Is the air coming out of the bitcoin bubble?
While gold has advanced (in dollar terms) by 12.3% over the past three months, its ostensible digital replacement, bitcoin, is down 1.1%. It’s a broader crypto phenomenon; the majority of the crypto universe has been notably weak.
It’s been observed, both here and elsewhere, that bitcoin far from lives up to its promoters’ claims to replace gold. It is much more highly correlated with stocks; especially tech stocks. It trades like a tech stock without the encumbrance of old fashioned baggage like earnings or assets.
Recent days and weeks illustrate. Recent weakness in bitcoin parallels relative weakness in the most popular tech stocks. Today for example tech bellwether Nasdaq traded down 1.21%, while the stodgier Dow rose 0.08%. Over the same time frame, bitcoin traded down 0.95%, at this writing trading in the 91,000s, well short of the 100,000s ballyhooed mere months ago.
It’s too soon to to declare the death of crypto, and this is no eulogy. But it is clear that whatever else it may be, contrary to mass marketing hype, bitcoin is not digital gold.
https://www.msn.com/en-gb/money/other/bitcoin-price-down-crypto-value-plunges-amid-major-market-worries/ar-AA1zJqUe?ocid=msedgntp&pc=U531&cvid=72c07227fb5b446d88311149180fde0a&ei=30
Major UK News mouthpieces, just read this!
Could the US become a threat to UK interests?
Next, our political editor Beth Rigby asks Kemi Badenoch whether she is concerned that the US is becoming a threat to UK interests.
“The US is not an authoritarian regime,” Badenoch says.
“It shares those same Western values that we share – free trade, free enterprise, free speech. What we see it doing is acting in its national interests, is being realistic – and we need to be so too.
“That doesn’t mean we’re going to agree on everything.”
Badenoch adds that she has always been clear that the ECHR should not prevent the UK from doing “what is right for the people of this country”.
“If it continues to do so, at some point we will probably have to leave.”
However, she says the UK should not leave without a plan.
Guess it depends on what you define as “UK interests”;-)
We can upgrade this to Crypto Crash. Bitcoin now in the $87,000s.
Unless you own crypto, this is a welcome development. It’s a huge industry that does nothing but transfer wealth … it produces no food, clothing, shelter, energy … in fact it consumes huge amounts … and also the time and talent of many people who could otherwise be producing something of value. The economy would benefit from the the redirection of these resources to productive use.
Of course crypto crashes are far from unprecedented so reading anything bigger into this one would be dicey speculation. Still, in the long run convergence to intrinsic value seems assured. No form of man made money has permanently escaped such a destiny.
Hmm…. Given the very high volatility of cryptocurrencies, I’d expect at least a 50% draw down for it to be considered a cratering and an at least a 90% drawn down to be considered a crash. 🙂
Someone has said that when all of the bubbles blown by the Fed finally pop (that will be an at least 60% draw down in the major equity indexes), that will be the true test of whether Bitcoin has any real staying power.
All I can say is that the Bitcoin bubble has inflated much bigger and lasted far longer than I ever could have imagined. I still haven’t seen even one strong argument that justifies Bitcoin’s high price. The worst justification I’ve seen is someone claiming that Bitcoin’s value comes from the price of all the energy expended through Bitcoin mining operations. By that metric, a beat-up old jalopy with 300,000 miles on it is worth more than when it was new!
I’ve seen attempts to levy similar criticisms of gold, that its value comes solely from its cost of production. But it does have practical utility, even aside from thousands of years of use as money. Not the least of which is to delight your sweetie. It’s hard to imagine a beautiful bitcoin watch, ring or necklace having quite the same effect;-)
Speaking of gold, the Real Thing is having a bit of a bad hair day. A small fraction of bitcoin’s declines, though, and on top of an epic run these past several weeks. A well deserved rest was in order. Best guess is a trading range between $2800-$3000 for a while.
Not to try to say when, but there is likely much more in store for bitcoin. As stories yield to math, high flying tech stocks have a lot of downside potential, and as a disembodied tech stock, bitcoin does too.
The implosion of bubbles has one offsetting force … the implosion of the dollar. Prices of assets – in dollar terms – can only fall to the extent their value declines outpace declines in the value of the pricing unit. It’s a bit of a least dirty shirt kind of thing … especially considering the likely Fed response dollars themselves have more than a bit of downside potential.
