Traditional investors are fueling the latest Bitcoin rally

Shawn Knight

Posts: 12,803   +124
Staff member
Recap: Bitcoin is on a run to break the $20,000 threshold for the first time in its relatively short history. The popular cryptocurrency has only ever got close to the mark one other time, but the circumstances were a bit different back then.

In late 2017, Bitcoin went on a tremendous rally and nearly eclipsed the $20,000 mark. According to The New York Times, however, that run was largely driven by investors in Asia that were just learning about cryptocurrency. Once the risk and other questions had time to sink in, the selloff was hot and heavy. Just one year later, the value of a single Bitcoin had plummeted from north of $19,000 to under $4,000.

It’s late 2020 and Bitcoin is on another run, recently surpassing its previous high mark, but the road taken thus far looks much different than it did in 2017.

According to an analysis from data firm Chainalysis, buyers this time around include traditional investors that are treating Bitcoin as an alternative asset and using it to diversify their portfolios rather than quickly trading in and out.

Philip Gradwell, the chief economist at Chainalysis, said the people that have been buying Bitcoin recently are “doing it in steadier amounts over sustained periods of time, and they are taking it off exchanges and holding it as an investment.”

PayPal is one of the American companies leading the latest surge. Last month, the financial services company started allowing its US-based users to buy, hold and sell select cryptocurrencies including Bitcoin.

PayPal Chief Executive Dan Schulman told The Times in a recent interview that three to four times as many people joined its wait list when the news was first announced than they had anticipated, adding that their decision to support crypto “came as a result of conversations with government officials, and then seeing the dramatic shift into digital payments as a result of the pandemic.”

Image credit Lordowski,

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QuantumPhysics

Posts: 4,064   +4,162
If you buy Cryptocurrency, you'd better be ready to divulge ALL of your personal info and your trading records to the IRS or else...

Bitcoin isn't what it was prior to 2018.

It's a red flag in your portfolio if you do international money transfers.

Yes there's reasons it's going up: Paypal adopting it, more businesses hedging it, but at the end of the day, it's way too volatile to be a store of wealth like ETF/Index Funds/Gold.

You'd actually be a better investor buying up and scalping PS5/XBOX and Nvidia GPU cards.

At least you have something tangible to show than an imaginary speculative asset.
 
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Endymio

Posts: 1,340   +1,214
I'll hold onto the crypto though. It's a lot easier to carry around than gold bars or 3080s.
Until someone solves the ECDLP, that is. If it hasn't been done already, at least on a limited basis. I've always thought secp256k1 was a very odd choice of curve for Bitcoin.
 

Karlos95

Posts: 144   +55
If you buy Cryptocurrency, you'd better be ready to divulge ALL of your personal info and your trading records to the IRS or else...

Bitcoin isn't what it was prior to 2018.

It's a red flag in your portfolio if you do international money transfers.

Yes there's reasons it's going up: Paypal adopting it, more businesses hedging it, but at the end of the day, it's way too volatile to be a store of wealth like ETF/Index Funds/Gold.

You'd actually be a better investor buying up and scalping PS5/XBOX and Nvidia GPU cards.

At least you have something tangible to show than an imaginary speculative asset.
Sounds like someone missed the boat and is now annoyed. It is at all time highs in the last 11 years. Tell me again how it is a bad store of wealth. Clueless people saying it is a bubble. Try buying one in 10 years under $100k, you won't be able to, and I'll bet any amount of money on that. If you can't see that, you don't understand bitcoin, the maths, or your own FIAT $$$. The only way to stop it now is if you EMP the whole world.

Goodluck.
 
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terzaerian

Posts: 239   +284
Sounds like someone missed the boat and is now annoyed. It is at all time highs in the last 11 years. Tell me again how it is a bad store of wealth. Clueless people saying it is a bubble. Try buying one in 10 years under $100k, you won't be able to, and I'll bet any amount of money on that. If you can't see that, you don't understand bitcoin, the maths, or your own FIAT $$$. The only way to stop it now is if you EMP the whole world.

Goodluck.
It's one thing to level criticisms on Bitcoin, but writing off cryptocurrency categorically is just plain wearing blinders. The explosion of technologies in the altcoin ecosystem is Cambrian in scale. From the rise of DeFi in Ethererum, privacy coin of Monero, or blockchain governance in Tezos, virtually any criticism or shortcoming of cryptocurrency has already been long-addressed in any number of alts, tokens and second-layer solutions. At this point the only reason to remain a nocoiner is because your investments are intimately and completely tied up with the corrupt, obsolete financial system it's striving to replace and you've emotionally welded yourself to said system.
 
