Here is your sign - Bitcoin

[flintnational]

Is crypto-currency the sign of a market top? I recall in the dotcom bubble we were told the obscure dotcom companies without profits (and sometimes without sales) had to be valued based on clicks or views or some other new metric. It seems that market tops are usually accompanied by some new investment that in hind sight should have been a red flag to everyone. Is crypto-currency the current red flag?

 

[jazz4cash]

I do believe Bitcoin or Tesla or some other fad that is suddenly worthless could be the trigger, but the real cause will be something else that is fundamentally out of whack. I don’t think we have anything like that right now so this is typical volatility. A wide ranging trade war could do it.

 

[flintnational]

Tesla could be part of it. A good idea that gets way over valued near a market top.

 

[imoldernu]

Where else could inestors lose 13 Billion Dollars in three hours?

https://www.cnbc.com/2018/10/11/bitcoin-price-nearly13-billion-wiped-off-cryptocurrency-market.html

On Thursday, bitcoin was more than 68 percent off of its record high of $19,783.21, which it hit on Dec. 17 of last year.

]

 

[Totoro]

Bitcoin is a bit more like the dotcom bubble, not the 2008 one: it's not in the core of the everyday financial system. In a sense it's even a lightning rod: money dumped in bitcoin doesn't end up in the stock market directly.

 

[RenoJay]

I think Bitcoin, Tesla and a few other phenomena are canaries in the coal mine. They demonstrate a level of euphoria. As we know, market tops occur when euphoria peaks and I think we are pretty close to that with the major US stock indices.

 

[nash031]

I think Bitcoin, Tesla and a few other phenomena are canaries in the coal mine. They demonstrate a level of euphoria. As we know, market tops occur when euphoria peaks and I think we are pretty close to that with the major US stock indices.

But fundamentally Bitcoin has nothing to do with the major US stock markets, and the block chain companies aren't a major factor in anything yet. Euphoria -> crash is usually marked by specific sectors (Tech in 2002; banks in 2008) or even individual companies that factor into the market. Bitcoin has nothing to do with it.

 

[Texas Proud]

Where else could inestors lose 13 Billion Dollars in three hours?

https://www.cnbc.com/2018/10/11/bitcoin-price-nearly13-billion-wiped-off-cryptocurrency-market.html

]

As a % it is big... but in total dollars not so much...

Facebook's $100 billion-plus rout is the biggest loss in stock market history


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https://www.cnbc.com/2018/07/26/fac...ne-day-loss-in-value-for-any-company-sin.html

 

[RenoJay]

But fundamentally Bitcoin has nothing to do with the major US stock markets, and the block chain companies aren't a major factor in anything yet. Euphoria -> crash is usually marked by specific sectors (Tech in 2002; banks in 2008) or even individual companies that factor into the market. Bitcoin has nothing to do with it.

I’ll respectfully disagree and will use your own examples. Tech was ludicrously overvalued in 2000 and was a sign of euphoria. Tech crashed first and hardest but ultimately led to a roughly 40% rout in the broad market. Banks in 2008 may or may not have been crazily overvalued, but their assets were toxic. Banks went down and brought the road market and the real economy with them. You’re right that bitcoin is not intertwined with much. But the reason people bought it was to seek a return. The fact that it crashed 70% tells me they sought yield elsewhere (like the broad stock market.) Ultimately when you run out of buyers you get a crash in prices.

 

[SnowBound]

My understanding is that Bitcoin (& other crypto-currencies) is how people pay for not so legal drugs and other not so legal things. So the root of the reason they exist is for the business of leaving no record. If someone tomorrow could figure how the money is moving, how much money would Bitcoin be worth tomorrow?

Or view it as if the farmer down the road says to loan him money in the spring to plant poppies and he will double your money at harvest; are you going to jump in?

 

[nash031]

I’ll respectfully disagree and will use your own examples. Tech was ludicrously overvalued in 2000 and was a sign of euphoria. Tech crashed first and hardest but ultimately led to a roughly 40% rout in the broad market. Banks in 2008 may or may not have been crazily overvalued, but their assets were toxic. Banks went down and brought the road market and the real economy with them. You’re right that bitcoin is not intertwined with much. But the reason people bought it was to seek a return. The fact that it crashed 70% tells me they sought yield elsewhere (like the broad stock market.) Ultimately when you run out of buyers you get a crash in prices.

My point was that a crash in BTC is not likely to lead to a broad market crash because it is not represented as a sector or even a major player in the domestic or international stock markets, whereas tech and banks are. I mean, look no further than what’s already happened. BTC down 70% from peak, and the bull run trucked on.

I also think you’re probably overestimating the assets tied into BTC relative to the rest of the market. Total market cap for all crypto currencies is $300B. 31 individual companies worldwide have a higher market cap than all of crypto. A BofA selloff alone doesn’t drag the whole market under.

 

[Rickt]

There seems to be a bubble building up in Private Equity market. Many companies are getting funded like back in the Dotcom era and fewer companies feel the need to take the IPO route. Don't understand how it can affect the equity markets but something doesn't feel right.

 

[Totoro]

No bubble in private equity. There is a problem in bulge bracket VC market. Different beast. Too many large funds chasing unicorns and unwilling to cut losses in winner-takes-all markets.


Food delivery is a prime example of that, ride apps another.

 

[dtbach]

Bitcoin from it's high is already in a deep crypto bear market. So far it hasn't done a thing to the real market.

 

[flintnational]

I agree with those that believe Bitcoin is not a significant part of the economy and will not likely affect the broader economy/stock market if its value collapses. But as someone mentioned, I do think it might be one of the "canaries in the coal mine". When markets get frothy it seems shaky investments gain acceptance with investors. Bitcoin, IMHO, represents the ultimate shaky investment. Something with no value being pitched as something with ultimate value, money. Shaky "investments" seem to gain traction near market tops when investors don't remember the last downturn. But, this is only obvious after the next downturn. Then we will all be geniuses and say we saw it coming.

 

[bobandsherry]

Bitcoin, no one could stop talking about it earlier this year and now no one wants to even acknowledge it. It better make it's move soon, if not I wonder if this clown will be called out at the end of the year.

Wall Street’s Tom Lee Says Bitcoin Price to Hit $22K by Year’s End, ‘Can Reach $25K’

And I'm setting a keyword recording on my Tivo for this:
$1mn by 2020: John McAfee will still ‘eat his own d*ck’ if he’s wrong about Bitcoin

 

[flintnational]

^^^Here is the weird thing, while I believe Bitcoin will go to zero, I am actually pro crypto currency. There are just too many things that can go wrong with Bitcoin. The most likely problem is that it will be the "Myspace" of its industry. However, unlike McAfee, I don't have much confidence in my forecasting abilities. Accordingly, I am not willing to risk any body parts or dollars.