You have to ask yourself about the world we live in when Bloomberg sees fit to run a segment titled, “DaVinci and Bitcoin.” A sign of the times it certainly is. The tie that binds the two parabolic price behaviors apparently comes down to scarcity value.
The global art market is about $45 billion. So, who’s to question when a mere one percent of the market changes hands for a one of a kind? Why indeed? And Bitcoin’s market cap of $300 billion doesn’t even register compared to the $6 trillion of the world’s mined gold. An even smaller drop in the bucket!
What’s next you might be asking? Based on the current thinking, we could see a $225 billion trophy property change hands based on the prevailing value of the global real estate market.
Is it me or does this logic have a, “Get it while it’s hot!” feel to it, and not much more?
On the other proverbial hand, major markets are moving into the Bitcoin space at a furious pace. The Nasdaq will launch Bitcoin futures following the CME on the supposed road to legitimacy. This can’t possibly be mob scene madness we’re witnessing, but rather a market setting prices based purely on the fundamentals of supply and demand. Right?
Denying Bitcoin’s appeal is both near-sighted and infantile. Investors worldwide are justified in their anxieties about fiat currency degradation care of the quiet and corrosive currency wars being fought to sustain an impossible debt build, a race to the bottom with no precedent. In the context of bubbles, it’s the very global nature of Bitcoin that makes it so difficult to disavow. And yet, bubble it undeniably is.
The more pressing question on investors’ minds should be what happens in the aftermath of Bitcoin’s bubble bursting? What will the contagion effects be? What other frothy asset classes will it take down with it? Or better framed, what asset classes will be spared?
It appears that one man will be tasked with addressing the damage the coming storm will leave in its wake. To incoming Federal Reserve Chairman Jay Powell’s credit, in his Senate confirmation hearing, he rejected the notion that banks are Too Big to Fail. We can only be optimists in interpreting his position to be one of a strong man, determined to let the banks suffer the fates of their own making.
As for the markets and in turn, the economy, we won’t know about such things as zero, or worse, negative interest rates for some time yet. By all indications, the Fed is poised to hike rates come December 13th. What follows in the year to come though is anyone’s guess. It’s more than likely we will be caught off guard by a supply rebuild that flatters growth figures through the first quarter. Will the Fed depend on this sugar-infused data to keep tightening all the way into recession?
And then what? Will central bankers’ dreams of totalitarian control of our spending come true? Is the Bitcoin of today a mere technological dress rehearsal for Fedcoin and its central banking cryptocurrency brethren of the future? I explore the potential for just that in this week’s installment, Cryptic Currency: From Blockchain to Daisy Chain and Beyond.
If you can tear yourself away from the fawning news coverage of Janet Yellen’s last trip to the Hill, I invite you to hopefully enjoy and generously provide feedback at will.
Bidding Yellen a fare thee well, and wishing you well,