Billionaire Mark Cuban is offering his take on the global financial crisis and what it would take to change his mind on emerging crypto assets like Bitcoin (BTC). Bitcoin has seen a strong reversal since last week`s highs. The cryptocurrency, which traded as high as $7,470 last week, is now changing hands for $6,550 Bitcoin`s price jumped close to $500 early on Thursday, triggering liquidations worth millions on crypto derivatives exchange BitMEX. In May, the rate at which new bitcoins are created will be cut in half. Investors might be keeping their bitcoins prior to halving next month, at which point rewards for each block mined will be reduced.
Entrepreneur and “shark” investor Mark Cuban is offering his outlook on the global financial crisis. The outspoken crypto critic, who has said he would rather buy bananas than Bitcoin, also sheds light on what it would take to change his mind on emerging crypto assets.
In a new interview on the Pomp Podcast with Anthony Pompliano, Cuban says he believes the government should bail out huge corporations that need cash to survive, but only if the American taxpayer reaps the rewards.
“If a company’s been impacted dramatically, like we’ve seen with airlines, like we’ve seen in the wedding industry, like we’ve seen with cruise lines, I’m not opposed to them going to the government for help. But when you give help, when you effectively invest in a company, whether it’s taxpayer money or my money or your money, you want something back. It’s never a gift.
In this particular case, I think any company of a specific size – small companies we’ll set aside as a different example – but for larger companies, if we’re investing in them, I want it to be an investment and not a gift. I want something in return.
We’ve seen what Warren Buffet has done with Bank of America and Goldman Sachs. He gave them money. It was preferred stock plus he got warrants. He made a boatload of money afterwards. Why can’t the American treasury do the exact same thing? The American taxpayers deserve that and by doing that, we bring back the American economy much more quickly.”
As for concerns about the government’s increasing push to print relief money out of thin air, Cuban says it’s a necessary evil to keep the gears of the economy in motion. As for the potential repercussions in the long run, he says we’ll find out sooner or later.
“This is a real world experiment. But the other side of the coin is, you know what happens if you don’t. If all these companies and organizations can’t pay their bills, like the MTA, like the transportation organizations in every city – the local governments in every city are facing the same problems – if we don’t pay it, we know what will happen. So we’ve got to try it. I’m not opposed to it, but you’ve got to make sure there’s no fluff in there.
When we did all these bailouts in 2009 and 2010 inflation [didn’t run] rampant. And then we’ve had other scenarios where interest rates go down to zero or negative interest in other countries and inflation hasn’t been rampant. It’s been deflation is more of a risk than inflation. Every economist will give you a different answer. I don’t have an answer, but we’ll find out and we’ll know for the future.”
Cuban says the markets will eventually turn around, but he expects another significant move to the downside in the near term. Although he’s not a big fan or gold or Bitcoin, he believes commodities are a solid bet in the current environment.
“Three years from now, five years from now, the market will be up from where we are today. It will be up who knows how much, but it will be better. But I still think we have a leg down. So I’ve gone to cash.
Even if I’m wrong in the public markets, I think there are going to be companies that need capital in America 2.0, that are going to be some amazing companies, that are going to be created. Having access to cash or having cash is going to give me the opportunity to invest in them…
I think commodities will go up because we’ll get at least some modicum of inflation. As companies try to protect their own manufacturing and try to bring core necessities domestically, I think that could push up the value of commodities. I couldn’t tell you which ones to invest in, but just generically on a macro basis.”
In order for Cuban to change his mind on the future of Bitcoin, he says BTC will have to become far more user-friendly and understandable than it is today.
“It’d have to be so easy to use, it’s a no-brainer. It’d have to be completely friction-free and understandable by everybody first. Then you can say it’s an alternative to gold as a store of value.”
Despite a growing number of merchants and companies that are accepting Bitcoin directly for various goods and services, Cuban argues that BTC remains too reliant on traditional money.
“In terms of being a way to transact, whether it’s just transfer of funds or whatever, you’ve got to be able to spend it. Right now, you still have to convert it for anything you want, and as long as you have to convert it you’re still dependent on fiat…
There’s so many peculiarities to Bitcoin: the halving, the mining. The fact that blockchain is a great opportunity, but in reality we haven’t seen blockchain applications take off, and there’s uncertainty with all the different types of cryptos and the arguments with all the different types of cryptos. These are things that create more and more confusion and diminish the confidence.
I get all the arguments, I’ve seen all the charts. I understand the potential problems with fiat. But to Bitcoin’s potential benefit – if everything goes into the shitter because we’re printing so much money and there’s global implications, Bitcoin has got something to deal with and something to say. And if we don’t, Bitcoin ain’t got nothing.”
Even After 80% Rally, Data Shows Bitcoin`s Bull Run Is Just Beginning
Bitcoin has seen a strong reversal since last week’s highs. The cryptocurrency, which traded as high as $7,470 last week, is now changing hands for $6,550 — 12.5% below the highs, but nearly 80% higher than the $3,700 bottom seen in mid-March.
