That is a loss of 25% of its value. This announcement does nothing to hurt the utility of Bitcoin or its application as a medium of exchange. That drop certainly seems like a speculative investment bubble popping.
That's what the 1MB blocksize limit is for.
Update as of 11 March 01:44 UTC (4h43m after the SEC decision): BTC fully recovered!
It now stands at $1140, which is the level it was trading at just 2 days ago. From 09 March 00:00 UTC to the SEC decision on 10 March 21:01 UTC it gained +12% due purely to speculation ($1140 to $1280) and basically retraced these 12%: http://bitcoincharts.com/charts/bitstampUSD#rg10zig30-minzcz... I am impressed. I thought downward trading pressure would have lasted for days/weeks after the SEC rejection.
https://cointelegraph.com/news/pay-up-in-bitcoins-norway-pro...
There are many who would argue it is a good store of value since it can't be manipulated by the issuing state's monetary policy or susceptible to the poor fiscal management of the issuing state.
Several of the major volatility events in the past of bitcoin were related to Chinese government announcements or rumors regarding regulation/legality.
Sure one can transfer bitcoin without governmental approval (or against restriction), but that annoying need to convert to and from fiat in order to trade for other goods and services means that the governments still have a great deal of influence over bitcoin.
Sure but I was speaking to the OPs assertion that this particular event is proof that it is not suitable as a store of value.
>"Several of the major volatility events in the past of bitcoin were related to Chinese government announcements or rumors regarding regulation/legality."
Right but this is to be expected given that China recently has been the largest market for Bitcoin by volume no? [1]
>" but that annoying need to convert to and from fiat in order to trade for other goods and services means that the governments still have a great deal of influence over bitcoin"
Is that any more annoying or any more inconvenient than having your hard-earned savings devalued by your government?
[1]http://www.coindesk.com/estimating-data-china-real-bitcoin-t...
I wouldn't recommend holding fiat currency as savings, except for perhaps 2-3 months of salary equivalent in case of emergencies. The rest should be stored in other assets based on your risk profile.
But it is currently a fact of life that we must exchange our cryptocurrency for fiat if we want to buy goods and services most places. While the number of merchants accepting bitcoin is growing, it's still quite small compared to the number of merchants who take local currency.
Fiat money has its plusses, though. Directly related to the fact that governments _can_ manipulate them is the possibility of reputational currencies. Here, a state has managed its fluctuations and taken actions when prompted for sufficiently often that "news" affects them much less than commodities, since the markets assume the state will act well before it becomes an issue (this also damps good news, since to a certain effect the good news was "expected").
A good study in this phenomenon, and how to break it, is what's happened to Britain since the referendum. It has lost a lot of value, obviously, but also its volatility has gone sky-high.
Going back to OP's point, a well-managed fiat currency can be a better store of value than any commodity. Entertainingly, Sterling has lost a similar amount of value to BitCoin, but it took much longer and is regarded as a disaster. Although, like BitCoin, you'll be able to find fans swearing the exact opposite.
http://www.ibtimes.co.uk/european-court-justice-ruling-bitco...
I find that Bitcoins are an effective hedge against conventional wisdom.
a good overview of the origins of the crisis. how politicians for their own shortsighted gains made one poor decision after another and led the country into financial crisis.
As many issues as Bitcoin has today, it has clear use cases.
How? Bitcoin atms were basically non-existent there and from what I read on /r/bitcoin at the time from Greeks no one there was accepting it in stores.
>There were capital controls restricting more than 100 euro worth of withdrawals from banks per day.
Yes and bitcoin didn't help this since the ways to get cash for your bitcoin involved international transfers which exposed you to those restrictions.
>Sure it's not helping you if you are buying a coffee but if it's saving parts of your pension that you worked your whole life to earn then it becomes very important.
I'm not sure what this has to do with the question above. Could you expand on it some more?
He said physical US currency was at a huge premium in the country because there wasn't nearly enough of it to go around, and the official exchange rate was clown shoes.
Other than that it's a much safer bet in Venezuela to buy USD than bitcoin though and that is generally what happens.
If you're poor in a country with a government like the Venezuelan one betting your limited funds on a speculative investment that requires an active internet connection to use doesn't seem wise or helpful.
How?
Those kind of statistical anomalies happen all the time, you must be aware of them if you look at real time chart. The bottom line is that you can't really know what the price is before a 30min period ends.
That being say, I expect the price to go down further after a bounce (disclaimer : I'm not a financial adviser, this is an opinion). Bitcoin was already at its all time high, and then there was the rumor of ETF, promising it will go even higher and will reach the moon. That's a big red flag to me. What seems the most plausible to me is that it will now enter a downtrend until it finds its support, then only start a new uptrend. I may be wrong, but at least I won't loose money.