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Endymio

Posts: 1,340   +1,214
Bitcoin is at all time highs in the last 11 years. Tell me again how it is a bad store of wealth.
Store. (v): To keep for future use.

Bitcoin has been at that high for all of one day. You don't seem to understand the concept of a store of wealth.

The underlying problem with Bitcoin as a store of wealth is revealed in the headline of this very article. Whenever the price of any commodity is being driven by investors rather than by its intended use, a bubble exists. People aren't buying Bitcoin for its usefulness as a currency, but simply speculating on its future value. That means the largest component of that value is psychological perception, rather than utility.
 

DZillaXx

Posts: 146   +213
If you buy Cryptocurrency, you'd better be ready to divulge ALL of your personal info and your trading records to the IRS or else...

Bitcoin isn't what it was prior to 2018.

It's a red flag in your portfolio if you do international money transfers.

Yes there's reasons it's going up: Paypal adopting it, more businesses hedging it, but at the end of the day, it's way too volatile to be a store of wealth like ETF/Index Funds/Gold.

You'd actually be a better investor buying up and scalping PS5/XBOX and Nvidia GPU cards.

At least you have something tangible to show than an imaginary speculative asset.
Bitcoin isn't going away. It will still be here 20+ years from now.

Now I do agree that I wouldn't bet the horse on Bitcoin, but I was on the bitcoin bandwagon before Bitcoin was even worth 80 bucks. Now its nearly 20k. I mined Bitcoin before Asic miners were a thing and mined litecoin well before this whole bitcoin thing blew up and shot the price above $1k. I bought my house with my bitcoin winning years ago, and I still have a very small amount left. Honestly would have been better off if I didn't touch it, but whatever. Like any investment its about when you want out.

Nothing wrong with Crypto, and as another form of long term growth its not a bad call. I put 20 bucks a week into my coinbase account, its a small enough amount of money where it doesnt matter. Yet Crypto has only ever made me money in the long run. But for someone looking for longterm goals, ETF/Index funds are the way to go. Take advantage of your works 401k match. Get some rental properties. Diversify. Crypto should only be another investment and should never be your sole investment. Having Crypto is always better than no Crypto.
 
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terzaerian

Posts: 239   +284
Air is even easier to carry around. That's what Bitcoin is. Pure speculation, with nothing to back up its price. Modern-day tulip mania.
...is what you would say if you knew no facts about the history of Tulip mania, bubbles, or cryptocurrency.

You could be excused for believing this in 2014, 2015, or if you were a low-information retail investor in 2017 that only jumped in at the first ATH. But believing this now when major players like IBM are finding and applying practical applications for blockchain, when decentralized finance is spinning up to pull the rug out from under traditional finance, and when decentralized alternatives to Facebook and YouTube are sprouting up and rapidly growing, is either truly breathtaking ignorance or internalizing the malicious whispers of parties who are invested in preserving the status quo.

Can I please borrow your crystal ball so I can play Lotto with it?
Let's put it this way, if Bitcoin does go away, it's because the modern world as a whole has gone away categorically and we're back in the stone age. You can cheer that world on if you like.
 
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QuantumPhysics

Posts: 4,064   +4,162
Let's put it this way, if Bitcoin does go away, it's because the modern world as a whole has gone away categorically and we're back in the stone age. You can cheer that world on if you like.


Bitcoin is backed by NOTHING.

It's a speculative asset whose only value lies in its relationship to the US Dollar, Yuan, Yen or some other "real" currency.

What's backing the American Dollar???

#1 Nuclear weapons
#2 Fighter Jets that drop nuclear weapons
#3 Battleships carrying Nuclear weapons
#4 A Space Force
#5 Millions of soldiers carrying Assault Rifles and grenades.
 
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terzaerian

Posts: 239   +284
What's backing the American Dollar???

#1 Nuclear weapons
#2 Fighter Jets that drop nuclear weapons
#3 Battleships carrying Nuclear weapons
#4 A Space Force
#5 Millions of soldiers carrying Assault Rifles and grenades.
We don't actually disagree here, and you've illustrated the reasoning behind Bitcoin quite beautifully, actually. Fiat is backed basically by force and censorship. I'm not a fan, so I'm pivoting towards crypto. Simple as that.
 