There’s a growing sentiment that recent weakness is a sign that there will soon be a strong bearish reversal back towards the lows, but according to a crypto analytics firm, a key signal that marked the start of 2019’s bull run has appeared yet again. This may suggest that bulls are ready to continue to push Bitcoin higher.
According to data shared by Glassnode, a leading crypto metrics provider, on April 15th, there’s been a strong increase in the number for “daily new entities on the Bitcoin network.”
The metric’s seven-day moving average, which calculates the number of new users entering the BTC network, has risen from the 6,000 lows in mid-March to 17,000 just recently, an increase of nearly 200% in just a few weeks’ time.
As global markets are plagued with ever more uncertainty, interest in $BTC is increasing.
The number of daily new entities on the #Bitcoin network recently peaked higher than it has in over a year.
— glassnode (@glassnode) April 15, 2020
This is interesting as the metric hasn’t been this high since around April 2019, as the rally from the $3,000s and $4,000s bottom to the $14,000 peak by late-June was starting. The metric did immediately dip after hitting the 17,000 level but remained relatively high until the market peak in June, then fell off dramatically as Bitcoin crashed from its highs.
Fundamentally, growing interest in Bitcoin coinciding with bull runs makes sense: more people interested in cryptocurrency means more buying pressure, which correlates with higher prices as increased demand causes a dynamic in which there is unlikely enough supply at a certain price to keep a market satisfied.
Should historical precedent be upheld, a rally could follow.
It isn’t only the influx of new arrivals into the cryptocurrency space that could be a boon.
According to data from Skew.com, after yet another series of prints, the value of all circulating USDT supply has risen to $6.7 billion, $2.2 billion higher than the approximately $4.5 billion market cap seen at the start of March.
Charles Edwards, a digital asset manager, remarked in January that “major changes in Tether’s market capitalization have led Bitcoin’s price over the last 1.5 years.”
Major changes in Tether`s Market Cap have led Bitcoin`s price over the last 1.5 years.
5 January 2020 was no different.
A healthy signal.
Keep it printing 🖨️ pic.twitter.com/dfe0dBJzwh
— Charles Edwards (@caprioleio) January 13, 2020
Prior to the nearly 50 percent crash in November 2018 that saw BTC plunge from $6,000 to $3,150, the amount of Tether in circulation fell by hundreds of millions; also, prior to the majority of 2019’s crypto rally was the printing of hundreds of millions worth of USDT.
Photo by Unsplash on Unsplash
Author: Nick Chong
Bitcoin Price Spikes Above $7.1K, Liquidating $23M on BitMEX
Bitcoin`s price jumped close to $500 early on Thursday, triggering liquidations worth millions on crypto derivatives exchange BitMEX.
The sudden move forced liquidations of futures worth $23 million on BiMEX, of which $10 million happened in the 60 minutes to 08:00 UTC and the remainder in the following 30 minutes, according to data provided by the crypto derivatives research firm Skew.
Total liquidation volume seen over that timeframe was significantly higher than the three-day hourly liquidation average of $1.6 million.
Bets were bearish
While both long and short positions were liquidated, more than 93 percent of the total liquidations of $23 million were of short positions – a sign leverage was skewed to the downside.
Bitcoin had dropped to lows below $6,500 during the early Asian trading hours, having faced multiple rejections above $7,000 over the last few days. Further, Asian equity markets were also flashing red at the time, tracking overnight losses on Wall Street.
Hence, it`s not surprising a majority of positions on BitMEX leaned to the bearish side.
It`s worth noting that sudden and sizable price moves almost always lead to the forced unwinding of long or short positions, which in turn adds to the downward or upward pressure on prices.
For instance, as bitcoin fell below $6,000 during the early U.S. trading hours on March 12, BitMEX squared off nearly $700 million worth of long positions. That likely exaggerated the bearish move, sending prices on to lows below $5,000.
Tracking S&P 500 futures
Bitcoin continues to move roughly in tandem with futures tied to Wall Street`s equity index, the S&P 500.
The cryptocurrency fell from $6,900 to $6,600 during Wednesday`s U.S. trading hours, as the stock markets put in a negative performance on the back of a record drop in consumer spending, as represented by retail sales.
Sentiment remained weak early on Thursday, with Asian markets tracking Wall Street lower. However, the S&P 500 futures erased losses and rose by 0.8% after European stocks opened on a positive note.
Risk sentiment has reportedly stabilized due to world leaders taking steps to reopen economies hammered by the coronavirus outbreak.
Bitcoin`s latest upward move is backed by strong volumes and looks to have legs. Notably, the $400 uptick to $7,000 (marked by arrow) was accompanied by the highest buying volume (green bars) since April 2, according to Bitstamp data.
