Marc Cuniberti: Where there’s steam, there’s bitcoin

I have always said that cyber coins like Bitcoin are vapor. And from time to time I get confirmation that I am not far from my goal. I also get a lot of hate mail when I cover bitcoin negatively. So it is for a financial analyst who covers the world of finance and tries to help people.

No, bitcoin is not just steam, but it is certainly more steam than it was the last time I wrote about it. My articles and radio shows about bitcoin started when it was around $60,000 per coin. Then I wrote another article at about $41,000, again at about $30,000 (it’s falling so fast I can’t keep up), another article and radio show when it broke $19,000 (on the downside of course), and last week it fell the additional 15% to the $16,000 figure.

When my emails light up shortly after these articles hit the news wires, I get emails from the usual suspects (people who own it), and the usual comments, like I don’t understand.

If you read each of my crypto articles, they usually start with the statement “I don’t quite get it,” so I’m not sure why they repeat it in their emails. I mean “I already said so!”

I’ll say it again, I don’t fully understand what Bitcoin is. Nor probably 90% of the people who own it. However, what I do understand, and probably my critics do not, is what an asset mania is.

Yes I understand. Bitcoin is a decentralized currency that cannot be destroyed, is in cyberspace or even aboard a localized “wallet” that one can physically own, and supposedly the currency of the future.

Well, about the currency of the future part, I will add: not in its current form. Currencies must retain a store of value. It means to be stable, and that means in both directions, up and down. Bitcoin and the other “vape coins” like it are anything but stable. In fact with 20,000 cybercoins now available, most of them are probably just a Ponzi scheme. My opinion of course.

The latest reason for this latest rumbling is the news that one of the biggest exchanges where people trade and store bitcoin is in trouble. Financial issues of course, and are there any others when it comes to cybercoins?

What Happened: On November 8th, an article appeared on a crypto news service suggesting that the CEO of one of the largest cyber coin exchanges FTX, Sam Brinkman-Fried, used his firm’s funds, also known as clients, to bail out one of FTX’s hedge funds, a very illegal transaction. Apparently, Brinkman-Fried said the same when he admitted hours later in an interview:

“I f…k up”.

That sounds pretty clear to me as an admission.

Bitcoin fell another 15% on the news.

Then on November 11, they filed for bankruptcy. Then good old Sam retired.

Oops!

Hence another “caveat emptor” article on the dangers of cybercoins by you.

It wasn’t just a few months ago that similar shenanigans surrounding Bitcoin and their exchanges rocked the cybercoin universe in what is becoming a familiar theme here at Money Matters.

No, I don’t hate cybercoins. I actually own a small amount of them, or at least I did. I haven’t checked lately and kind of kissed the money when I bought it at, where else, FTX.

It’s not ironic.

No, I don’t fully understand Bitcoin, but I know a craze when I see one, and there have been many throughout human economic history.

They all have a great story: the early money makes a ton of money, imitations appear (how about 20,000 of them), everyone thinks they can only go in one direction (up), celebrities, banks and companies start participating (and they have ), then the bad guys start to emerge, prices start to flatten, dealer illiquidity starts to appear, followed by bankruptcies, then the news wires are flooded with denials and assurances from remaining participants, all is well (we’re here), then several firms fail, and the whole thing implodes with devastating losses for many. Then regulators dissect the entire mess and the arrangement is complete.

I don’t know if cybercoins will run the gamut and implode completely, and neither does anyone else. It could go up in a big ball of steam, or it could become the biggest currency of all. My forecast is the first if you haven’t guessed.

But ask yourself, given the above description of all other past fads in history, do you see any similarities here?

I sure do.

“Look at the markets so you don’t have to”

This article expresses the opinion of Marc Cuniberti and is not intended as investment advice, or a recommendation to buy or sell securities, nor does it represent the opinion of any bank, investment firm or RIA, or this media outlet, its employees, members or underwriters. . Mr. Cuniberti holds a BA in Economics with Honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com and was recently named Best Financial Advisor in Nevada County. 530-559-1214.