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22 ноября, 17:10

Bitcoin: An Unknowable Bubble?

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"Whatever [Bitcoin] is, I missed it... It looks and smells like all the bubbles I have seen throughout history." - billionaire investor Jim Rogers Authored by Constantin Gurdgiev via True Economics blog, There is a much-discussed in the crypto-sphere chart making rounds these days, plotting Bitcoin price dynamics against the historical bubbles of the past: The chart is striking. Albeit simplistic. See Note 1 below for a technical argument on the chart timing. On price dynamics alone, Bitcoin looks like a sure bubble - a disaster waiting to happen. But Bitcoin dynamics are basically not suited for any empirical analysis of any significant accuracy. As noted by some commentators, Bitcoin had numerous 80-90% and larger drawdowns in the past (given its immense volatility). It keeps coming back from these. Some claim this to be the evidence that Bitcoin it not a bubble. Which is neither here nor there: bubbles are generated by exuberant expectations of investors, not by actual parameters of price processes. Causality does not flow from dynamics to bubbles, but the other way around. So to identify a bubble, one needs to identify exuberance. See Note 2 below for more on 80% drawdowns. In the case of Bitcoin fans, there is clearly such. No investor or serious analyst has been able to provide a fundamentals-based valuation model for Bitcoin. A disclosure in order here: myself and a graduate student of mine have looked at the fundamental modelling for Bitcoin over the summer. We found no tangible relationship between any economic or financial parameters tested and Bitcoin price dynamics. In another piece of research, myself and two co-authors are currently looking at empirical dynamic and fractal properties of Bitcoin. Again, we finding nothing consistent with a behaviour of an asset with fundamentals-derived valuations. Absence of evidence is not the same as evidence of absence. But, taken together with the general lack of credible fundamentals-linked modelling of the crypto-currency, this means that, at this point in time, Bitcoin price can be potentially driven solely by… err… expectations held by its enthusiasts, plus the incentives by the predominantly China-based investors to avoid extreme risks of capital controls and expropriations. If so, both drivers would make it a speculative bubble. The only quasi-fundamentals-linked argument for Bitcoin has been the blockchain one - the promise of Bitcoin serving as a key tool for data aggregation, recording and transmission. This argument, however, no longer holds. Blockchain technology has migrated from public blockchains, like Bitcoin, to either open blockchains, like Ethereum or, increasingly more frequently, private blockchains. It is the latter that currently hold the promise to serve as viable platforms for data economy. As a libertarian, I should like a private currency system that supports anonymity of transactions. As an economist, I should like the innovative nature of Bitcoin. And, put simply, I do. Both. But as an investor, I do not have the stomach for Bitcoin’s valuations and volatility, as well as for its higher moments behaviour (in particular worrying are kurtosis, co-skews and co-kurtosis, which severely complicate empirical dynamics analysis, see Note 3 below). And I have even less enthusiasm for the crypto market that is sustained increasingly by undertakings, like BitMEX - a purely speculative platform trading some $35 billion in Bitcoin derivatives with leverage up to x100 to the amateur speculators who, put frankly, have zero idea what they are buying and at what price. The vast majority of Bitcoin investors have no clue what a butterfly option looks like and how it can be valued. And the vast majority of financial markets analysts and professionals won’t be able to price a butterfly strategy for Bitcoin, given its painfully twisted moments. Yet, within a month of starting trading, BitMEX reached 1/3 of the market capitalisation of Bitcoin. This is not just a shoe-shine-boy moment, folks. It is white-powder-under-the-nose-and--empty-bottles-of-vodka-on-the-floor hour for high school dropouts with cash to burn. Another worrying issue with Bitcoin is the argumentation of its main supporters. This ranges from the cognitively biased “you don’t know anything about the Bitcoin” to “Bitcoin is scarce & limited in supply” to “Bitcoin is a promise of liberating the masses from the oppression of the Central Bankers”. The first sort of argument exhibits not just Jurassic ignorance of logic, but also a gargantuan dose of arrogance. Repeated sufficiently enough, it signifies the absurd degree of exuberance of investors’ expectations. The second argument is patently false. Bitcoin has undergone splits, and engendered dozens of other cryptos, with unlimited supply of such into the future. Bitcoin itself is divisible ad infinitum and, with forks, its supply is potentially unlimited. Worse, Bitcoin rests on man-made mathematical foundations. Which means it has no physical bound or constraint. Anything man-made (and