Banks corralled as cryptos run wild

Wednesday, 29 November 2017
Melbourne, Australia
By Bernd Struben

  • When 18 government reviews aren’t enough…
  • Exponential growth

Is it time to sell the banks and buy bitcoin?

Maybe.

The world’s largest cryptocurrency passed the US$10,000 milestone since I penned yesterday’s Port Phillip Insider.

At time of writing a single bitcoin is worth US$10,031.56 (AU$13,192.48). That’s up from US$997.69 since 1 January this year — a gain of 1,004.5%.

Not bad.

Ether, the second biggest crypto by market cap, is also at record highs. One ether will fetch you US$490.17 at the moment. That’s up from US$8.52 on 1 January — a gain of 5,537.6%.

Even better.

If you haven’t bought into either — or both — yet and feel like banging your head against the wall…join the crowd.

Especially as these 10 and 55-fold gains were made by simply buying and holding bitcoin and ether…for less than 11 months.

Now I say ‘simply buying and holding’ for a reason. You see, crypto expert Ryan Dinse tells me he could have supercharged those gains by as much as 50 times with his as yet unreleased ‘Flip Trading’ method.

He details his revolutionary new strategy in a secure dossier which we’ll email directly to you next Tuesday. But only if you register your interest here. (Don’t worry, it’s 100% free. And only available to our paid subscribers.)

You’ll get the most out of this if you’re already somewhat comfortable with cryptocurrencies.

Over at their entry level service, Secret Crypto Network, Ryan Dinse and Sam Volkering provide a simple introduction to the world of cryptocurrencies. That includes which coins to buy…and which to avoid. Details here.

Cryptos’ rapid evolution and huge price gains, and losses, have many analysts concerned.

Yet, despite some grumbling from regulators across the globe, the crypto market remains almost entirely unregulated. Or, more accurately, almost entirely self-regulated.

Not so the humble banks. And a royal commission into Australia’s banking industry looks increasingly likely.

More after the markets.

Markets

Overnight, the Dow Jones Industrial Average closed up 255.93 points, or 1.09%.

The S&P 500 gained 25.62 points, or 0.98%.

In Europe, the Euro Stoxx 50 index finished up 19.47 points, or 0.55%. Meanwhile, the FTSE 100 rose 1.04%, and Germany’s DAX climbed 59.33 points, or 0.46%.

In Asian markets, Japan’s Nikkei 225 index is up 77.53 points, or 0.34%. And China’s CSI 300 is down 0.89%.

In Australia, the S&P/ASX 200 is up 29.05 points, or 0.49%.

On the commodities markets, West Texas Intermediate crude oil is US$57.70 per barrel. Brent crude is US$63.61 per barrel.

Gold is trading for US$1,293.90 (AU$1,701.60) per troy ounce. Silver is US$16.89 (AU$22.21) per troy ounce.

One bitcoin is worth US$10,031.56.

The Aussie dollar is worth 76.04 US cents.

When 18 government reviews aren’t enough…

The Greens are waffling over their support of a royal commission. But Labor looks to have enough backing from crossbenchers and rebellious Nationals to push their vaunted banking inquiry through.

And now it appears Australia’s $40 billion insurance industry may get caught up in the dragnet.

It’s created a serious headache for Malcolm Turnbull. The prime minister remains adamantly opposed to the measure.

Earlier this week David Murray sounded off in support of Turnbull’s position. You likely remember Murray from his time as head of the 2014 Financial System Inquiry.

Here’s what Murray told Fairfax Media:

What are the self interests driving this? It just begs the question. I think it would be a very bad look for Australia, with the fundamentals of the financial system being so sound, and with the rest of the world being our net creditor.

The financial services sector provides around 10% of Australia’s GDP. That’s bigger than the mining industry. And, as noted by The Sydney Morning Herald, it has already been through 18 government reviews and inquiries.

Now we’re no cheerleaders for the big banks or insurance companies. Far from it. But we’re also no fans of excessive government red tape. Or expensive, taxpayer funded royal commissions.

Mere speculation of a banking enquiry has already put the big banks’ share prices under pressure. And in the lead up to the enquiry, banking stocks could suffer a good deal more.

Ben LeBrun, a market analyst with Charles Schwab Australia, sounded off on the issue to News Corp Australia. He warned of the fallout from a royal commission.