I’ve expected for a long time now that when the bubbles finally pop, the Federal Reserve and the U.S. government will do things such that both the bubble assets and the U.S. dollar share the burden of the hit. Asset prices will not fall as much nominally in their mean reversion as they would if the U.S. dollar were hard(er) currency and the U.S. dollar loses quite a bit of its purchasing power although the loss of purchasing power may be hidden for a year or two by a recession.
The only cryptocurrencies I’ve seen that have a real value are the so-called stable coins that are backed by reserves of things such as U.S. dollars. I think there is also a cryptocurrency that is backed by precious metals. Somewhat surprisingly given the utter madness in the cryptocurrency space, these stable coins have essentially zero capital gains over the years of their existence. In a sense, the stable coins are the best argument that things such as Bitcoin have a very, very long way to fall. The stable coins are backed by either specie or something that is fully or quasi legal tender but they also are transacted in the same way a pure cryptocurrency like Bitcoin is. So where does the extra value of Bitcoin come from?
Just as the meme stocks are starting to revert to their reasonable or sane fair values, I suspect we’ll eventually see that cryptocurrencies are a variant of a meme stock. For the meme coins such as Doge Coin, I guess it is a meme-meme coin, kind of like a CDO^2 (CDO-squared) from the housing bubble? 🙂
You bet, Milton. They will try to thread the needle. History agrees.
Look at what’s happened to stocks since the turn of the century. Looks good in dollars. Not so good in gold … it’s been a two and a half decade bear market. Only by depreciating dollars more than stocks have the returns been made to appear decent.
Kinda like honey I shrunk the ruler … now I’m seven feet tall.
Don’t know if it will work for bitcoin though. Zero is zero on any scale. Zero intrinsic value, and if you consider the infinite potential supply of knockoffs, even the supposedly limited number can’t save it. The only thing that separates it from clones is marketing.
As soon as something sexier comes along, it’s game over. And the way tech obsoletes, there’s no long term to bail you out.
I must have missed that earlier article on Bitcoin. One thing you wrote really stands out:
“And it gives you a handy retort to critics; you just don’t get it.”
Wow. That was exactly what was said during the dot-com bubble by the various liberal arts and history majors who went to Silicon Valley to become HTML “programmers.” 😀 I remember the dot-com crash and all the HTML programmers who lost their jobs and had to pack their bags to move back to Kansas.
Ahh the dotcom era. I was working for the government at the time … in an IT office, no less, so there were a lot of smart, tech savvy people. Not long after New Year’s 2000 the water cooler buzz was all about stocks. A co-worker had heard I was interested in investing and added my name to an email group. The names were all ultra-high-PE stocks … if they had any E at all. One day I replied to one of the emails with a list annotated with PEs. I received no more emails.
A few months later, there were no more emails, no water cooler buzz…
The striking thing was that even people capable of cranking numbers and grasping discounted cash flow weren’t interested in it. Stories were all that mattered. If numbers entered in at all, it was only numbers relative to last quarter or last year.
Deja vu all over again. You hear how Monster Tech Magic or whoever beat their numbers by however much. Nothing whatsoever about how long it would take you to recoup your investment collecting dividends, even if all the earnings were distributed as dividends. Nothing about how much – assuming all the stories were true – the stock should be worth.
You don’t have to be Warren Buffett to figure it out. As JK quoted:
““At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at USD64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”
– Scott McNeely, Founder and CEO of Sun Microsystems”
It’s always the same. You can either learn from other people’s experience, or you can learn from your own. The first is a heck of a lot less expensive.
France FALIED TOTALLY in Washington.
Just can’t wait to Thursday when Starmer gets there……..
He just made a BIG Splash “Will increase arms spending 2.5% of GDP, half of what Trump demanded.
The British SCUM have ZERO to bargain with, its over.
Mike
I don’t know what Trump is trying to accomplish with his military spending demands. Oh … I do … he wants Europe to take more responsibility for its own defense … but against what? It’s tacitly conceding just what the warmongers claim, that Russia is poised to conquer all of Europe. At the same time he’s saying America, Russia and China can cut their military spending in half. He wants to end the war and reduce US commitments abroad, but wants to cut a “mineral deal” that would give Zelensky security guarantees.
If he wants to maintain credibility, sooner or later his rhetoric is going to have to coalesce around some kind of coherent message.
