Tag: bitcoinasset

Tesla Sends Bitcoin To Record High With $1.5bn Investment

Tesla has invested $1.5bn in bitcoin and plans to begin accepting it for payment in one of the highest-profile endorsements of the cryptocurrency sector by a major US company. The disclosure from the electric carmaker sent bitcoin rallying to a record high of $44,100, extending its 50 per cent surge so far this year.

Analysts have put the meteoric rally down to growing enthusiasm from institutional investors seeking returns in the era of low interest rates. In a regulatory filing on Monday, Tesla said it purchased the bitcoins after changing its investment policy last month to “diversify and maximise” returns on its cash. Line chart of $ per coin showing Bitcoin soars after Tesla reveals $1.5bn investment For years Tesla was short of cash as it invested heavily in developing its electric vehicles.

Although its finances have improved, the bitcoin investment still represents about 8 per cent of the $19.4bn it held in cash and liquid assets at the end of December, according to the filing. The group said it expected to accept bitcoin as a form of payment for its products, although initially on a “limited basis”, adding that it might sell the digital assets for hard currency once payments are processed.

Elon Musk, Tesla’s founder, has been a vocal supporter of digital assets on social media, particularly about dogecoin, which he said was the “people’s crypto”. In December he wrote on Twitter that bitcoin was his “safeword” in an apparent joke. Robyn Denholm, an Australian telecoms executive who took over from Musk as chair of Tesla’s board in 2018, is head of the audit committee that signed off on the change to the company’s investment policy.

The change allows Tesla to invest “a portion” of its cash in “alternative reserve assets including digital assets [and] gold bullion”. Recommended John Gapper Electric vehicles need to arrive as fast as vaccines The carmaker is the latest consumer-facing company to venture into cryptocurrency markets, following PayPal. However, cryptocurrencies remain highly volatile and are risky to hold due to frequent hacking and fraud, as well as difficulties in transferring them to cash.

“We believe our bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavourable at the time when we want or need to liquidate them,” Tesla said on Monday. “[This] is a potential game-changing move for the use of bitcoin from a transactional perspective,” said Dan Ives, an analyst at Wedbush Securities.

Ives said the announcement from Tesla could prompt other companies to make similar decisions given the growing interest in digital currencies. “Investors and other industry watchers will be watching this closely to see if other corporations follow the lead of Tesla on this crypto path or on the other hand does it remain a contained few names that make this strategic jump around bitcoin.”

By: Eva Szalay

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Bitcoin Just Suddenly Surged Toward $12,000 But Now Might Not Be The Time To Buy Here’s Why

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Bitcoin, after a prolonged period of stability, has suddenly leaped higher—jumping over the closely-watched $10,000 per bitcoin level for the first time since June and surging toward $12,000.

The bitcoin price has added some 20% over the last seven days, hitting highs of $11,420 on the Luxembourg-based Bitstamp exchange, amid equity market jitters and a rally in the price of gold, considered a safe haven asset.

However, some market watchers have warned the recent bitcoin price gains might not last—with the options market signalling just a 7% probability of bitcoin returning to its all-time high of around $20,000 before the end of 2020.

“Our view for the balance of 2020 is still high volatility with a year end of around $7,000 [per bitcoin] with a drive higher to new highs in 2021,” Gavin Smith, the chief executive of bitcoin and crypto consortium Panxora, said via email following the publication of Finder’s latest cryptocurrency prediction report, adding he expects “a short term washout this year before the true rally takes hold.”

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In March, the bitcoin price fell sharply, in line with global stocks and other commodities, as the coronavirus pandemic spread around the world and countries went into lockdown to contain it.

The bitcoin price quickly bounced back, boosted by a highly-anticipated supply squeeze and bullish signals including investment giant Paul Tudor Jones revealing he was buying bitcoin as a potential hedge against the inflation unprecedented central bank stimulus measures designed to prop up coronavirus-hit economies could bring.

Smith’s warning chimes with comments made by Binance chief executive Changpeng Zhao (CZ) last week, who said bitcoin is still tied to the stock market and a future crash could send the bitcoin price lower.

“People should not take the description of bitcoin as a safe haven asset too literally,” CZ told Bloomberg.

Others have also warned the bitcoin price could be heading lower in the short term.

“There won’t be as much money going into bitcoin while people try to survive,” Jimmy Song, author of Programming Bitcoin, said in Finder’s Cryptocurrency Predictions 2020 report.

“Until the prices rise in the grocery store, bitcoin won’t really start taking off. I suspect that’ll take another nine months or so.”

Finder’s report, released last week ahead of bitcoin’s surge toward $12,000, revealed half of the 28 bitcoin and crypto experts surveyed thought it was the right time to buy bitcoin, with 32% recommending investors hold and 18% saying it was time to sell.