QuantumPhysics

Posts: 4,064   +4,162
We don't actually disagree here, and you've illustrated the reasoning behind Bitcoin quite beautifully, actually. Fiat is backed basically by force and censorship. I'm not a fan, so I'm pivoting towards crypto. Simple as that.

Force and censorship = insurance.

Who do you call if your Bitcoin get hacked?
 

DZillaXx

Posts: 146   +213
Bitcoin is backed by NOTHING.

It's a speculative asset whose only value lies in its relationship to the US Dollar, Yuan, Yen or some other "real" currency.

What's backing the American Dollar???

#1 Nuclear weapons
#2 Fighter Jets that drop nuclear weapons
#3 Battleships carrying Nuclear weapons
#4 A Space Force
#5 Millions of soldiers carrying Assault Rifles and grenades.

Bitcoin is backed by the same thing as any other modern currency.
People.

People put value on objects. Simple as that.

It's why people will pay $1000 to get a Xbox that retails for $500.

Bitcoin is largely the same as dealing with Cash. If it is Stolen, there is no one to call. There is a reason why we go through an institution for handling money.

Crypto is not going away. It serves a purpose in a digital era. And if that digital world ends, get good at collecting bottlecaps. As that's the currency in that scenario.
 

kiwigraeme

Posts: 193   +177
What traditional investors or commercial investors do is often mute .
Oh Citibank is loaning in Argentina - they are smart cookies - we'll do it to.
On Deutsche bank is investing in Russia - those germans are real smart - we'll do it to .

I have memories of Banks in the nineties doing all this crap - executives flying to Rio to be sensually entertained . Oh dear we loss it all - oh well put the fees up on and bread and butter customers and redo the executive suite as my mistress doesn't like it.
With bitcoin as I have previously stated play the cycles and you will probably do fine - as it is nearly impossible to collapse ( unless by law ) as the big players control over 50% of it
 

Endymio

Posts: 1,340   +1,214
But believing this now when major players like IBM are finding and applying practical applications for blockchain, when decentralized finance is spinning up to pull the rug out from under traditional finance, and when decentralized alternatives to Facebook and YouTube are sprouting up and rapidly growing, [is] breathtaking ignorance
None of those events have any relationship to Bitcoin. Yes, blockchain technology is useful. But claiming that proves Bitcoin has value is akin to saying that, since propellers are useful, my propeller-tipped beanie cap must be highly valuable.
 

Endymio

Posts: 1,340   +1,214
Bitcoin [is] nearly impossible to collapse ( unless by law ) as the big players control over 50% of it
While I agree with your premise that Bitcoin is unlikely to collapse entirely, that isn't because of those 'big players', not as long as Bitcoin is priced on a free-floating exchange.

Let's assume that one single player owned 90% of all Bitcoins, and they hoarded that entire stake to keep the price as high as possible. If the remaining 10% were placed for sale, and found no buyers, the price would still plummet to zero. Exchange prices based solely on demand for the supply up for sale, not the total supply. In the theoretical worst case scenario, the only way this can be prevented is if there are buyers willing and able to purchase the full 100%.
 

terzaerian

Posts: 239   +284
None of those events have any relationship to Bitcoin. Yes, blockchain technology is useful. But claiming that proves Bitcoin has value is akin to saying that, since propellers are useful, my propeller-tipped beanie cap must be highly valuable.
This is more like saying that, because the Wright Flyer can't ferry over a hundred passengers coast-to-coast in under 8 hours, it's inherently worthless. The design limitations of Bitcoin do not invalidate its value or put a ceiling on it.
 
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Karlos95

Posts: 144   +55
Store. (v): To keep for future use.

Bitcoin has been at that high for all of one day. You don't seem to understand the concept of a store of wealth.

The underlying problem with Bitcoin as a store of wealth is revealed in the headline of this very article. Whenever the price of any commodity is being driven by investors rather than by its intended use, a bubble exists. People aren't buying Bitcoin for its usefulness as a currency, but simply speculating on its future value. That means the largest component of that value is psychological perception, rather than utility.
And yet people don't put a bubble on house prices yet that is exactly what it is.
Also gold, know why gold goes up when everything else looks grim? Is that a bubble too because it is driven by investors?

