CEO of $250 billion multinational holding conglomerate Berkshire Hathaway, Warren Buffet, leave no stone unturned to diss at bitcoin, a digital commodity which is often termed as the digital gold by its proponents. The leading cryptocurrency in terms of market capitalization, bitcoin, has garnered a lot of support from across the globe since its inception back in 2008. However, it has failed to convince one of the biggest names in the world of finance Warren Buffet, of its usefulness and viability to replace the centuries-old traditional banking system.
In a recent meeting with the shareholders of his company Berkshire Hathaway, ss per Buffet, investing in bitcoin is NOT an investment and said:
It doesn’t do anything. It just sits there. It’s like a seashell or something, and that is not an investment to me.
Warren Buffet is one of the most respected names in the business world and his opinions do percolate in the general public and build a sentiment. As of now, the major connotation that is attached with bitcoin in the media, among the institutions and the general public is somewhat negative. These remarks from Buffet will only fuel the fire that has been lit by the revolution that cryptocurrency proponents promise to deliver despite a plethora of problems attached to it.
In the meeting, Buffet also stated:
The remarks made by Buffet make some sense too as the 88 years old veteran has been involved in the business world for quite a significant time. His notion of perceiving bitcoin as just a gambling device makes sense due to the fact that most of the people that are in the crypto space are here to make a quick buck. People want to get involved in Initial Coin Offerings (ICO) of various tokens so that they can cash out when the tokens are worth much more in the future with usually no specific interest in the project lying underneath. As Buffet said:
I’ll tear off a button here. What I’ll have here is a little token…I’ll offer it to you for $1000, and I’ll see if I can get the price up to $2000 by the end of the day… But the button has one use and it’s a very limited use.
Secondly, the issue of volatility that is associated with bitcoin makes it more of a gamble than an investment. Back in 2017, the asset was seen rising from a few hundred thousand dollars to almost $20,000 in a mere matter of days. This resulted in a lot of fortunate people becoming “bitcoin millionaires”. Soon after the spike, the asset fell down drastically over the subsequent months and since then, a bear market has been witnessed which is now poised to be broken as per some bullish experts. Cryptos do provide an investment option but it is too dangerous and risky.
Thirdly, the initial wave that drove the adoption of bitcoin was due to its linkage with negative and illegal activities. Darknet, or Dark Web, is one of the prime examples of places where cryptocurrencies are used for carrying out fraudulent and illegal activities with the likes of drugs and ammunition deals and much more.
But despite all the criticism for bitcoin, Warren Buffet couldn’t hold himself back from praising the underlying technology of blockchain as he stated:
“Blockchain…is very big, but it didn’t need bitcoin. J.P. Morgan, of course, came out with their own cryptocurrency,
The innovation that blockchain brings in the form of a decentralized peer-to-peer system of operation cannot be questioned. It is the use-cases that it brings that require extensive research.
So, the thing that is here to understand is that conventional businessmen and financial institutions are not quite liking the idea of cryptocurrencies. Cryptos are considered to be rebellious be some as they challenge the well-established norm of the banking system. Previously, the General Manager of International Monetary Fund (IMF), Christine Lagarde, also expressed her concerns regarding this highly unregulated space stating:
I think the role of the disruptors and anything that is using distributed ledger technology, whether you call it crypto, assets, currencies, or whatever … that is clearly shaking the system.
READ ALSO: Yes, ‘Bitcoin is Clearly Shaking The System’ and Even IMF Can’t Control
The major reasons behind the negative image of bitcoin involved price manipulation, scams and volatility. In order to solve these issues, the need is to develop concrete legislation around it so that its role as a currency or an investment asset can be defined clearly. Is it going to become the future gold or the future dollar, things are still blurry. If big business fishes like Warren Buffet are to be convinced of the positive aspects that bitcoin offers such as faster transactions, freedom from central control, borderlessness etc., the need is to define its role in the market and provide regulatory clarity. Once people like Warren Buffet start adopting this space, things will move quickly for this space in the right direction in terms of public adoption. In retrospect, if bitcoin is to rival the centuries-old fiat system, it needs to address the issues that make brands like Buffet dislike it.
Can Bitcoin Surge As Fast As It Did In 2017?
In 2017, Bitcoin successfully hit $19,783, a figure which till date, is still the asset’s all-time high. The mark is still being used in comparison with the coin’s current price especially by naysayers who believe the glory days are not only over but probably will not be seen again.
