A 63,189,000% gain in eight years…after the price crash

Thursday, 1 November 2018
Melbourne, Australia
By Bernd Struben

  • US$4 billon per day
  • EU global elites blackmailing australia on paris agreement

Do you remember what you were doing on Halloween 10 years ago?

Even if you had young kids then, odds are you might not have taken much notice of the holiday. It was only just gaining a toehold in Australia. Unlike today.

Yesterday we were greeted by a steady stream of trick-or-treaters at our Bayside house in Melbourne. From toddlers to teens, they managed to empty the heaping bowl of spooky-themed lollies my wife had prepared.

No worries, though. The latecomers were just as happy with our backup Santa-themed chocolates. And it all balanced out in the end. Our daughter managed to collect almost as much candy as we handed out. So, no shortage of sugar to see me through the day.

We weren’t in Australia 10 years ago, though.

I was working in The Hague at the time, analysing European commercial property trends and transactions.

And the Dutch were having the same debates about Halloween as Australians are having today. Just one more example of Americanisation and commercialisation, some grumbled.

Not that this stopped many of the adults from dressing up in outrageous costumes and partying late into the night.

The Dutch love a good party. And there are no holds barred on your costume choices. Yes, even blackface is OK. The Dutch, pragmatic to the core, understand there need be nothing racist about painting your face black, white, yellow or purple.

On Halloween 2008, I opted to paint my face white. Along with blackened eyes and a bit of fake blood I made a passable zombie.

Two of my friends were much more creative. They worked in finance, and one dressed up as a euro note while the other dressed as a US dollar. The rival currencies exchanged amusing insults all night.

Today one of them might well have chosen to dress as a bitcoin instead. A true rival to classic fiat currencies.

But on Halloween 2008, none of us had heard of bitcoin yet. That’s because, as we were out partying, bitcoin was just being born.

More, after the markets.

Markets

Overnight the Dow Jones Industrial Average closed up 249.12 points, or 0.97%.

The S&P 500 gained 29.11 points, or 1.09%.

In Europe, the Euro Stoxx 50 index finished up 50.38 points, or 1.60%. Meanwhile, the FTSE 100 gained 1.31%, and Germany’s DAX closed up 160.12 points, or 1.42%.

In Asian markets, Japan’s Nikkei 225 is down 150.13 points, or 0.68%. China’s CSI 300 is up 1.87%.

In Australia, the S&P/ASX 200 is down 7.61 points, or 0.13%.

On the commodities markets, West Texas Intermediate crude oil is US$65.02 per barrel. Brent crude is US$75.47 per barrel.

That’s a 2.2% fall in the price of WTI since this time yesterday. We need to see WTI fall another 7.2% by Tuesday to reach our longstanding forecast of US$60 (or less) before the US midterm elections.

We could still get there!

Turning to gold, the yellow metal is trading for US$1,216.64 (AU$1,711.17) per troy ounce. Silver is US$14.30 (AU$20.11) per troy ounce.

One bitcoin is worth US$6,319.60.

The Aussie dollar is worth 71.10 US cents.

US$4 billon per day

I don’t know if Satoshi Nakamoto — the name adopted by the person or people who created bitcoin — chose 31 October for any particular reason.

But whether or not they were a fan of costumes, candy or the more ancient traditions attached to the date, Halloween 2008 was when they published ‘Bitcoin: A Peer-to-Peer Electronic Cash System’.

Like the cryptocurrency itself, the whitepaper didn’t garner much attention at first.

In fact, as Bloomberg notes:

One of the first known transactions was in May 2010 for 10,000 Bitcoins to indirectly buy two pizzas for about $30, or less than a cent for each Bitcoin.’

This is a favourite story among crypto enthusiasts.

You’ve got to imagine the guy is still kicking himself for the US$63 million pizzas. Which would have been valued at over US$190 million in mid-December.

But in 2010, bitcoin was broadly dismissed — by the few who even knew it existed — as a novelty for computer geeks. Hence the price of less than one US cent. Meaning bitcoin’s since enjoyed a 63,189,000% gain…and that’s after this year’s massive price crash.

But as you can see in the chart below, over time people around the globe sat up and took notice.



chart image

Source: Bloomberg
Click to enlarge

I’m sure you recall the bitcoin mania that gripped the world last year. You can see that in the crazy upward price spike, which saw bitcoin hit over US$19,500 in mid-December last year.

You’re also likely aware of the plunge in price that followed earlier this year.

But as you can see in the chart above, that plunge did not result in bitcoin falling to zero…as many so-called experts predicted.

In fact, over the past few months, bitcoin has been remarkably stable. More so than many stocks during the last few weeks.

I would have thought that bitcoin’s recent stability would have seen a rise in the number of transactions. One of the ideas is, after all, for bitcoin and other cryptos to replace dollars, euros, and yen. And one of the difficulties has been frequent daily price swings of 10% or more.

But I would have thought wrong. I know…gasp!

From Bloomberg:

‘[O]nly about one in four Bitcoins that weren’t freshly mined moved between the anonymous online addresses holding them in the last six months.

That’s a huge change from late 2017, when about half of all such Bitcoins were active, according to data compiled for Bloomberg News by researcher Coin Metrics…

Historical data shows that a large swath of Bitcoins doesn’t ever trade. Up to 40 percent of all Bitcoins are lost or kept in what’s known as cold storage, Coin Metrics estimates.’

Although trading volume is way down, CoinMarketCap estimates that some US$4 billion (AU$5.6 billion) worth of bitcoin still changes hands every day.

While the slowdown in trading came as surprise to me, it’s no revelation to crypto guru, Sam Volkering.

Sam, as you may know, has been atop the crypto story since day one. He’s also the first analyst I know to actively recommend his readers buy bitcoin. That was back on 23 November 2016.

At the time bitcoin was worth US$750.

Anyhow, Sam’s a big advocate of cold storage. (If you don’t know what that is, you can get the full scoop here.) He’s also an advocate of passing on your bitcoin to your children. He’s convinced bitcoin, and select other cryptos, will see fresh rallies over the coming years.

Sam says they’ll also see fresh crashes…only to rise back ever higher.

But why take it from me?

Sam explains it all in his newly updated book, Crypto Revolution. If you haven’t gotten your hands on the just-released print copy, you can find out how to get your discounted copy by clicking here.

That’s all for today. Be sure to tune in tomorrow to read the latest from Sam, alongside a new edition in our exclusive series from ‘The Billionaire’s Trader’.

Remember to send your questions and comments to  letters@portphillipinsider.com.au. If we publish your letter, we’ll only use your first name.

And don’t forget to check out the latest on the climate wars from The Australian Tribune:

‘EU Global Elites Blackmailing Australia on Paris Agreement’

The European Union has tipped its hand at what’s in store for Australia over the coming decades. And it’s not good.

In a brazen show of coercion, Romanian MP Sorin Moisa has directly linked Australia’s commitments on climate change to any free trade deal with Europe. It’s just one more ugly example of foreign powers attempting to dictate Australian policy.

Moisa is on the European parliament’s trade…

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Cheers,
Bernd