Another panelist, University of New South Wales associate professor of finance, Elvira Sojli, said she expects the bitcoin price to be under $10,000 by December 31 2020. The panel’s consensus was for the bitcoin price to climb to just under $13,000 by the end of the year.

“If anything, the second or third wave of Covid-19 may drive [the bitcoin price] down,” Sojli said, pointing to the coronavirus’ devastating economic impact.

Meanwhile, as bitcoin began its rally past $11,000, the bitcoin options market was signalling just 7% probability of the price returning to its all-time high of $20,000 per bitcoin, data from crypto derivatives analytics firm Skew revealed, with the market putting the odds of $10,000 per bitcoin by Christmas at around 50%.

“Options market is repricing quickly the probability of [new highs] by the end of the year, from 4% to 7% over the last week,” Skew chief executive Emmanuel Goh told bitcoin and crypto news site Coindesk.

MORE FROM FORBESVisa, Mastercard And PayPal Are Changing Their Tune On Bitcoin And CryptoBy Billy Bambrough

Elsewhere, others are confident the bitcoin price is going to continue to soar.

“There are significant changes since March in the way that institutional investors view bitcoin,” Joe DiPasquale, the chief executive of BitBull Capital, said via email.

“Now that institutions have moved into bitcoin in 2020, the price has shown more support over the last couple of months. We will not see a repeat of the March crash, but bitcoin will still remain somewhat more volatile than equities.”

“I think the price needs to take a bit of breather—it has moved quite a lot in a short-period of time,” Bill Herrmann, the managing partner of hedge fund Wilshire Phoenix, said via email, adding he could see the bitcoin price hit its all-time highs by the end of the year “if we continue to receive regulatory clarity and continued institutional adoption,” pointing to last week’s decision by the U.S. Office of the Comptroller of the Currency to allow banks in the country to custody digital assets as triggering the latest rally.

“It is huge for the space and that should serve as a tailwind for quite some time.”

Trying to forecast bitcoin price moves has proven difficult, however, and some have warned against trying to predict market moves.

“Predicting the price of bitcoin on an exact timeline is a fool’s errand,” Peter Wall, the CEO of UK-listed crypto miner Argo Blockchain, said via email, though adding he is “very optimistic in the medium to long-term, as we believe bitcoin will again be one of the best performing asset classes in the coming months and years.”

Billy Bambrough

Billy Bambrough

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies

Source: https://www.forbes.com/

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Bitcoin Falls More Than 8% As Crypto Markets See Red

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Bitcoin prices dropped by more than 8% today, approaching the $9,000 level as digital currency markets suffered widespread losses.The world’s most prominent cryptocurrency fell to as little as $9,108.47 close to 1 p.m. EDT, CoinDesk figures show.

At this price, it had declined more than 8.5% in less than 24 hours, after rising to $9,962.18 the night before, additional CoinDesk data reveals.The largest digital currency by market capitalization was not alone, as at the time of this writing, all of the top 10 cryptocurrencies were in the red, with 9 in 10 being down at least 5%, according to CoinMarketCap.

Digital currencies were not the only asset class to record losses today, as stocks experienced notable declines.The S&P 500 index, for example, dropped nearly 6% today, Google Finance data showed.

There was a massive decline “in the equity markets today, with large cap U.S. stock indices plunging more than 5-6%,” said John Todaro, director of digital currency research for TradeBlock.“There was a general flight to cash today, with even gold ETFs trading down. Bitcoin and other cryptocurrencies were not immune to the sell-off and in a heightened correlation between assets, nearly everything traded lower,” he noted.

Other analysts provided similar perspectives, with Avi Felman, head of trading at BlockTower Capital, stating that: “The recent sharp drop in the equity markets is rattling investors who have watched Bitcoin struggle to break 10,000 even in a risk on market.” “Now that equity markets are suggesting there may be continued downside, digital asset investors are reminded of the last time equity markets fell out (which coincided with a large bitcoin drawdown) and are selling out of fear about a potential resumption of the equity bear market,” he claimed.

Denis Vinokourov, head of research for London-based digital asset firm Bequant, also spoke to the widespread declines, attributing them to bearish forecasts for the job market and the recent dovish comments made by the Federal Reserve. Because of these factors, “stocks fell across the board and it appears that crypto markets are once again not immune when it comes to cash crunches and margin calls.”

“The move is likely exacerbated by already bearish market positioning seen in the options market,” he said. Hugo Renaudin, CEO and co-founder of LGO, summed these comments up nicely, stating that “cash is still king, and when the uncertainty on future prospects rise, investors favor cash over ‘risky’ assets.”

“This happens across any market from equity to bitcoin: when markets go down, correlation goes to one.”

Technical Factors

While the aforementioned analysts primarily focused on factors like a decline in equities and a flight to cash helping fuel losses in bitcoin, analyst Marouane Garçon spoke to technical factors. “This tends to be the norm whenever Bitcoin gets close to $10,000,” he stated. “It’s a very strong resistance. I was expecting this.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.