However, what‘s most important is that back then, Bitcoin reached the $8,000 mark and less than a fortnight later (11 days precisely), it gained $2,000, hitting the $10,000 mark.
At the moment, Bitcoin is struggling to reach and surpass the $8,000 mark, a price it had previously surprised, several days ago. So, what’s the likelihood that we will see a similar bull run?
Bitcoin was at $7,800 in November 2017. However, a little less than a month later, it had its biggest surge, hitting its all-time high in December. So, ever since the price rally began this year, analysts and experts have been trying their best to figure out the possibility of a similar bull run.
When Bitcoin started to break through earlier set resistance levels up until it reached $8,000, many analysts were sure that it was definitive proof of the end of the crypto winter that had plagued the sector since last year. This assertion was understandable considering the fact that it was about $3,150 in December last year and in about 6 months, shot up to $8,000.
“Reminder that BTC generally generates all of its performance within 10D of any year. –ex the top 10 days, BTC is down 25% annually since 2013.”
Another researcher, Alex Saunders, has also stated that the $8,300 is significant because less than two weeks after Bitcoin hit that mark in 2017, it was able to reach its all-time high.
How Soon Can We Expect Another Surge?
At the moment, pretty much everyone agrees that the market will do fine. Some have expressed that pullbacks are almost inevitable but they aren’t and shouldn’t be a deterrent as the price would definitely correct itself after a few of those. However, there is no general agreement as to when exactly another surge will occur.
A cryptocurrency trader and investor has however predicted that Bitcoin would move fast. In a tweet The Rhythm Trader (@Rhythmtrader) said:
Last bull market, this is how fast bitcoin moved:
$8000 – $10000: 11 days
$10000 – $12000: 7 days
$12000 – $14000: 1 day
$14000 – $16000: 1 day
$16000 – $18000: 8 days
Now consider the fundamentals today vs 2017.
I've never been more bullish.
— The Rhythm Trader (@Rhythmtrader) May 20, 2019
Report: Bitcoin (BTC) Futures Trading Approaching All-Time High in May
According to a new report published by The Block, the month of May is on pace to set a new all-time high in Bitcoin futures trading for the CME Group.
In a note sent to clients on May 21, the Chicago-based firm and backer to one of the largest Bitcoin futures trading exchanges, claims that May is “shaping up to be the strongest month ever for CME Bitcoin Futures.” The firm also reports a record day of trading on May 13, with 33,677 contracts being traded for the equivalent of $1.3 billion in BTC. Daily volume for Bitcoin future trading has also spiked during the month of May to 14000, up from 9900 in April.
CME Group continued,
“Since launch in December 2017 we have traded over 1.6MM contracts (+8MM equivalent bitcoin) representing over $50BN in notional value ($4.2BN per month).”
Beyond daily volume for futures trading, new account creation is also on the rise for the group. CME reports that the number of accounts for Bitcoin futures trading has climbed to an all-time high 2500, which the group interprets as a booming desire for traders to hedge on the risk of BTC,
“The number of unique accounts continues to grow showing that the marketplace is increasingly using BTC futures to hedge bitcoin risk and/or access exposure.”
Despite the seemingly bullish market for Bitcoin and cryptocurrency, with the price of BTC up close to 100 percent since the start of April, traders remain divided over the future valuation for the coin. BTC Futures, such as those offered by the CME Group’s exchange, have become a popular alternative for traders looking to speculate on the market movement for Bitcoin. Futures contracts have long been one of the more dominant products for the traditional financial markets.
Users can open long or short positions on BTC futures, depending upon where they see the price of the currency moving. With Bitcoin hovering near the $8000 mark for its second day in a row, both the bears and bulls are holding their breath over the next price movement for BTC. Some analysts are now calling for the currency to fall back to $6K before making another run at the all-time high. Considering the massive gains and bullish rally Bitcoin went on since the start of April, after more than 12 months of declining price and ‘crypto winter,’ some investors are anticipating a correction.
However, others see Bitcoin entering a perfect storm of market conditions for renewed investment. Given the economic uncertainty being generated over deteriorating negotiations between President Trump and President Xi, a looming U.S.-China trade war has bullish indicators for the price of cryptocurrency.