even more so, anything mathematically derived) is, by definition, fungible and axiomatic. Just because to-date no one cracked the code to alter Bitcoin mid-stream or drain blockchain-held information does not mean that in the future such a code cannot be written. So hold your horses: gold is physically limited in quantity (even though in the Universe, it is not as scarce as it is on Earth, which makes long term supply constraint on gold potentially non-binding). Bitcoin is limited by our capacity to alter the underlying code defining it. Anyone thinking of an algorithm as a 'law' needs to go back to Godel's mathematics. Finally, there is an argument of ‘liberation’. Bitcoin value is only sustained as long as it remains convertible into goods, services and other currencies. This means that Bitcoin cannot remain a government- regulation-free asset, as long as its popularity as a medium of exchange and a vehicle for store of value grows. Which means that in the medium terms (3 years or so?), Bitcoin will either cease to be, or cease to be anonymous. All protection from the dictate of the Central Bankers will be gone.  Benign tolerance of Bitcoin by some regulators can quickly turn into outright prohibition on trading - as current and past examples of China, Vietnam, Nigeria, Colombia, Taiwan, Ecuador, Bangladesh, Kyrgyzstan and Bolivia, Russia, and Thailand suggest. Evolution of cybersecurity measures and regulatory and supervisory tools, including their spread into cryptocurrencies domain will only increase effectiveness of such measures into the future. So, unless you are planning to live in a libertarian paradise, where legal norms of other states do not apply, good luck committing much of your wealth to Bitcoin as a safe haven for oppressive or coercive actions of the nation states. Worse, anyone claiming that Bitcoin is a hedge against inflation fails to understand how modern markets work. Again, to increase in value, Bitcoin requires higher rates of adoption. Higher rates of adoption bring about higher rates of asset instrumentation (see above for BitMIX). Higher rates of instrumentation and adoption, taken together, imply higher holdings of Bitcoin by institutional and diversified portfolio investors. So far so good? Right, now the kicker: these holdings imply greater, not lower, positive correlations between Bitcoin and other asset classes in shock-experiencing markets. That's right, dodos: Goldman holdings of Bitcoin are correlated to liquidity supply in general markets, because if such liquidity starts evaporating, Goldman will sell Bitcoin to plug holes in other instruments. Sell-off in the markets can trigger sell-off in Bitcoin. Now, another kicker: Bitcoin is currently less liquid than any major asset class (see extreme volatility of pricing across various Bitcoin exchanges). Which means that smart folks at Goldman will be dumping Bitcoin before they dump gold and other assets. Hipsters hugging their laptops will be the last to wake up to this momentum (behavioural evidence suggests, they might actually buy into falling Bitcoin in hope of speculatively gaining on a bounce, which, incidentally, can explain why large drawdowns in Bitcoin can turn so fast into upward trends). The tricky bit about Bitcoin is that its enthusiasts need to learn to live in the real world first. Until they do, Bitcoin will continue its upward path, and this process can go one for quite a while, depending on the supply of cash in the markets for Bitcoin. Once they are taught a sufficient lesson, however, the rest of us will be learning the long term fundamentals valuations of Bitcoin. I, for now, have no idea what these valuations might be. So Bitcoin, then. A bubble or not? If you ignore the arguments that attempt to justify its valuations, it looks like one, albeit with dynamics that are very hard to interpret.   If you listen to them, it looks that way even more, with more confidence in the arguments bogus nature. Draw your own final conclusions. *  *  * Note 1: In defence of the chart above, without validating its implied conclusions: the chart plots Bitcoin evolution from 3 years ago through today. This starting point makes sense. Until mid-2014, Bitcoin was extremely obscure, hype-only investor vehicle, with volatility so off the charts, any analysis of its dynamics was futile (I know, I did such analysis and presented the results in my talk at Bloomberg two years ago). Those us who do research in finance generally and routinely disregard the first 3-4 years of existence of Bitcoin for exactly that reason. Note 2:  A note due here: Bitcoin's returns from 80-90% drawdowns is not a solid evidence of the crypto-currency not being a bubble, because they are in line with Bitcoins' overall massive volatility. In other words, a valid comparative for these drawdowns relative to other asset classes is not "an 80% drawdown in  Bitcoin ~ an 80% drawdown in stocks", but "an 80% drawdown in Bitcoin ~ an 8% drawdown in stocks". Apples to apples. Dust to dust.  Note 3:  Interesting Elliott Wave analysis of Bitcoin dynamics here and here , although I am not convinced Bitcoin price trends are established enough for this technique to work.

