Is Bitcoin the World’s Most Valuable One-Trick Pony?

11.07.2017 • Switzerland

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Henry Bonner – Strategy and Council Letter (Switzerland) –

Here in Lausanne …

The market is waiting …

By the end of the week, companies will announce their second quarter results …

Two groups, Citi and JPMorgan, warned, saying the results could disappoint expectations …

As a reminder, the CAC 40 is down since May, indicating that the market is losing its breath …

The following graph published by MarketWatch shows the market problem:

In blue, you have rising stock prices …

In black, you have earnings per share …

Since March 2014, revenues per share on Wall Street have stagnated … but stock prices continue as if nothing …!

Sooner or later, analysts say, prices will change direction … at least if companies do not start to generate more profits …

JP Morgan, in a message they published in May, said the market now rested on profit expectations in the 4th quarter!

In other words, the market is based on predictions of growth that will be realized – perhaps – in 6 months …!

By then, of course, many changes can occur … and derail the market …

We should have the results of the 2nd quarter in the coming days …

As it seems, the market does not expect anything spectacular …

On the other hand, the market continues to keep an eye on interest rates, which could be problematic …

If rates rise, banks’ shares could slip … which could plumb the entire market …

Meanwhile – on the side of Bitcoin – blood flows …!

We have reported how the Bitcoin course – and cryptos – has exploded since January …

Bitcoin has climbed more than 200% …

Ethereum has taken 4,500% …

Hundreds of these “cryptos” have exceeded 1,000% gains in 6 months …

Since mid-June, on the other hand, the bubble deflates … which does not surprise after a rise of this size …

For 24 hours, the deflation accelerates …

Bitcoin has lost 7% …

Ethereum 21% …

Ripple 25% …

Across the landscape, nearly all have lost between 15% and 50% since yesterday …

Where does the problem come from…?

Well, Bitcoin, Ethereum, and others are forms of money … and nothing else – for now.

On the other hand, many people who bought believe that the basic system that makes these currencies – the “blockchain” – can have other uses …

Take Ethereum, for example, the rival of Bitcoin’s day …

Why did Ethereum explode in value …?

Well, many people advocated Ethereum as a way to create “intelligent contracts …”

In other words, you could have your mortgage, your lease, or your insurance contract in the form of a “smart contract,” resembling some sort of “Ethereum room.”

Instead of waiting for your insurance to cover you, your contract would recognize “all alone” if you are entitled to reimbursement … and would do so without waiting for the insurer to approve …

Such an “intelligent contract” would give you more security, would not it?

Well, behind the scenes of crypto-currencies, some see these “contracts” as perlimpinin powder …

In other words, these contracts are a form of marketing for Wall Street speculators who understand little … but never see the light of day …

This is what Dr. Gideon Greenspan, the founder of the company Coin Sciences, has said, a platform that makes it possible to make a crypto-money:

“When intelligent people hear the term ‘intelligent contract,’ their imagination takes flight … They have dreams of autonomous, intelligent programs, able to fend for themselves, putting the data to good use.

“The problem is not that people do not know what they want from intelligent contracts.

“Rather, it is that, largely, these ideas are impossible to put into practice.”

In short, even if “cryptos” could serve as currency in the future … the other uses of the “blockchain,” which attracted the attention of the media, are perhaps “only wind.”

Perhaps this decline means that the market is becoming aware of it …

What to do…?

Will the Bitcoin go up …? We can not say …

With all the attention that Bitcoin has attracted in the media, we would not be surprised to see him down in the future …

Eventually, we could see the volume of transactions through the “crypto” climb … but not necessarily with Bitcoin …

We have thousands of “cryptos” available … and others appear day by day …

Is Bitcoin at its zenith?

Possible…

On the other hand, stocks on the stock market worry us much more …

After all, we have inflated the value of the shares with 10 years of intervention by the Fed, the ECB, and the Bank of Japan …

What will happen now that the Fed is raising its rates …?

Will the shares go down calmly …?

Unlikely … With today’s valuations, the fall should “take the breath” of many people …

Here in France, where the basic pensioner does not own shares on the stock exchange – but a pension or life insurance – the problem could affect your ability to make withdrawals …

After all, your insurer must generate earnings to pay you …

Its assets – bonds and equities – have been rising for 10 years … and the ECB has promised to raise the price of its assets …

But if the tide goes out … so watch out for you …!

-Read more at www.lettre-strategie-conseil.com (French)-

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