I know a lot of people using bitcoin as it is intended. Just because people want to make money off it doesn't mean it isn't useful. Kind of like how people bulk buy PS5s so they can sell the others higher and MAKE money. SAME CONCEPT.


TO say one is different is to be delusional.

I mean, if you want a store of wealth just hold your crappy fiat. Only goes down by 1.2% every year, whereas bitcoin, if I held at the start of the year I would be up 165%. Inflation will be worse with all the stupid printing all gov's have been doing. Can't print new bitcoin, only will ever be 21m coins. Keep eating the gov's propaganda of they are the greatest, but as history would suggest, they aren't.
 
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kiwigraeme

Posts: 193   +177
While I agree with your premise that Bitcoin is unlikely to collapse entirely, that isn't because of those 'big players', not as long as Bitcoin is priced on a free-floating exchange.

Let's assume that one single player owned 90% of all Bitcoins, and they hoarded that entire stake to keep the price as high as possible. If the remaining 10% were placed for sale, and found no buyers, the price would still plummet to zero. Exchange prices based solely on demand for the supply up for sale, not the total supply. In the theoretical worst case scenario, the only way this can be prevented is if there are buyers willing and able to purchase the full 100%.

Yeah but they are smarter than that - I think they propagate the cycles - that's where they make
 

Endymio

Posts: 1,340   +1,214
This is more like saying that, because the Wright Flyer can't ferry over a hundred passengers coast-to-coast in under 8 hours, it's inherently worthless.
Here was the argument you put forth:

Premise A: Bitcoin uses Blockchain
Premise B: IBM's use of Blockchain has value.
Conclusion: Bitcoin has value.

A classic syllogistic fallacy.

Who do you call if your Bitcoin get hacked?
The same authority you'd appeal to if the IRS ordered your bank account frozen for political reasons, I imagine
Whoa, there. If the IRS freezes my bank account, I have recourse under case law and the U.S. Constitution. Many people who this has happened to have sued, won, and recovered their funds.

If my Bitcoin wallet gets hacked (or the Bitcoin algorithm itself is hacked), I can appeal to no one.
 
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Endymio

Posts: 1,340   +1,214
And yet people don't put a bubble on house prices yet that is exactly what it is.
Also gold, know why gold goes up when everything else looks grim? Is that a bubble too because it is driven by investors?
Yes -- when gold prices or housing prices are driven primarily by investors, it is indeed a bubble. That is, in fact, what caused the housing market collapse of the last decade: a significant portion of homes were being by speculators...and an even larger percentage of the resultant mortgage debt was being purchased on speculation. Eventually, the psychological component of those home prices vanished, and the bubble collapsed ... down to a price floor based on underlying utility.

The difference is that homes -- and gold -- have utility separate and distinct from their value as investment vehicles. People buy houses primarily to live in them, not as investment vehicles. Gold too -- it's price can never collapse below a certain floor, due to its demand for jewelry and thousands of various industrial processes.
 

terzaerian

Posts: 239   +284
Premise A: Bitcoin uses Blockchain
Premise B: IBM's use of Blockchain has value.
Conclusion: Bitcoin has value.
I never made that argument. My argument was that if you're writing off cryptocurrency in general as "Tulip mania" you're either sticking your head in the sand or you're invested in suppressing it. My beliefs about Bitcoin in particular are distinct, and I acknowledge its technical limitations wrt other cryptocurrencies, many of which absolutely address the legitimate shortcomings of Bitcoin, but its historic cache as an invention of note should be self-evident by now to anyone.

Whoa, there. If the IRS freezes my bank account, I have recourse under case law and the U.S. Constitution. Many people who this has happened to have sued, won, and recovered their funds.

If my Bitcoin wallet gets hacked (or the Bitcoin algorithm itself is hacked), I can appeal to no one.
It's cute that you still think the rule of law applies in the United States, but that stopped being the case long ago. If the state, particularly its intelligence apparatus, wants your head, they won't stop until it's served to them on a platter.

And my point there was to illustrate that there are no-win hypothetical scenarios in both "secure" fiat and Bitcoin. If someone hacks my private keys, that's no-win. If the IRS freezes my bank account, that's no-win (with the illusory promise that legal proceedings might, eventually, after thousands of hours of priceless lost time and who knows what legal expenses, be settled). The difference being that from the time your account is frozen to whenever you maybe get the funds back, it's been losing value continually by design.