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21 ноября, 02:10

Bitcoin: The World Has A Money Problem

We know the world has a money problem of... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

20 ноября, 00:45

JIM ROGERS Stocks Fall as Energy Companies Slide with Oil Prices,Tech Weighs

JIM ROGERS Stocks Fall as Energy Companies Slide with Oil Prices,Tech Weighs Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and... This is an excerpt only please visit http://jimrogers1.blogspot.com or the other Jim Rogers Blog http://jimrogers-blog.blogspot.com, for the full story, >>>>]]

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17 ноября, 20:49

A Different Kind Of Diversification

Jim Rogers explains why you should have more than one... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

17 ноября, 06:40

Rickards On Gold, Interest Rates, & Super-Cycles

Authord by James Rickards via The Daily Reckoning, When the Fed raised interest rates last December, many believed gold would plunge. But it didn’t happen. Gold bottomed the day after the rate hike, but then started moving higher again.  Incidentally, the same thing happened after the Fed tightened in December 2015. Gold had one of its best quarters in 20 years in the first quarter of 2016. So it was very interesting to see gold going up despite headwinds from the Fed. Meanwhile, gold has more than held its own this year.  Normally when rates go up, the dollar strengthens and gold weakens. They usually move in opposite directions. So how could gold have gone up when the Fed was tightening and the dollar was strong? That tells me that there’s more to the story, that there’s more going on behind the scenes that’s been driving the gold price higher. It means you can’t just look at the dollar. The dollar’s an important driver of the gold price, no doubt. But so are basic fundamentals like supply and demand in the physical gold market. I travel constantly, and I was in Shanghai meeting with the largest gold dealers in China. I was also in Switzerland not too long ago, meeting with gold refiners and gold dealers. I’ve heard the same stories from Switzerland to Shanghai and everywhere in between, that there are physical gold shortages popping up, and that refiners are having trouble sourcing gold. Refiners have waiting lists of buyers, and they can’t find the gold they need to maintain their refining operations. And new gold discoveries are few and far between, so demand is outstripping supply. That’s why some of the opportunities we’ve uncovered in gold miners are so attractive right now. One good find can make investors fortunes. My point is that physical shortages have become an issue. That is an important driver of gold prices. There’s another reason to believe that gold could be in a long-term trend right now. To understand why, let’s first look at the long decline in gold prices from 2011 to 2015. The best explanation I’ve heard came from legendary commodities investor Jim Rogers. He personally believes that gold will end up in the $10,000 per ounce range, which I have also predicted. But Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50% retracement along the way. This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead. Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650% until it peaked near $1,900 in September 2011. So gold rose $1,643 per ounce from August 1999 to September 2011. A 50% retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce). This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead. Why should investors believe gold won’t just get slammed again? The answer is that there’s an important distinction between the 2011–15 price action and what’s going on now. The four-year decline exhibited a pattern called “lower highs and lower lows.” While gold rallied and fell back, each peak was lower than the one before and each valley was lower than the one before also. Since December 2016, it appears that this bear market pattern has reversed. We now see “higher highs and higher lows” as part of an overall uptrend. The Feb. 24, 2017, high of $1,256 per ounce was higher than the prior Jan. 23, 2017, high of $1,217 per ounce. The May 10 low of $1,218 per ounce was higher than the prior March 14 low of $1,198 per ounce. The Sept. 7 high of $1,353 was higher than the June 6 high of $1,296. And the Oct. 5 low of $1,271 was higher than the July 7 low of $1,212. Of course, this new trend is less than a year old and is not deterministic. Still, it is an encouraging sign when considered alongside other bullish factors for gold. But more importantly, gold has held its own despite higher interest rates and threats of more. That tells me we’re seeing a flight to quality, meaning people are losing confidence in central banks all over the world. They realize the banks are out of bullets. They’ve been printing money for eight years and keeping rates close to zero or negative. But it still hasn’t worked to stimulate the economy the way they want. So gold has been moving up in what I would consider a challenging environment of higher rates.  The question is, where does gold go from here? The market is currently giving close to 100% odds that the Fed will raise rates next month. I disagree. I’m skeptical of that because of the weak inflation data. There will be one more PCE core data release before the Dec. 13 meeting. That release is due out on Nov. 30. If the number is hot, say, 1.6% or higher, that will validate Yellen’s view that the inflation weakness was “transitory” and will justify the Fed in raising rates in December. On the other hand, if that number is weak, say, 1.3% or less, there’s a good chance the Fed will not raise rates in December. In that case, investors should expect a swift and violent reversal of recent trends. Markets have priced a strong dollar and weaker gold and bond prices based on the expectation of a rate hike in December. If that rate hike doesn’t happen because of weak inflation data, look for sharp rallies in bonds and gold. Now, the last time gold sold off dramatically was on election night, when Stan Druckenmiller, a famous gold investor, sold all his gold. It’s only natural that when someone dumps the amount of gold he deals in, the price will go down. That move reflected a change in sentiment. What Stan said at the time was very interesting. He said, “All the reasons that I own gold in the first place have gone away because Trump was elected president.” In other words, he was buying into the story that Hillary Clinton would be bad for the economy but Donald Trump’s policies would be beneficial. If we were going to have strong economic growth with a Trump presidency, maybe you didn’t need gold for protection. So he sold his gold and bought stocks on the assumption that the economy would grow under Trump. But earlier this year, Stan has said he’s buying gold again. What that means is that people are finally reconsidering the reflation trade. Tax reform is still a big question mark. And when’s the last time you heard a word about infrastructure spending? Investors will once again flock into gold once reality sets in. Mix in rising geopolitical tensions in Asia and the Middle East, and gold’s future looks bright.

