On the heels of global market jitters over the bitcoin split and assorted hacks and robberies, some refreshing news from renowned market analyst Ronnie Moas, who recently released the first two parts of his 122-page report on Bitcoin and cryptocurrencies, with the remainder of the report to be released in coming days.
“In my view, the genie is out of the bottle, and cryptocurrencies will continue to rise and take market share away from stocks, other precious metals, bonds, and currencies,” Moas, founder of Standpoint Research, said in the report.
Mr. Moas went one step further than merely talking about it, and has invested his own money in a diversified portfolio of 10 of the top currencies including Bitcoin, Ethereum, Litecoin, Ethereum Classic, Monero, and Dash.
According to Moas, Bitcoin has the potential to almost double in value, from the current $2700 range, to $5000 in 2018. He also expects Ethereum and Litecoin to double their values in this period.
Predicting the movements of markets and the valuations of any stock or currency has always been a hazardous pursuit, however in addition to the confidence expressed by Mr. Moas towards the progress of these individual currencies, two other significant facts emerge from his statements.
The first is that cryptocurrencies have moved to the point of no return, “the genie is out of the bottle,’ as he puts it. This represents a significant leap in credibility for cryptocurrencies in general, given that they have been observed as curiosities and side issues by the mainstream media to date. By moving into territory held by traditional precious metals and stocks, cryptocurrencies build a credibility that is instrumental in finally establishing consistent stability.
Secondly, Mr. Moas is emphatic about describing the currencies in the context of other major market leaders like Amazon, Apple, Tesla, Facebook, Netflix and Google. This is a gallery of companies whose products, management and business approach are continually on the leading edge, and are light years away from those listed on the Dow Jones Industrial Average.
August 1 may be seen as a day of maturation for the cryptocurrency market. The Bitcoin hard fork happened, and this will force further improvements upon mining procedures, times, and fees. In its first day on the job, Bitcoin Cash doubled in value, offering a nice dividend to holders of Bitcoin. Whether this is a bump typical of traditional IPOs remains to be seen.
Not all financial gurus are on board the “Bitcoin and Ethereum price surge” optimism train. According to CNBC, billionaire investor Howard Marks holds the view that “digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.” Mr. Marks wrote this in his weekly investor letter on July 26.
Famous for predicting the dotcom crash, Mr. Marks holds to the philosophy that investment vehicles like stocks are priced against the intrinsic value of the company, something the cryptocurrencies can’t do.
These are strong arguments. A pyramid scheme is a in investment program largely founded on confidence without substance. Investors place their money with a trusted advisor, who regularly returns with good news and dividend checks. These checks do not come from profits made by the investments, but from other investors. The first layers of investors are smoothly convinced to reinvest their dividends, plus more if they have it, and the schemer continues to make the rounds. All the while, there are few actual investments – little of substance supporting the money.
Cryptocurrency certainly can be described as being based on faith and little more, at least to this point. The concepts behind Ethereum, Bitcoin and the blockchain are the stuff of science fiction nerdology – computers and databases creating a virtual economy through obscure algorithms. At least Linden Dollars, the currency of Second Life, gave people an experience to pair with their money.
So, the challenge is, which brilliant and highly successful mind should people follow? Much of cryptocurrency is virtual – seemingly a solution looking for a problem. But the problems are coming forward and are starting to mate with blockchains in serious ways. Every industry, from the supply chain to healthcare, from banking to agriculture is finding uses for blockchain technology in creating more accurate and reliable transactions and records.
As such, the technologies of blockchain, and its currencies will very soon be as inextricably linked to industry and commerce as fiat currencies are today. Mr. Marks is certainly right in his assessment, and people like him are much smarter and better informed than almost all the rest of humanity. But it seems to many that the virtualness of cryptocurrency, blockchain and many new-age companies like Airbnb belie a reality that has already changed the world. The Tesla 3, for example, has the potential to complete the tipping action that the Tesla S started. SpaceX has become one of the world’s most valuable privately-held companies at $21 billion, changing the economics of space flight, and Uber has already changed the taxi industry, and with it, every other company that depends on middlemen for delivery of a service or product.
Change is coming to the markets very fast, and each time it starts in a nebulous cloud of virtual dust before congealing into tangible services like TriVaGo and Tinder. These then expand their best features into more traditional worlds (look how many online retail catalogs use the swipe-left/right feature).
The Bitcoin and Ethereum price surge points to a slow and consistent domination of the markets that ultimately will prove both gurus, Mr. Moas and Mr. Marks as correct. The tangible value of the virtual space is getting more obvious by the day.