British Gold
https://www.youtube.com/watch?v=boOPyGBLfv4
Oh F**k off Limey
https://www.msn.com/en-gb/news/world/london-to-host-group-of-european-leaders-to-discuss-ukraine-bloomberg/ar-AA1zL4aN?ocid=msedgntp&pc=U531&cvid=9ee8b866876f4909a9277adf36338be1&ei=18
Ukraine just signed away their (Your) rare earth to Trump WITHOUT a security deal.
Ho Ho Ho
Its FAR WORSE than i thought!
https://www.youtube.com/watch?v=qzCu-inyCyI
He 98% right, its a MUCH WORSE than i thought.
Its a MUCH watch youtube!!!!!
Mike
https://x.com/Megatron_ron/status/1894776989539606743?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
https://x.com/Megatron_ron/status/1894770604705792158?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
The ECCP sorry EU has acted………….
Mike
Ok, Starmer is on route to meet Trump tomorrow…………..Trump is sat there holding ALL the cards. Then Starmer goes to Europe on Sunday. Given where they are i wonder what sh!t they try to pull?
This s a very dangerous game, could UK or France try to play a Nuclear card?
If i were Russia i make it VERY clear to Trump that if they fire one, he fire the LOT.
US might have to Nuke Blighty!
https://www.youtube.com/watch?v=eOll3v55Dmo
Make up your mind. Have tariffs been driving gold higher or holding it back?
The media spent weeks saying the first. I called BS. Now we even have some analysts suggesting tariffs could be holding gold back:
“Nonetheless, analysts believe that Trump’s plans for higher tariffs have raised inflation worries at the US Federal Reserve (Fed), which might convince the US central bank to keep interest rates higher for longer. This, in turn, might cap the upside for the precious metal as higher interest rates tarnish non-yielding gold’s appeal.”
https://www.gold-eagle.com/gold-price-attracts-some-buyers-amid-trade-war-concerns
What accounts for this is little more than the impulse to connect financial market activity with whatever happens to be making headlines (the possibility that tariffs might upset corporate media more than the average citizen may also enter in). It’s plausible that prospects for higher rates could restrain gold prices. But likely gold has been driven higher in 2025 by the same things that drove it higher in 2024 … easy money, exploding debt and the prospect central banks will monetize it. In which case convincing signs of fiscal restraint could help cool it.
Another headline trumpeted that Nvidia’s Q4 earnings, announced today, demonstrate that it still dominates the AI field. Nvidia’s fourth quarter ended January 26. The DeepSeek headlines hit January 27.
Media routinely make statements like X “is going up”, when the only thing we know for certain is that X did go up. Tenses matter.
Be skeptical of everything you find in the financial media.
It could be that the market perceives “convincing signs of fiscal restraint”, and that that accounts for both the nascent rally in Treasuries and weakening of gold.
I may have gotten this one wrong, multiply commenting during the campaign to the effect that no one would confuse Donald Trump with a fiscal conservative. I am surprised by the extent and seriousness of the effort at reigning in government spending.
On the other hand, that is offset by the effort to cut taxes. We will have see which effort most prevails.
At the moment gathering signs of weakness in employment and corporate profitability are likely to weaken the political case for monetary and fiscal restraint … the weaker the data, the easier monetary and fiscal policy … and that would mean lower Treasuries and higher gold.
Bitcoin at last check $83,293.33.
Bloomberg reports the House has identified about $2.0T in proposed spending reductions and about $4.5T in proposed revenue cuts (estimated over the next ten years). Unless my arithmetic is bad, that’s a net add of $2.5T to the debt, not counting borrowing costs.
Don’t sell yer gold yet.
Well in the next 5 mins Starmer meets Trump…………..oh i love to be a fly on the wall!
Trump DEMANDS UK ups its defence budget to 5% of GDP, Starmer SEz 2.5% …may be when your about to leave office………
Can’t wait!!!!
The Art of the Deal!
CNBC headline:
Bitcoin to hit $500,000 before Trump leaves office, Standard Chartered says
Translation: There’s a lot of big money in bitcoin and it’s getting desperate.
“…enthusiasm waned as crypto investors apparently expected Trump to do more to boost the market in the five weeks since his inauguration. Traders hoped the US would start buying bitcoin….”
https://arstechnica.com/tech-policy/2025/02/bitcoin-plunges-as-crypto-fans-didnt-get-everything-they-wanted-from-trump/
So in other words, the cryptocoin investors were hoping that Trump would make the U.S. government a price-indiscriminate buyer of Bitcoin. It still might happen but it seems the idea that cryptocurrencies are some pyramid-ish, Ponzi-ish bubble is appearing more and more in the media.