15 ноября, 19:20

Jim Rogers : The Population Bomb

Investment legend and global financial commentator Jim Rogers will provide a keynote address entitled ‘The Population Bomb: Migration, Global Population, and Environmental Trends, and What They Mean for Asia’, which will highlight some of the key issues affecting global citizens and their... This is an excerpt only please visit http://jimrogers1.blogspot.com or the other Jim Rogers Blog http://jimrogers-blog.blogspot.com, for the full story, >>>>]]

15 ноября, 17:17

You're Going To See Bankruptcies In China

Even China has debt and you're going to see... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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14 ноября, 03:06

The Worst Financial Crisis In Our Lifetimes

We're going to have the worst financial crisis in... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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11 ноября, 00:44

Gigantic Trauma Is Coming In The Debt Markets

There is no question that gigantic trauma is... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

10 ноября, 02:11

Q: Are you buying or selling gold at the moment?

Neither at the moment. I own a lot of gold and silver. I haven't bought any serious... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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09 ноября, 21:05

Jim Rogers : The computer and the Internet are going to change money as we know it

“People in China don’t have paper money,” Rogers said. “They buy a cup of coffee, put their phone on the sensor, and it’s paid for. They look at me funny when I say I have cash and want to pay. They say, ‘We don’t want to take cash. Cash is not efficient.’ My children will never go to a bank,... This is an excerpt only please visit http://jimrogers1.blogspot.com or the other Jim Rogers Blog http://jimrogers-blog.blogspot.com, for the full story, >>>>]]

09 ноября, 07:25

Виктор Ивантер: «Власть можно поменять, а население – нет»

«Россия — это коммерчески неэффективное пространство, но его можно заставить заработать благодаря скоростным магистралям, таким как Москва — Казань», — считает академик РАН Виктор Ивантер. В интервью «БИЗНЕС Online» ученый рассказал, как российская экономика может достигнуть роста в 4,5–5%, за счет чего сельское хозяйство РФ оставило позади СССР и царскую Россию, по чьим доходам кризис нанес самый ощутимый удар и почему «радио есть, а счастья нет».

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09 ноября, 03:57

Sooner or Later Governments Are Going To Crack Down On Crypto Currencies

Governments could issue their own crypto currencies, they could control it that way because... Well, my first reaction is... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

07 ноября, 17:59

Investing: My Thoughts On Japan

Japan has staggering debt as we all know, they have a declining population and the debt is going... Well, my first reaction is... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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06 ноября, 16:51

Forex: I Expect The US Dollar To Move Higher

I have a lot of US dollars because when the turmoil gets... Well, my first reaction is... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

04 ноября, 21:44

JIM ROGERS -- These Americaan States Are Already Bankrupt!

JIM ROGERS - 04 Nov 2017 - These States In The US Are Already Bankrupt! Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped... This is an excerpt only please visit http://jimrogers1.blogspot.com or the other Jim Rogers Blog http://jimrogers-blog.blogspot.com, for the full story, >>>>]]

03 ноября, 20:50

Emerging Markets: Where To Invest (Iran, Nigeria or Kazakhstan)?

Iran, Nigeria or Kazakhstan... Well, my first reaction is... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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03 ноября, 01:32

Chinese Stocks: My Plan

I haven't sold any Chinese shares and I have been... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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01 ноября, 18:43

The US Stock Market May Drop 40-50% In The Next Correction

In America, I'm going to use America as an... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

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31 октября, 17:34

Markets: I'm Not Buying Anything Right Now

I'm not buying anything right now me here I'm... READ THE REST OF THE ARTICLE ON THE NEW WEBSITE: JIM ROGERS TALKS MARKETS  Jim Rogers is a legendary investor that co-founded the Quantum Fund and retired at age thirty-seven. He is the author of several books and also a financial commentator worldwide.

03 октября 2015, 18:00

Периодическая система капитализма — Джим Роджерс

В декабре 2007 года миллиардер и "гуру инвестиций" (как его называют в западной прессе) Джим Роджерс продал свой особняк в Нью-Йорке и переехал в Сингапур, утверждая, что наступило время, когда основной инвестиционный потенциал мировой экономики перемещается на азиатские рынки: "Если вы были умны в 1807 году - вы переезжали в Лондон, если вы были умны […]