Follow me on Twitter or LinkedIn.
Charles Bovaird

Charles Bovaird

I am a financial writer and editor with strong knowledge of asset markets and investing concepts. Currently, I serve as VP of Content for financial services firm Quantum Economics. I have worked for financial institutions including State Street, Moody’s Analytics and Citizens Commercial Banking. An author of more than 500 publications, my work has appeared in mediums such as New York Post, Washington Post, Fortune, CoinDesk and Investopedia. Previously, I created all the industrial finance training for a company with more than 300 people. I have spoken at industry events across the world and delivered speeches on financial literacy for Mensa and Boston Rotaract. I currently hold Bitcoin, Bitcoin Cash, Litecoin, Ether and EOS.

Source: https://www.forbes.com

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Bitcoin Futures Trading Spells Danger Ahead

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Since last October there has been a growing debate as to whether bitcoin (and other cryptocurrencies by association) are safe havens or risky, speculative assets. The stress test of the coronavirus crisis has helped to clarify this.

During the past two months, bitcoin has moved in sync with the S&P 500, betraying the fact that it is a risky asset. Gold, typically seen as a safe haven, has also risen but that is likely a response to falling interest rates, huge liquidity injections from the Fed and other central banks, and the possibility of monetary debasement.

Fed liquidity boosts bitcoin futures trading

The recovery in bitcoin has come alongside the overly generous provision of liquidity by the Fed, and the worrying development is the explosion in open interest in bitcoin futures (up to three times the average of the last year).

This points to the risk that bitcoin has now become a speculative plaything (several large hedge funds have become active in the bitcoin market) in markets and is at risk of a correction should risk appetite change.

Underlying this, on longer horizon view, bitcoin has also tended to move in sync with equities, for instance the peak in bitcoin in December 2017 prefigured weakness in equities.

Still within the less ‘independent’ crypto currency community there is a view abroad that bitcoin and crypto currencies are a ‘safe haven’ in the same way people might for instance, regard gold. Recent behavior suggests this is not the case.

From the point of view of cryptocurrencies as assets, very basic data analysis suggests that optically bitcoin has a low correlation with safe havens like gold. This does not mean that bitcoin is a good diversifier or a safe haven. It has been highly volatile over the past two years and is subject to trading and liquidity risks not normally associated with safe havens.

A further clue as to the true nature of cryptocurrencies as investable assets comes from the community of people who hold and trade them. The micro-structure (or plumbing) of markets, as well as the anthropology and sociology of those who populate them (which will have to be the subject of a future missive) is crucial to the way they behave and subsequently to their risk characteristics. Note that the current spike in bitcoin futures trading coincides with a huge spike in Robinhood account trading and in retail buying of call options.

Bitcoin futures activity explodes

Though admittedly not scientific, nor thorough, I suspect that many bitcoin traders also trade equity futures and currencies and use the same equity trading rules (technical) to buy and sell bitcoin (cryptos now have their own rating system, FCAS). If this generalization holds, it suggests that risk budgeting may drive a positive correlation between cryptocurrencies and equities, especially at market highs and lows.

Another observation is that for its size (the top ten cryptocurrencies barely add up to the market cap of JPMorgan JPM ) the crypto market attracts an inordinately large amount of attention, which may draw money in at high points. To my mind this points to bitcoin having a pro-cyclical bias in terms of its riskiness as a trading asset.

On a structural basis the coronavirus crisis may create greater interest in cryptocurrencies – especially given how the crisis have underlined the role of the digital economy and how higher taxes will be required to pay for the stimulus programs enacted.

However, the disarray surrounding Facebook’s Libra project is a sign of the operating and regulatory complexities facing cryptocurrencies. More powerful still is the incentive that central banks and fiscal authorities around the world have for the bitcoin not to succeed. Witness as an example the vigour with which the Chinese – who tightly control money flows – have clamped down on cryptocurrency exchanges.

Madness of crowds

The next steps in the crypto or digital currency (they are almost the same in that crypto currencies are digital currencies that use cryptography) industry for central banks to issue their own coins, and for the digital payments industry. More thorough regulation, cleaner cross-border payment processes and more reliable identification mechanisms will be part of the workload of central banks and governments.

In the short-run, keep an eye on the growing number of speculators in the bitcoin market – financial history shows that when new assets attract crowds, it invariably ends badly.

Mike O'Sullivan

Mike O’Sullivan

I am the author of a book called The Levelling which points to what’s next after globalization and puts forward constructive ideas as to how an increasingly fractured world can develop in a positive and constructive way. The book mixes economics, history, politics, finance and geopolitics. Markets are the best place to watch and test the way the world evolves. Most of my career has been spent in investment management, the last 12 years at Credit Suisse where I was the chief investment officer in the International Wealth Management Division. I started my career as an academic, at Oxford and Princeton.

Source: https://www.forbes.com

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