The cryptocurrency, however, needs to print a strong hourly close above the top end of the descending channel. A breakout, if confirmed, would likely invite stronger chart-driven buying, leading to a re-test of recent highs near $7,500.
The outlook would again turn bearish if bitcoin finds acceptance under $6,695 – the low of today`s high-volume bullish candle.
Disclosure: The author currently holds no cryptocurrencies.
Author: Wolfie Zhao
Bitcoin: The Halvening Cometh
HONG KONG, HONG KONG – NOVEMBER 9: As a visual representation of the digital Cryptocurrency, Bitcoin … [+] with US Dollar on November 9, 2017 in Hong Kong, Hong Kong. Cryptocurrencies – Bitcoin, have seen unprecedented growth in 2017. (Photo by studioEAST/Getty Images)
Bitcoin remains a controversial asset with most people either believing it as doomed to be valueless or set to be worth $1 million a coin. As such it is probably a fair bet to say it will do neither.
Here is the state of play:
The Bitcoin chart as the `halvening` approaches
This is what happened last time:
Here`s what happened to the Bitcoin price after the last `halvening`
The idea is that the price will go up because the supply of new coins will halve, so on an even keel basis there will be the same demand but less supply. The increase of bitcoin supply will half but interestingly it will also fall below the recent rate of U.S. dollar inflation. So the thinking goes: supply of new bitcoin down + supply of bitcoin less than U.S. dollars (substantially less since the recent titanic stimulus packages) + ever increasing spread of acceptance = significant price rise.
Doomsters say that miners will flee as they can no longer make money mining and the blockchain will seize up. However, every two weeks the mining difficulty retargets to take that into account, so this scenario simply won’t happen and in the end transaction costs would make up for any drop in new coin rewards if the situation became difficult. A $6 per transaction fee would fill the gap, which is super pricey, but not when large transactions are at stake.
The ‘halvening’ won’t break bitcoin, but will it be the beginning of the next leg up?
I think so.
Will it catapult bitcoin to $100,000 a coin? It could happen “but I want to believe” because I have a pile of bitcoins.
The key factor will be the shape of the developing coronavirus recession. The outcome of these huge stimulus packages are impossible to predict. Not only is their effect utterly unpredictable but even their scale is uncertain. Bitcoin (BTC) is just a tiny sideshow to all these goliath moves.
The only outcome that would hurt BTC is deflationary depression and with trillions of cash being helicoptered in to bailout everyone, at least the deflationary part seems hard to imagine.
What isn’t so hard to imagine is something the ex-Federal Reserve Chairman brought up: Hysteresis. That’s not the electrical thing, it’s the political type. Hysteresis is what Marxists use to explain away the fact that their “fabulous” theories never seem to be adopted or work. It’s a shock to the system that is needed to create the momentum for a sudden and irreversible change. That Ben Benenke should bring up the prospect for that is enough to make your ears burn. Bitcoin $1 million is totally ridiculous but then….
A Zimbabwe one hundred trillion dollar note
Whether hysteresis would mean a trillion dollar bill or something else entirely, it won’t do bitcoin any harm.
Love it or hate it, in times of hysteresis a bitcoin wallet would be a prized possession. Even without the halvening, bitcoin looks good as a haven/flight asset in very uncertain times.
Clem Chambers is the CEO of private investors website ADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginner’s Guide.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.
Follow me on Twitter or LinkedIn. Check out my website.
Author: Clem Chambers
Bitcoin Daily: Bitcoin Exchange Balances Drop
The seven-day moving average for all bitcoin held in exchange addresses dropped to the lowest point as of June 2019 to 2,214,365 in mid-April. The average on Tuesday was almost 8 percent lower from a 2,404,786-high back in January.
The heightened holding levels might have to do with a bullish forecast connecting a reduction in rewards for bitcoin mining. Rewards for each block mined will be cut to 6.25 BTC from 12.5 BTC through a process designed to curb inflation. At the same time, the drop in exchange balances hints at a move to holding strategies for the longer haul.
Investors typically take coins out of the exchanges to have in their wallets at a time that prices are forecasted to be on the uptick. They typically bring their balances in exchanges to gear up for a sale at a time when a decrease in price is forecasted or in the midst of tumbling prices. The price of bitcoin was $6,638.27 as of 7:53 p.m. Eastern Daylight Saving Time on Wednesday (April 15).
Bitcoin is lower by just more than 4 percent on the year, while gold is higher by 14 percent. The report, however, noted that bitcoin seems to be trading in tandem with forecasts for inflation.
Research firm Coin Metrics examined the digital currency’s correlation with the five-year forward expectation rate that the Federal Reserve Bank of St. Louis publishes. In its report, the organization said, “there is some evidence that correlation between Bitcoin and gold may be starting to increase, at least slightly. Although the short-term is still uncertain amidst the global pandemic, this could potentially be a long-term inflection point for Bitcoin if federal banks around the world continue to inject money into the global economy at historic rates.”