As quoted in The Daily Telegraph:

The big banks are still highly profitable, making billions of dollars a year but if you removed that uncertainty around a Royal Commission today I think you would see shares rise by around three to four per cent.

And if a Royal Commission were announced today the share price could fall by about the same amount.

Investors would not like the uncertainty or the negativity. The banks would be on the nose both locally and with international investors.

Banks could be down by 10 per cent or more in the lead up.’

Highly profitable they may be. But the big four banks certainly haven’t been highly profitable for investors this year. That’s despite all four banks trading well into the black at time of writing, with NAB leading the pack, up 0.85%.

And whether you know it or not, you most likely own the banks’ shares. At least if you’ve parked your money in a managed super account.

So how have the big four done this calendar year? Excluding dividends:

  • Commonwealth Bank of Australia [ASX:CBA] is down 1.35% year-to-date.
  • Australia and New Zealand Banking Group [ASX:ANZ] is down 4.98%.
  • Westpac Banking Corp [ASX:WBC] is down 2.79%.
  • National Australia Bank Ltd. [ASX:NAB] is down 3.20%.

That doesn’t compare well to the broader ASX 200, up 6.32% in 2017.

And it doesn’t really compare at all to the 1,004.5% gains made by bitcoin, let alone the 5,537.6% gains scored by ether this year.

Exponential growth

With those kinds of gains on the board, you have to wonder if bitcoin may be running out of steam.

It’s a fair question.

One good way to gauge this is by having a look at the amount of investors and users still moving into the digital coin.

And judging by the amount of new bitcoin accounts opened at Coinbase every week, the crypto market has plenty of steam to spare.



chart image

Source: Bloomberg
Click to enlarge


From Bloomberg:

Coinbase, one of the most popular platforms for trading cryptocurrencies, has added at least 300,000 users since just before the Thanksgiving holiday on Nov. 22, according to data collected by Alistair Milne, co-founder of the Altana Digital Currency Fund.

The San Francisco-based company had 13.3 million users as of Nov. 26, up from 13.0 million on Nov. 22 and 10.6 million two months ago. The company has almost tripled its customer base in the past year.’

At some stage, of course, this kind of exponential growth will come to an end. Simple maths demands it.

But with hundreds of millions of potential crypto users still sitting on the sidelines, I reckon that day is still a long a way off.

Ryan Dinse couldn’t agree more. Here’s what he had to say on the longevity of cryptos — and his Flip Trading method — in an email he fired my way this morning.

Hey Bernd

I bet you’re sick of writing about cryptos by now!

Sometimes it feels like we’ve all been writing about this for ages now.

And ever since I joined in May it has been a hot topic for sure.

But here’s the thing…

We are still in the early stages of this boom.

If we used the internet analogy it’s still ‘1994’

Check this out from Forbes:



chart image

Click to enlarge


It’s amazing…

Despite all the fanfare, hardly anyone actually owns any bitcoin. Let alone the other huge opportunities out there in the less well known cryptocurrencies.

Imagine the opportunities about to unfold because of the internet in 1994.

Amazon, Apple, Netflix, Facebook…

And a whole host of companies that went up super fast, then went down just as rapidly.

The beauty of Crypto Flip Trading is that we can make money on them all.

But the idea is to be holding onto the eventual winners at the end of it all. We’re just not going to try and predict the future. Instead we’re going to let the market show us who the winners will be. And ride the waves as far as they go.

Anyway, I suspect we’ll both be writing about this for a while to come!

Cheers,

Ryan

You can tell Ryan is excited about his new method of buying and selling cryptos.

And he should be.

‘Old school’ buy and hold investors who bought $1,000 of ethereum in March are now sitting on roughly $16,000.

I’m sure they’re not complaining!

But the back-testing results show that if you’d put $1,000 down and used Ryan’s as yet unreleased Flip Trading method over that same time, you could have $52,420 instead.

It may sound greedy to turn my nose up at 1,600% gains. But I’ll take the 52,400% gains instead, please.

To top it all off, Ryan tells me that Flip Trading actually works to reduce your risk in the crypto markets as well. Not that it’s risk free, mind you. But Ryan keeps a close eye on any potential losses.

And this Tuesday, 5 December, Ryan will release his complete dossier on the art of Crypto Flip Trading. All at no cost for our paying subscribers.

But you must register your interest first. It will only take a moment. Simply click here.

Cheers,
Bernd