Are we allowed to talk about Bitcoin?

I sold the last bitcoin and ethereum I was hanging onto at the end of November. I had owned for a few years and didn't want to sell, but I couldn't hold onto something trading that stupidly. It turned into an insane speculative mania, not something based on a potentially important technology, which has yet to be harnessed in a profitable way. I had already trimmed most of what I had long before as I watched it go from an interesting idea into speculative silliness.

A week and a half ago I short 3 of the CME contracts (the bigger, slightly more liquid contract based on 5 bitcoins each) when the commodity was trading at between $15K and $16K. I am about to cover two of them in the $9300 to $9700 range. I don't know how much longer I will stay short the last contract, but I am ready to lock in a really nice profit to go with the dumb luck money I made on holding some bitcoin for a few years.

The CBOE contract settles for the first time later today, and it worries me a bit, because it is ripe for manipulation. The benchmark settlement price will be based on a 4 pm auction held by Gemini Trust Co., which struck a deal with the CBOE. And this market is so relatively illiquid that I have no idea what to expect. Some serious money might be made or lost based on that settlement price, so I wouldn't be surprised to see some of the big trading desks in cahoots trying to push around the price (up or down) as the time approaches. I am holding out hope there are no shenanigans, because they need a couple of smooth settlements if they want to launch options, which will be where the real money might be for the CBOE. So it's in their interest to put the fear of god in some people to keep it all above board.

Justin, it isn't really a currency. So far in its life it has been a relatively little used payment system that morphed into a speculative vehicle that will probably go down as the poster child for the everything bubble that $14 trillion dollars of fiat currency creation over the last 9 years blew. When the dust clears, who knows if any of the hundreds of crypocurrencies based on blockchain technology will have any sort of wide acceptance. Maybe, maybe not. There are major problems with all of them, even as simple payment systems. But the technology itself has huge potential for something. It's just waiting for someone to harness it in a way that makes sense and monetize it.

 

Not that anyone cares, but I covered all three contracts instead of just two. @ 9515. As I was typing that post. I had already well passed my target, so no reason to push it.

 

Didn't really read that (just can't right now).

But volatility makes a great vehicle for traders. In fact, the reason that Goldman Sachs had such miserable trading revenue for the quarter this morning was that volatility in various markets has been compressed (due to yeah, I know I am a broken record).

Volatility doesn't make for a good currency -- at least as most people want a currency, which is as a STABLE store of their purchasing power.

I do a lot of currency trading. One notable thing we have gotten as central banks have been fucking around with currencies via the radical manipulation they have embarked on, is that we have had more and more days in which various currency pairs have had outsized moves. Two or three decades ago, for example, if you had gotten a 1 percent move in yen/dollar, it would have meant something really bad was happening globally. Today, those moves happen occasionally and a .5 percent or more move is relatively common. It's a huge source of lurking instability. On top of it, take away the pairs (comparing one currency to another. ... and ALL currencies have been losing value at a fast pace because of their massive devaluation, which is really what the monetary mandarins are up to).

In any case, put that in the context of bitcoin, where you have gotten 10, 15 percent daily moves. That may make for a great trading vehicle in someone's hands (and ruin in someone else's hands). It's not a smart way to try to store your wealth, in my opinion at least. It's a speculative vehicle.