As Bitcoin comes to mainstream markets, I take a look at what it all means for our trading
The View from LaSalle Street #1
Among my trading friends of all stripes, and fellow professionals in the spot FX and Futures markets, opinions on Crypto Currency trading are many and varied. There are two very strong debates running concurrently: that of the philosophy of crypto coinage and its progenitor, Blockchain technology – and that of the viability of trading Bitcoin in both its “outright” digital form and in its brand-new futures incarnation. Today, let’s have a look at the thought-process driving the fad, and a few hard facts.
On the philosophical side, my observations tend to the 30000-foot variety. After participating in many social media discussions on topic, it is amazing to me that the Brainiacs of the world so easily conflate Blockchain technology with the asset that IS Crypto Currency in whichever form one chooses to invest; as if the former lends special credence and additional value to the latter’s existence.
Investors will come to understand it is the difference between a technological breakthrough and an artifact of great momentary or notional value wrought by the self-same technology – and that the fad, or bubble, surrounding Bitcoin will most likely end of its own accord.
Recall the dot-com bubble that The Internet brought to bear in its first decade. Billions of “pie-in-the-sky” dollar valuations, made by a select few, have since dropped to zero – the losses from which the buyers, more traditional business models intent upon breaking into this NEW technology, have absorbed their losses or simply moved out of the space altogether. The dot-com survivors tend to the more traditionally solid business models, and as such maintain the huge net worth and value to their investors. Think Amazon, Facebook, Netflix and the like. Dot-com techs that penetrated a very traditional audience and is capable of providing value and excitement while prying precious dollars out of their users.
The Internet, a generational technology that has forever rewritten the future of mankind, is, on scale, what I see Blockchain tech to be – something that will forever alter the growth curve of society. However, in crypto coinage, we might just have the Beanie-babies or Atari’s of modernity, most of which are sitting quietly in attics all over the world.
In part’s two and three (later today) I’ll talk about what we’ll need to know about futures trading and how the first week has gone on futures markets.
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