I totally agree we can't use btc as a currency, though. I have a prepaid visa card that I can load with btc, but I only use it very rarely because it's annoying to have to look at chart to know when is the good time to load my card for this week's grocery. Things are settled, now, bitcoin is a speculative asset. It would be more interesting if cryptocurrencies like tether, which provide USDTether and EURTether, crypto currencies always indexed against their fiat counterpart, were finally available at scale.
Yes, there were in fact $4/gallon, $5/gallon, and even $8/gallon gasoline and diesel prices posted, many by noon. This also increased the price of everything shipped by truck for a while, too.
Prices came off that peak quickly, but took months to years to revert completely.
The price of a christmas tree drops precipitously the ~9PM on christmas eve every year, that says nothing about the value of a dollar.
Not saying that's what did or didn't happen on 9/11, though.
[1] - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=E...
If I charge $1000 to eat a cracker from my cupboard, the value of a dollar didn't suddenly decrease by 99.99%.
Thus, "anything can happen" if a few key players agree behind closed doors and change the rules.
I think bitcoin is a quite useful transfer platform, but I think it would be foolish to store much of one's assets in BTC.
Loans absolutely will evaporate if hyperinflation occurs. Lets say you give a $1000 loan that pays out $2000 after two years and the value of the dollar drops 50% over the first year. You will still get $2000 in 1 year. Assuming the value of the dollar holds, you won't have made an actual profit. But what if the value of the dollar continues to drop? If you think its going to drop another 50%, you'd be better off selling your loan for $1000 now, in which case you've already lost half your value, assuming you can find a buyer.
I suspect you could probably put all the people in the world that got rich from buying at $1 and holding in a school classroom together for a chat and not be very crowded.
- being a good anonymous currency
- being a truly global currency for irreversible online transactions
- being a currency that's easily programmable
That's the three main use cases for Bitcoin. There are contenders for #1 (Monero, Dash), and for #3 (Ethereum). For #2 it's still the easiest because of the huge network effect behind it.
Traditional currencies can't compete with crypto for neither of the space. They are attached to systems that prevent transactions from being anonymous, global, irreversible or programmable.
Its design allows it to be pseudo-anonymous at best, while Monero, for instance, has anonymity built in. Therefore if one seeks a truly anonymous currency they cannot possibly find it in Bitcoin.
> Nothing about the currency actually changed.
You can say this about about everything: "while nothing about the pound changed, brexit caused the price to go down."
That's because Bitcoin isn't directly tied to any economy. But just as Brexit had a real world impact on the pound, the SEC decision had a real world impact on bitcoin: It is directly tied to how people perceive Bitcoin, which is an import aspect just as well.
The volume this week is actually down. It is only a handful of people trying to intentionally spike the price, and trade off the news to turn a daily profit. The only suckers are other day traders, and hodlers actually suckered some of them by buying in the dip they created.
weekly volume: https://data.bitcoinity.org/markets/volume/30d?c=e&r=week&t=...
If a handful of people trying to spike the price and trade off the news can cause BTC-USD to be 30% more than what it "should" be (i.e., what the price would be in a high-information, high-liquidity, low-shenanigans market), then the SEC is absolutely correct to say that the ETF is too wild to be approvable at present.
For comparison, on June 24 (Brexit), GBP-USD fell from about $1.50 to about $1.35, a 10% drop, and that was (IMO) much more significant news about the long-term future of the pound.
It could be coincidental, but I've always been suspicious that the Winklevoss twins were the first people of a mind and with the capital to start gaming the BTC market as one can any other financial institution.
The Winklevii are not people I'd like to distantly do business with.
Edit: I'm trying to find articles but it was years ago. What I recall were cycles of Ramps and Bear Raids. https://en.wikipedia.org/wiki/Market_manipulation
Cryptocoin markets are a haven for scams and manipulations. When I was into it I was hearing of a new scam almost every week. I don't think there is any correlation with Winklevoss let alone causation. Unless you have some evidence or references to present?
Citation? Not disagreeing - I have no knowledge either way, but this is about as useless a statement as one can imagine without backup.
Sell coins, create negative news & watch the price go down, buy coins at the new low.
Same as what unscrupulous people have been doing since the beginning of commerce.
I only made a few bucks, but I was curious if it were possible then to move such a tiny market. It was.
Basically most smiths run an official registry. Even though a gold bullion is yours, most countries will forbid you from melting it into something else and destroying serial number in process, just like even if you own your house you cannot set it on fire. There are penalties including jail time. Its irrelevant if you put same serial number back on remelted PM.
Do you have some links for this? I did not know that and I'm not sure why would you get jail time for that.
I mean, what is the rationale? Is it about somehow preventing transfer from a legal market to an unregulated one?
I get that you can't mint your own gold coins or bars, but why not melt them? I'm very intrigued by this.
It is much easier and faster to sell 10 x 100g tabs than 1 x 1kg.
Its obvious whatever that such rules can hardly be enforced.
Sidestory: Argentina had an issue with inflation making coins worth less than their metal, and the bus lines (which were coin operated) turned out to be hoarding coins for reselling.
bitcoin is a text file.
Bitcoin has practical applications as well, on the Internet as peer to peer cash. But like gold, it's value comes largely from speculators, not its practical applications.
Gold persists.
(sorry, spend too much time on zerohedge...)
Power changes with men with gens are empowered to enforce it.
So that's not likely not gonna happen ever. The ruling kills any other bitcoin/virtual asset ETF from getting approved as well.
So we're going to have competition in exchanges, a free market of them with various rules/surveillance levels? Neat!
[1] https://en.m.wikipedia.org/wiki/Alternative_trading_system
Interesting part was, it went from 1250 way up to 1350 hours before the announcement making people feel someone bought on insider information but turned out that was some FOMO buyer.
I was trading right then sticking to the monitor for 8 hours straight waiting for their announcement.
This was etherium, which is also very interesting; etherium and BTC have been highly correlated over the last few months. I suspect that the crazy dip is just bots trading on that fact and the immediate correction is humans.
Unfortunately for them, the SEC, quite reasonably, requires more than one regulated market to exist for the underlying commodity, and probably preferably not owned by the company behind the ETF itself. Seems obvious in retrospect.
From the ruling, it doesn't really seem that was an issue. That Gemini does very little of the US and an utterly miniscule amount ogmthr global bitcoin trade made the surveillance agreement with Gemini insufficient, but a single-but-dominant regulated exchange would probably be sufficient.
Then some proper options would be nice. Preferrably someone who doesn't trade against their own customers, which at least one exchange is open about. There's a lot that could be done in the Bitcoin ecosysten (well, at least we are rid of MtGox).
1. A governing body that can create rules and regulation for the market.
2. An enforcement body that can enact penalties for rule violations.
The problem I think is not so much the governing agency, it's the enforcement for rule violators. It's one thing to punish Mt. Gox for violating the exchange terms, but what if it's some shady anonymous bitcoin exchange broker in China?
It means commodity exchanges dealing in Bitcoin regulated by the CFTC or similar entities in other jurisdictions. There are some already, but they do a very small share of Bitcoin volume.
> Coinbase has KYC, banking relationships and tax integration, I'm sure that can be extended to an exchange.
That's money transmitter stuff, which is a different set of regulatory requirements.
And do it in all the major jurisdictions?
No, you'd just need for the regulated exchanges to control a substantial share of the total volume of trade, which could happen by shift in trader preferences, unregulated exchanges becoming regulated, or, yes, unregulated exchanges shutting down.
> and block ability to run smart contracts or any other software on it.
How do you think smart contacts play a role?
This is partly why SEC wants underlying to be regulated.
Furthermore, selling naked options (Level 3 access) without hedging or verticals requires certain capital and margin requirements, I do not think it is easily possible to get 50x levered in options alone - you'd probably need /ES futures for that.
On a later spin than the one he bet on. Which, you know, happens in roulette all the time.
Seriously, who in their right mind takes out an option with such a short life?
You can trade the OTC product with ticker GBTC [1]. It is a sponsored note - has quite a bit of volume on OTC markets. AUM is about 230mm. Expense ratio is around 2% (atrocious).
I noted that - before bitcoins drop on Friday afternoon - GBTC was up about 135% over 2 years - versus bitcoins 200% appreciation. So the tracking error is quite bad.
I'd challenge ANY government to regulate cold, hard, cash
The SEC has a three pronged mission:
- Protect investors - Maintain fair, orderly, and efficiently markets - Facilitate capital formation
With this decision they missed on all three. No investor was protected. The BTC market today was not fair, orderly, or efficient. There was excessive capital destruction.
Registration means you're complying with certain laws. Those laws, in turn, make diligence easier for investors. If you remove those baseline expectations, marginal transaction costs go up.
Wow.
From the ruling....
> First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.
> Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated. I'm not sure I entirely understand if they mean that Bitcoin itself must be regulated or just that the SEC needs to see that the major exchanges are regulated.
If its the former, then I think this is game over, if its the later then............hmmm I really don't know.
EDIT Having gone through the ruling it looks like they have a few reservations.
1) Most of the bitcoin trading happens on unregulated markets
2) Most of the volume happends in China and not the us and is therefore hard to regulate.
3) The ETF is tied to the Winklevoss own Gemini exchange which has little volume and often inferior pricing to other more liquid exchanges.
4) They bring up the lack of a liquid futures market, though I'm not sure this is really a concern.
> The Commission has, in past approvals of commodity-trust ETPs, emphasized the importance of surveillance-sharing agreements between the national securities exchange listing and trading the ETP, and significant markets relating to the underlying asset. 144 Such agreements, which are a necessary tool to enable the ETP-listing exchange to detect and deter manipulative conduct, enable the exchange to meet its obligation under Section 6(b)(5) of the Exchange Act to have rules that are designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest
So until bitcoin markets are regulated by the SEC or similar no ETP/ETF products I suppose.
I'm a bit disappointed that there is no ETF but this is pretty darn reasonable.