Cryptocurrencies: Time To Party Like It Is 1999: STEEM And Everything Else Will Explode
I read a post by @jrcornel that got me thinking. In it he described how CME announced it is going to open up a platform to trade derivatives on cryptocurrencies. Basically, there will now be a futures market like there are with stock markets and commodities. @jrcornel alluded to the fact that this adds a great deal of legitimacy to the entire sector. I agree with this conclusion.
So why do I write "Time To Party Like It Is 1999"? For those who do not recall, that was part of the craze called the dotcom bubble. Essentially, Wall Street got so excited about this thing called the Internet that money flowed in from everywhere. People were buying anything that was even remotely tied to the Internet or the .com craze. Naturally they had no idea what they were buying but it did not matter. Everyone wanted in even to the extent credit was used. It was a wild time where fortunes were made....before they were lost.
As I wrestled with the present state of cryptocurrencies, I mulled over the fact that Wall Street is poised to enter. Over the last few weeks I was leaning towards this outcome but today's news really solidified it for me. Anyone holding coins now will be rich. 😎 😊 It does not matter what coins you have, they will appreciate. How can I say this? History has an odd way of mimicking itself.
There will be a couple TRILLION (that is with a T) dollars rolling into the cryptocurrency world. With that much money, people will eventually end up looking for deals. Bitcoin had a great run (with plenty more upside still in the works). However, it will not go up 1,000fold from here. While I believe that BTC will get the lion's share of the Wall Street money, it will not get it all. People will look for other opportunities to buy anything for a return. The blockchain is the most potential, technologically, than the Internet and Smartphone combined. This will truly revolutionize how the world operates.
And for this reason, Wall Street will go into a frenzy. One thing these people can do is raise money. Turn them loose on the rich and they will bring home the funds. We already have seen 70+ hedge funds open up that are solely designed to invest in cryptocurrencies. For those who do not know about hedge funds, they require big money to get in (usually $100K-$1M to start). Numbers like that will move things upward as the buying spree begins.
Back in the late 90s, Warren Buffet took a PR hit since his stock was under performing. What caused this? Because ole Warren does not invest in anything he does not understand and technology was beyond his realm of comprehension. Isn't it interesting that just last week, the Oracle of Omaha blasted Bitcoin. History repeating itself?
It sure is beginning to feel a lot like 1999.
Um, yeah so Twenty year later Warren Buffet is worth $80 billion and his stock Berkshire Hathaway...
Well, they did alright too.
Not sure if I really like the idea of big derivative players coming into the crypto market. As @lestatistician noted in his comments, this will enable the big money players to have a powerful instrument to manipulate markets. With derivatives, they can place bets on crypto prices without even buying or selling any real coins. Bad as it is with whales moving real coins to move markets in their favor, derivatives could enable market manipulation to go to a whole new level.
There seems to be a lot of talk about derivatives driving prices upwards. We need to remember that derivatives can be used to go long (bet up) or go short (bet down) on prices.
Big money players could use them to multiply their financial firepower in order to drive markets/prices in the way of their choosing. When ordinary investors are faced with huge potential losses by going against these big bets, it takes balls of steel to hold your nerve to try and ride it out. Many will inevitably cave in and that's when the manipulators go home with your cryptos.
Remember how George Soros gave the UK Gov and Sterling a black eye by taking a huge bet against Sterling. That's the kind of players we'll be up against when the big boys move in from the stock markets and start playing in the crypto market for real.
Thanks. I suggest that there are two things to watch in the months ahead, in addition to those covered in your interesting speculations.
The first is the potential of the futures market to allow the big-money guys to manipulate the bitcoin price, as has happened with silver and gold.
The second, and this is much further down the road, we will get to a price plateau arising from the fact that we are talking about a currency’s value, which is going to swing up and down as currencies do in the Forex market and not necessarily reflect underlying growth in world production of real goods and services.
I think you will see the opportunity for the first to happen....I agree it is a big risk...as we know the big money players do manipulate the markets.
As for the second, I see it more as a bubble akin to the stock market where the music stops and we see a pop. There will be some currencies that hold their value over time because there is a lot of underlying activity on that blockchain. But many of these tokens will die worthless in the end.
Thanks! You make an interesting scenario here.
The devilish thing I've found from my life in these wars is that you rarely have a clue how long or short it will take before trend change happens. Timing marches to its own secret drummer, in a sense.
@lestasticien @taskmaster4450 i agree with the bubble popping for alt coins in the future, similar to the dotcom bubble pop. This is where Steem stands out really well, because there are plenty of platforms that utilise Steem so there is still certain value in Steem (provided that there are users on the platforms like Steemit, Zappl, Steepshot and APPICS etc.)
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Exellent explanation my friend
I enjoyed reading this post and I think the history will repeat himself. Many folks will make a killing but many will lose on the game!
I buy the prediction that there will be another big price jump (or series of same) when the USA institutional big-money guys come into the sector 'big-time', assuming the shape of the government regulations are reasonably well known by that time.
Once that big jump takes place and the space is well populated by the trading robots, the people coming in during recent times are going to have to learn to trade! And in that environment, there could be a lot of pain going around.
If they dont get out before the bubble pops, they will get killed.
Of course, the late entries to the game, the average investor is always the one hung out to dry.
That could well be...I agree the next step will be the big Wall Street money...I look for that start after the first of the year.
Hey @taskmaster4450, another wonderful sharing about the increase in future price of STEEM!
Quick question: What platform(s) do you use to buy steem and why?
Blocktrades so far....because it is tied into here and I have no steem other than my steem power.
I am now getting involved with bitshares but havent used that so far to purchase...only store my bts....I went through blocktrades for that too so far.
What do you think of the exchange rate in Blocktrades? And are there any extra fees to pay for, eg. transaction fees, withdrawal fees etc.? @taskmaster4450
I dont know...I just put my orders in...might be a mistake but I am not dealing with large enough quantities that it is noticeable.
So far it went off without a hitch.
Others might know more.
Excellent explanation...very nice