Somewhat related, I recently read a paper that stated a supply of price indiscrimate buyers create arbitrage opportunities. This appears to be the case for companies that pay relatively large dividends and have a lot of investors who automatically reinvest the dividends.
Part of that may be media navel-gazing. Taking its own hype seriously … it’s been using a government-buying-bitcoin narrative to pump it up, so its failure to pump must be a failure of the narrative. Bitcoin has been a parade of one bull story after another. Like Roseanne Roseannadanna used to say, it’s always something.
Considering it as disembodied tech stock explains just as much. Sparkledazzle tech (see Nasdaq) has been tanking at the same time. What they have in common is they’ve both been overhyped and overbought in breathless bandwagon speculation. All that was needed was the inevitable baby step back towards reality.
Bitcoin and Nvidia are both down sharply since peaking February 20. Same effect, same cause.
Well well it seems there WAS a Secret deal on Ukraine Rare earths
https://www.msn.com/en-gb/news/world/uk-s-100-year-deal-with-ukraine-under-threat-from-trump/ar-AA1zVrI4?ocid=msedgntp&pc=U531&cvid=7ac450f9f70e4903a9c48b85cb18bf9d&ei=8
Trump Just asked Starmer if Britain could take Russia alone?
Ho Ho Ho
‘Britain can take care of themselves,’ Trump quips over support for UK peacekeepers
Asked if the US would come to the UK’s aid if British troops were attacked by Russia while keeping the peace in Ukraine, President Donald Trump said: “You know, I’ve always found about the British – they don’t need much help.
“They can take care of themselves very well.
“It sounds like it’s evasive but it’s not evasive. You know, the British have been incredible soldiers, incredible military, and they can take care of themselves.”
The president went on to reassure Sir Keir Starmer, telling reporters he would “always be with the British” if they “need help”.
“But if they need help, I’ll always be with the British, OK? I’ll always be with them – but they don’t need help,” he said.
Sir Keir responded by saying the alliance between the US and the UK was “the greatest alliance for prosperity and security … the world has ever seen”.
“I’m very proud of our country – but we’ve also always been there backing each other up,” he said.
“That is why this is the greatest alliance for prosperity and security, I think, the world has ever seen.
“Whenever necessary, we’ve absolutely backed each other up.”
Translation: Put troops in Ukraine at your own risk. US would be there in a heartbeat if Russia attacked UK, but that’s not what Starmer is talking about.
Trump voters may be feeling a bit betrayed at this point. The war was supposed to be over on “Day One”. Okay, they didn’t expect literally the first day, but neither did they expect that mineral deals and propping up the Zelensky regime were going to be put first.
Is the MIC is ginning up Russophobia to justify its size? Many are skeptical. Is Russia just dying to march across Europe? I don’t think so. It’s been acting defensively against NATO imperialism. It didn’t invade Ukraine until the West put it on a NATO track, which would have brought NATO forces right to its own border.
Could I be wrong? Sure. But if I am, it’s easy enough to wait and see if Russia really does indeed pose the presumed threat and then respond accordingly. The cost of pre-empting a hypothetical threat is potential world war and even nuclear war. Versus war only if proven necessary. The risk-benefit proposition makes it a no-brainer.
Ho Ho Ho
https://x.com/Megatron_ron/status/1895198070918562293?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Guess what is getting KILLED!!!!!!
Been waiting for that one!
After three consecutive days of waterfall declines, guess it’s earned it.
Looks like it found a bit of support in the low $2800s. Even bitcon recovered slightly after plunging below $79,000 this morning.
Ok, Starmer got ZERO from Trump……NO US IN UKRAINE, NO US BACK STOP………
Next up, the Green Goblin of Ukraine
https://www.youtube.com/watch?v=G3XzAFR6oGo
Meantime in Blighty
Just watching the Green Goblin & Trump…………what a bloodbath!
Mike
Fireworks.
https://www.zerohedge.com/geopolitical/trump-meets-zelensky-says-minerals-deal-be-signed-today-will-use-ukraine-rare-earths
“Trump then slammed Zelensky for ‘gambling with world war three,” adding “You either make a deal or we are out…”
How about just “We are out”?