In addition, the mounting adoption of cryptocurrency by major industry players such social media giant Facebook and investment bank JP Morgan Chase have given a vote of confidence for BTC that was not present during 2017’s bull run. While FOMO will continue to drive the price of crypto, in both directions, the growing futures market provides another avenue for would-be speculators.
Top 5 Tips Prior to Engaging in OTC Bitcoin Trading
When it comes to dealing with Bitcoin trading, there are numerous options one can easily explore. Whether it is through regular exchanges, OTC trading, or peer-to-peer trading, any and everyone option can be worth exploring. However, those who want to experiment with OTC Bitcoin trading need to keep some very basic tips in mind at all times. No one wants to lose money in a way that could have easily been avoided.
- 1 Private OTC Chat Rooms are a No-no
- 2 Never Deal With Just Individuals
- 3 Proper OTC Desks are Easy to Find
- 4 If it’s too Good to be True…
- 5 Don’t Invest Money one Can’t Afford to Lose
Private OTC Chat Rooms are a No-no
On the surface, there won’t be too many people who bat an eye where private OTC Bitcoin trading groups are concerned. Similar to pump signal groups or altcoin discussion groups, OTC trading is not necessarily a business activity out in the open at all times. Over the past few years, there have been plenty of legitimate private OTC groups, albeit the number of potential scammers should never be overlooked either. Since these criminals know people simply want to buy BTC at a competitive price, they will try to obtain customer funds without handing over any BTC.
Whereas most people would automatically assume such businesses are shut down pretty quickly, the reality is often different. Since these trades involve private groups, the information is usually not shared with the rest of the world. This is primarily because users know all too well they opted for a less-than-legal option and must pay the price for trying to take a shortcut. That doesn’t mean fake private OTC Bitcoin trading groups aren’t shut down in the end, though, but it seems unlikely any stolen money will ever be recovered.
Never Deal With Just Individuals
Over the past few years, the number of people who own Bitcoin has seemingly increased. As such, one would expect the OTC market to grow by leaps and bounds. Anyone is free to buy and sell Bitcoin at their own pace, as long as they don’t try to make millions of dollars from doing so. When traders deal with very high volumes of Bitcoin and fiat, they will need to obtain a money transmitter license sooner rather than later.
This is why private individuals offering OTC Bitcoin trading services are best avoided. It is very uncommon for any of these individuals to be officially licensed. As such, these users often tend to scam others and run off with their hard-earned money. While it may seem convenient to deal with an individual rather than a proper company, the results will often be disappointing or even worse.
Proper OTC Desks are Easy to Find
As the popularity of Bitcoin continues to grow by leaps and bounds, there are more and more legitimate and registered companies who engage in OTC Bitcoin trading. Some of the well-known names include Japan’s Coincheck, Kraken, Huobi, and Itbit. These are just three examples of how many companies users can go through for all of their Bitcoin needs. It might involve a bit more work to get everything set up accordingly, but it greatly reduces the risk of losing any money in the process.
Speaking of finding a legitimate Bitcoin OTC trading provider, there are more and more companies joining the fray. This further expands the number of options users have to legitimately obtain Bitcoin through methods which suit their needs the best. To properly engage in this type of business activity, users should always conduct their thorough research before making any decision. It takes effort to get in on the Bitcoin action, after all.
If it’s too Good to be True…
It is better to avoid such offers altogether. No one will openly reject an option to buy Bitcoin slightly below market prices, but any price difference that seems too good to be true is almost always a scam. Offers like these will become a lot more apparent when the next Bitcoin bull run commences and FOMO starts kicking in accordingly. It is very difficult to buy Bitcoin at the real market price, primarily because the value fluctuates quite a bit every single day.
Moreover, any relatively shady business which explains why a user or company is engaged in OTC Bitcoin trading will usually indicate a scam looms ahead. Similar to the point above, conducting thorough research can usually prevent users from losing their money. A somewhat dubious background story combined with a too cheap Bitcoin price is usually a major red flag. Even so, there will be people who fall for these kinds of schemes simply because greed gets the best of them.
Don’t Invest Money one Can’t Afford to Lose
The golden rule as far as overall investing is concerned is to never spend money on such markets if the funds can’t be written off when things go awry. The same principle applies to OTC Bitcoin trading, as Bitcoin’s price is very volatile. Given the current value per BTC, there is a lot of money involved when one tries to obtain a full Bitcoin. As such, do not try to chase potential profits if the money is not there to spend on extras like these in the first place.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency.