Bitcoin investors should be more aware of its history of bubbles and price crashes, a crypto entrepreneur explains

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Bobby Lee said the history of bitcoin was one of bubbles bursting and growing again

  • Bitcoin investors need to be more aware of the asset’s history of big booms and busts, Bobby Lee said.
  • The crypto exchange founder said bitcoin is likely to shoot up further but then crash dramatically.
  • Yet Lee said he is optimistic about bitcoin long-term, seeing it as an inflationary hedge.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin investors should be more aware of the asset’s volatile history of bubbles and dramatic price crashes, crypto exchange founder Bobby Lee has said.

Lee told Insider that bitcoin’s history suggests it will continue shooting up but then is likely to crash dramatically “within a few hours.” He said bitcoin may rapidly lose 50% of its value and could then fall further over the coming years.

Bitcoin has soared in 2021, touching an all-time high of close to $62,000 in March, after falling below $4,000 in the same month a year earlier.

Analysts said the huge amounts of money pumped into economies by governments and central banks – which have supported asset prices across the board – have been a key driver.

Lee said bitcoin could potentially go to $300,000 in the latest bull market cycle. The cofounder of BTCC, one of the oldest crypto exchanges, said he’s attracted to bitcoin as a store of value at a time when fiat currencies risk losing value due to monetary stimulus.

Yet, the entrepreneur, who has recently written a book about bitcoin, said buyers should be more aware of the digital asset’s hugely volatile past.

“A lot of investors are getting in without knowing the history,” he said. “That’s just life, right? People buy real estate, not knowing the history of real estate bubbles, people buy stocks, not knowing about the history of stock market bubbles.”

He added: “Bitcoin history has shown that not only has it risen really fast, but after every bubble, the bubble bursts, after every bull market, the bubble does burst and it quickly falls.”

Lee said bitcoin could fall 50% rapidly, “and then it’ll be a bear market for the next two, three years.” At times, it could even fall as much as 90% from previous highs, he said.

“When bitcoin winter comes, when it crosses the 50% sell-off, that’s when people lose conviction and then people panic. They sell, and that’s what causes it to go down even further and sit at that low level for two or three years.”

Yet, Lee said he remained optimistic about bitcoin. “We just have to have the mental fortitude to hold onto it, what they call HODL… hold on for dear life.” He predicted it could even hit $1 million if it continues to go through boom-and-bust cycles.

Bitcoin continues to sharply divide the financial world, although many investors and institutions have been drawn to the cryptocurrency’s remarkable rally. JPMorgan, Morgan Stanley, BlackRock, and Tesla are some of the major corporations to get involved.

However, bitcoin skeptics argue that bitcoin’s massive volatility means its institutional adoption will be limited. Many argue its rise has been driven by huge amounts of stimulus and could falter once people return to normal life and spending patterns after the coronavirus pandemic.

They say it is set for a price crash similar to after 2017, when bitcoin plunged below $4,000 from about $20,000 in just over a year.

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The bitcoin rally is very near the top and companies are being ‘gimmicky’ in adopting crypto, a currency strategist says

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Bitcoin has surged 775% in the last year

The bitcoin rally is “very long in the tooth” and could be about to sharply reverse course, according to one currency strategist.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, told CNBC this week CME Group’s announcement that it will introduce micro bitcoin futures could be a sign that the market is at the top.

“Last time they announced that there was going to be futures” – which was in 2017 – “bitcoin actually hit [the] top,” Schlossberg said.

He said he thought lots of companies’ adoption of bitcoin is “very gimmicky.” Tesla announced in March that it had started accepting bitcoin as payment, while PayPal said on Tuesday that its US customers can use their cryptocurrency holdings to pay at millions of its online merchants globally.

“I don’t think any asset that has a volatility of 20% per week can really act as a currency at this point,” Schlossberg said. “And I think whatever transactions you’re going to see in bitcoin are going to be infinitesimally small relative to regular currency.”

The foreign exchange strategist said he thought “the whole rally in crypto… is getting very long in the tooth.”

He said: “I think we’re very, very close to perhaps an intermediate-term top here. A little bit of a correction is certainly due at this point.”

Schlossberg is far from the only analyst predicting that the remarkable rally in the world’s biggest cryptocurrency could be nearing its peak. Bitcoin has risen around 775% over the last year to $58,400 on Thursday, according to Coinbase data.

Crypto analysts at Glassnode said in March a pickup in “wealth transfers” from long-term bitcoin holders to newer speculators could mean bitcoin is entering the second half or later stages of a bull market.

Yet bitcoin tycoon Mike Novogratz predicted on Wednesday that increased institutional interest would drive the asset to be bigger than gold. He told CNBC he is shocked at the pace of crypto adoption by big Wall Street players.

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Bitcoin may be entering the later stage of a bull market, crypto analysts say, as talk of a price plunge grows

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Bitcoin has soared more than 700% in a year

  • Bitcoin conditions are “similar to the second half or later stages of a bull market,” crypto analysts said.
  • Glassnode’s report pointed to signs of long-term holders spending coins and a reduction in big wallets.
  • Talk of a bitcoin price plunge has grown, with a crypto entrepreneur saying there could be a 90% drop.
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Bitcoin may be entering the second half or later stages of a bull market, according to crypto analyst Glassnode, as nervousness grows in some quarters about a possible plunge in the price.

Glassnode’s weekly analysis report found there had been a pick-up in “wealth transfers” from long-term bitcoin holders to newer speculators, which the company said was reminiscent of previous market peaks.

The report said bitcoin bull markets eventually reach a “euphoric top”, which materializes as big holders increasingly spend their coins to realize profits.

Glassnode estimated long-term bitcoin holders had reactivated about 9% of supply so far in 2021 by spending coins, although this was below the 17% reactivation seen before the market’s crash in 2017.

“These studies suggest conditions are similar to the second half or later stages of a bull market,” Glassnode said.

The bitcoin price (BTC) was down 6% on Tuesday to $54,294, well off a high of $62,000 earlier in March, but still up around 700% from a year ago.

Glassnode also said on Tuesday that the biggest players – wallets with 1,000 to 10,000 BTC – had cut their holdings by 307,000 bitcoin since December.

Read more: Hedge funds are ramping up bets against Chamath Palihapitiya’s SPACs and have already taken home $40 million this year. Here’s a detailed look at the wagers they’re making.

Investment manager Timothy Peterson tweeted recent falls in big holdings “are often, but not always, associated with bear markets.”

On Monday, crypto exchange founder Bobby Lee told CNBC 2021 is a bull market for bitcoin, of the sort that comes around every three, or four years. He said the bitcoin price could “potentially” go as high as $300,000 this year.

Yet Lee said the “bubble” was likely to pop. “People should be aware that it could fall as much as 80% to 90% of its value from the all-time peak,” he said.

However, many bitcoin advocates point to growing institutional interest as a reason why bitcoin is unlikely to crash like it has in the past. Visa, Morgan Stanley and JPMorgan are some of the latest big names to get involved.

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Bitcoin could plunge 90% into a ‘winter’ lasting years after another surge, crypto exchange founder warns

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The bitcoin price has surged 800% in the last year

The bitcoin price could surge as high as $300,000 in the latest bull-market rally, but could then plunge 90% into a “winter” lasting years, the founder of cryptocurrency exchange BTCC has warned.

Bobby Lee told CNBC’s “Squawk Box Asia” on Monday that 2021 is a bull market for bitcoin, of the sort that comes around every three or four years. Lee, who currently runs crypto wallet app Ballet, said 2013 and 2017 were also bull-market years in which the bitcoin price increased by 10 or 20 times.

He predicted the bitcoin price (BTC) would hit $100,000 by the summer and “potentially” $300,000 by the end of the year, “if history plays itself out again.”

However, Lee said “bull market cycles come and go.” He added: “After a bull market peak, inevitably it could go down by quite a bit, and that’s when the bubble bursts.”

Lee warned bitcoin could then enter a “winter” where the price stays low for two to three years. “So after it peaks out, whether it’s $200,000, $100,000 or $300,000, people should be aware that it could fall as much as 80% to 90% of its value from the all-time peak.”

Lee co-founded BTCC in 2011, making it one of the oldest cryptocurrency exchanges.

The bitcoin price has roughly doubled this year already to around $58,100 on Monday, down from a high of close to $62,000 a week ago. And it is up by almost 800% from March last year, when it tumbled as coronavirus started to batter the global economy.

Advocates say the world’s biggest cryptocurrency by market value will continue its remarkable run, as growing numbers of institutional investors become involved. They also argue bitcoin can act as a hedge against inflation, which many investors expect to rise.

But critics say bitcoin’s massive volatility means its institutional adoption will be limited. Many argue it is in a bubble driven by huge amounts of stimulus and is set for a price crash of the sort seen after 2017, when bitcoin plunged from around $20,000 to below $4,000 in just over a year.

“I don’t know if history will repeat itself, but what we do know is that bitcoin bull-market cycles come every 4 years and this is a big one,” Lee said.

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Cryptocurrencies are attractive as a ‘small part’ of any portfolio, George Ball says

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  • CEO of investment firmSanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

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Cryptocurrencies are attractive as a ‘small part’ of any portfolio, former Prudential Financial chief says

bitcoin
  • Former Prudential Financial CEO and current CEO of Sanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Former Prudential Financial CEO George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The former Prudential Financial CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

Read the original article on Business Insider

Bitcoin will eventually be a global currency – and a $1 million price target within the next 10 years is ‘very reasonable,’ Kraken CEO says

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Bitcoin will eventually be the world’s currency, because “you have to think it’s going to infinity,” Jesse Powell, the CEO of the cryptocurrency exchange Kraken, told Bloomberg on Wednesday.

He said that national currencies were “already showing extreme signs of weakness” and that people would soon start measuring the price of things in bitcoin.

“The true believers will tell you it’s going all the way to the moon, to Mars, and eventually it’ll be the world’s currency,” Powell said.

Kraken, based in San Francisco, is in talks to raise new funding that would double its valuation to over $10 billion, Bloomberg reported in late February.

The price of bitcoin fell on Thursday by 0.4%, to $50,175, but is up 70% year-to-date. The price slipped earlier this week after Gary Gensler, the nominee to lead the Securities and Exchange Commission, said at his confirmation hearing that making sure crypto markets are free of fraud and manipulation was a challenge. Gensler has been viewed as an advocate for cryptocurrencies, given his previous work and teachings on the subject at MIT.

“In the near term, people see it surpassing gold as a store of value, so I think $1 million as a price target within the next 10 years is very reasonable,” Powell said of bitcoin.

Bitcoin believers expect it to replace fiat money, and the market capitalization of all national currencies combined could make up its worth, Powell said.

Read more: UBS: Buy these 14 back-to-normal stocks now before a ‘sharp acceleration’ in consumer spending in Q2 as vaccinations pick up

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Bitcoin above $51,000 is unsustainable unless volatility subsides, says JPMorgan

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  • Bitcoin’s current price above $51,000 is “unsustainable” unless volatility subsides, JPMorgan said in a note. 
  • Strategists estimate a large portion of recent flows into the token have been driven by speculation. 
  • If the token’s volatility converges to that of gold, bitcoin could reach $146,000, they added.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin’s current price is “unsustainable” unless the cryptocurrency’s volatility dies down, according to JPMorgan.

The cryptocurrency flew to new heights above $52,800 on Friday morning, bringing its year-to-date gains to more than 80% as the breakneck rally powers ahead. Just one year ago, bitcoin traded around $10,000.

The cryptocurrency has achieved the fastest-ever price appreciation of any “must-have asset” to which it is often compared, like Gold in the 1970’s and internet stocks in the 1990’s, noted JPMorgan. But the rally has left wary investors reminded of the mania in 2017 that ended in a steep drop. 

Strategists led by Nikolaos Panigirtzoglou wrote in Tuesday note that unless bitcoin’s price swings subside “quickly from here,” the current rally could end in disappointment. 

The strategists estimate that $11 billion of institutional money has flown into bitcoin since the end of September, but they say  a large portion of that has been dominated by “speculative investors seeking to front run other more real-money institutional investors.”

Despite the firm’s short-term caution, JPMorgan sees bitcoin’s price growing significantly higher in the long run.

If bitcoin’s volatility converges to that of gold, JPMorgan has a “theoretical price target” of $146,000. However the strategists said this convergence would be a “multi-year process” and would also depend on bitcoin ownership tilting more institutional and less retail over the coming years.

“For the bitcoin market cap to match the total private sector investment in gold via ETFs or bars and coins, we estimate that mechanically bitcoin prices would need to rise to $146k,” JPMorgan added. 

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