t happen with these exchange outages

While bitcoin was dropping like a stone on Monday with sellers clamoring for the exit, thereby crashing the Coinbase exchange, another digital crypto-like token, ethereum, soared to record highs.

Other exchanges like BTC-e, tweeted on Monday that it was hit by a distributed denial-of-service attack, or DDoS. Their website was back online at 4:00pm EST.

This was the second outage for Coinbase in the last three weeks and both outages were when bitcoin was falling.

So what is with the bitcoin exchanges, that they work fine when there are $200-$500 run ups in price, but fail miserably on the downside? And why can’t they get their stories straight?

For any cryptocurrency to gain broader appeal safeguards must be put in place to give each investor equal opportunity to buy and sell. The last thing anyone needs is a government to step in to regulate the market.

Another question is how is it that a digital currency exchange is developed that is not robust enough to handle spikes in traffic? The exchanges are built with the express purpose of having scalability. It’s not like you built a physical market and then people started trading it online and you were caught short.

The exchanges by using the ploy of server outages due to traffic or DDoS attack at a critical junction are setting themselves up for comparison with Mt. Gox and its implosion some years ago.

If you want to see a $10,000 bitcoin price, these exchanges — and there are about 10 of differing sizes on bitcoin — must come together to execute sales for each other if one exchange goes down.

You can’t expect neophytes, new to the cryptocurrency markets, to be able to manage navigating different exchanges to find one to buy or sell on.

The Federal Reserve is schedule to announce Wednesday the result of its two-day meeting on whether to raise rates another quarter point.

I’ve written numerous times that Yellen & Co. will not raise again this year.

So I’ll stand by that and say the Fed will stand pat and wish to monitor the markets and inflation and stand ready to raise at upcoming meetings, but will stand pat today.

While the low rates have created numerous asset bubbles from stocks to bitcoin, the tightening of credit will have a disastrous effect on the overall economy. GDP is looking at below 2% for the quarter after coming off a sub 1% first quarter.

That’s my call we will see at around 2PM EDT whether I am right or not.


June hike puts Trump in White House in January

The Fed minutes from its April meeting were released yesterday. The committee sees a June rate hike “as being on the table.”

So this table they speak of, is it like the kids’ table at Thanksgiving? Short legs and wooden chairs?

The premise that the consumer is coming back to yank this economy by its bootstraps is misplaced by bogus DC data.

The new future minimum wage of $15/hour will not spur meaningful growth. Rents are increasing since there is more money in their pocket. Any aspirational retail spending miracle is pie-in-the-sky thinking. Look across the board of the largest retailers speaking on their earnings calls the last two week.

Lowered guidance with sales falling off a cliff. And as far as an Amazon miracle, its sales are still a rounding error for overall US retail sales, so let’s not attribute the death of the mall to Jeff Bezos just yet.

The 5% unemployment rate that DC proffers does not speak to the job market. If a VP at a drug company is laid off and takes a job at CVS, the job market numbers have no mechanism to recognize that as a downward spiral that it is. When a %125K job becomes a $50K job there is an economic impact on that family that they may never recover from, as my friend Jon Trugman says.

Now if the Fed believes it needs to raise rates in order to help recapitalize the bulge bank balance sheets in June that is a different story. There’s no inflation, there’s no inflation and by the way, there’s no inflation.

You need meaningful pay raises for the middle-class to even think that inflation will rise to the Fed’s 2% wish number. Look at the last eight years, growth and inflation were stamped down due to 1% wage growth for most.

Let’s be honest, given what the stock and bond markets did at the beginning of the year after the Dec. rate hike, if June is on the table, then Trump may be in the White House in January.

Now for many in Washington that’s the equivalent of the National Lampoon cover with the headline: “If You Don’t Buy This Magazine We’ll Kill This Dog.”

So let’s say June is for Dads and Grads and not Hikes.