Cryptocurrencies, Investments

Cryptocurrencies: Popping of the Bitcoin Bubble?

September 22, 2017

Cryptocurrencies: Popping of the Bubble?

In my previous post, I wrote and ponder aloud if Cryptocurrencies are bubbles in the making. I received quite a bit of opinions and we had a bit of discussion on my post.

JIN pointed out the lack of clarity on the intrinsic value of cryptocurrencies and he confessed that he would prefer holding Gold than a digital coin if a major war or catastrophic disaster breaks out.

DICK argues vehemently on the virtues of digital currency being a “free” and “uncontrolled” medium of exchange. And he has the opinion that the usage of digital currencies will only grow in the future and thus the implied value in digital currencies can only increase further!

YEW KIM has a more pragmatic approach on it, and is more inclined towards seeking alpha from trading digital currencies while avoiding trapped in money losing positions.

My view?

I think it is a bubble, and that a bubble will be a bubble no matter how hard or how much you dress it up. It ultimately pops after sometime.

Classic Reversal Signs

As a student of financial markets, I watched out for clues that the markets offer. The chart tells me that the Bitcoin market is probably, most likely, going into a major reversal. The 3,000 support line will be tested, and if it breaks, we all know where it will likely go next - further down.

Fundamentally, you have top and respected guys speaking and voicing their doubts openly. Governments are sitting up, not only watching from the sides but some have openly acted against it. And we are all still waiting for the tangible and practical usage of digital coins to be made transparent and publicly adopted. 

Technically, charts do not lie. The patterns coming from the markets are signs of an exhaustion, at least now and in the short term.  Nobody has a crystal ball and can see into the future. For me, the current sentiments are more negative than positive, the market has more shorts than longs and the tendency is for it to move lower than higher! Will it last forever? I do not know.

According to some estimates, the market cap of Bitcoin is around US 70 Billion (maybe lesser now). It is possible, but highly unlikely, that any Bitcoin player can and will want to risk all in an attempt to try control the Bitcoin market. Thus, any signs that one sees from the charts, one should respect it and not attempt to be a hero. Whether it is FX, Rates, Stocks, Commodities or Bitcoin, no one is bigger than the market.

Market likes Heroes - ‘cos Heroes tend to die young. The ones left standing are the ones left counting the dole.

I’m no hero, and I’m of the opinion that good traders or astute investors do not aim to be heroes - they only want to remain profitable and solvent.

Lately, it seems that pop artistes are quite spot on (in the Financial Markets), in their chart-topping collaboration with Chainsmokers  “someone like this” Coldplay sings it,

How much you wanna risk?
I’m not looking for somebody
With some superhuman gifts.
Some superhero, some fairytale bliss.
Just something I can turn to.


about author

Seng Ti is currently heading a Treasury & Finance team in a MNC and is serving as the President of the Association of Corporate Treasury (Singapore) aka ACTS. He enjoys reading and discussing about current affairs, politics, life, wine and lives a normal life with his wife and 2 young kids.