“Trump also added that he’s committed to NATO.”
Why?
I hear the Green Goblin stormed out o the White House & has REFUSSED to sign the Rare Earths deal. Total Coke Head, i thought he was gong to start swinging, a US marine would have to throw him out the room via the Window!
It was a high risk meeting that shouldn’t have happened in the first place. A mineral deal was purely a concern of establishment elites … not a single ordinary citizen I know could care less. Ending the war on the other hand will save countless human lives. Perspective, please. Trump keeping his eye on the ball can only help to bolster his bona fides with the people who elected him.
Your not seeing the big picture………..this “meeting” was to show the world who this guy is……it worked well!
Are you saying Trump orchestrated this just to humiliate Zelensky? If so, that would just be more mission creep. The big picture is to end the war!
Trump is on the right track, but sometimes can’t get out of his own way. He’s not cutting real estate deals any more. This mineral deal stuff is a distraction. This meeting was great theater, but there has been no meeting with Putin, the war is still going on, and some of the roadblocks are self imposed. He may have succeeded in letting Zelensky look bad, but he’s looking scattershot and unfocused himself.
The Green Goblin is a City of London agent, Trump has to lay everything out for the US tax payer can see what is what. Think of it like a court case.
Mike
ZH has a good summary of the reaction:
https://www.zerohedge.com/geopolitical/trump-meets-zelensky-says-minerals-deal-be-signed-today-will-use-ukraine-rare-earths
The world is far from uniformly impressed, as you can see by the list of statements of Ukraine support.
On the other hand, it may have helped to bring around one notable neocon, as you can see by the reaction of one Lindsay Graham: “What I saw in the Oval Office was disrespectful. And I don’t know if we can ever do business with Zelensky again.”
If it helped show him who this guy is, you may have a point!
https://www.youtube.com/watch?v=cjFkBmhdPAE
Graham has backed Ukraine HARD from day one, he just threw the coke shouting bastard under the BUS.
Euro/UK Press are shocked, tried to back the Green Goblin but are now turning against him..
Wow!
Still Stunned……………….British are “PISSED”.
So, what to do?
The Brit Army is not able to fight in a “Long” war in Ukraine, so what can they do?
I suspect they try to use Navy power . So sort of Blockade on ships to & from Russia…..
Sunday, European “Leaders” meet with the British………….. get ready.
Mike
Mega’s dispatch from England
“Can you take Russia yourself?”
As i am writing this the Coke snorting Green Goblin is on his way to see the British PM.
Everyone talks about the Row but i think it had kicked off far early, note how the Green Goblin was sitting on the edge of the chair. He didn’t want to be there at all!
He been given is orders from the City of London, thus not much he could do……throw in the stress frustration & lack of Coke must have had its toll. The object of the exercise was simply….show the American people were their tax $ went……..& why its totally unwinnable.
This has cut the legs off the (British) MSM to spin it as Trumph’s fault. Indeed it has flushed out so much more! For all of my life i had the story that Britain was always an “unfortunate” if not unwilling “Friend” of the US. Forced to “Back up” US overseas policy & Wars……….now we can see another very different tale.
The UK (City of London) HAS been driving these policy choices! The US has fallen under British control!…….I think after the Suez crisis in 1956 when the British were hung out to dry by Ike they decided to start meddling in US policy making.
Now we can see the “Players” in plain sight.
Not how both Canada & Oz are being brought into play even though they on the other side of the world. Make NO mistake, the “Empire” is NOT going down without a fight. This is their last chance to break Russia & stop the brave new World of Bear/Dragon/Eagle….a new chapter for the World, a World where to British are not as important as Botswana!
Buckle up kids!
Mike
The option no one in the MSM talks about … trying to get along better with Russia. The cold war was supposed to be over decades ago and the peace dividend declared. What a squandered opportunity.
Most people I chat to about Russia/Ukraine just can’t get over that Putin invaded Ukraine and so can’t be seen to get away with it.
He did invade Ukraine. And it wasn’t to support Russian speaking Ukraineans. Nevertheless, there is absolutely no moral obligation on the part of the USA to support the war. In fact the moral obligation is for Trump to do what he was voted in to do by the American public. I can’t understand Europeans/Brits not agreeing on the latter point other than that most can’t see past their intense dislike for Trump.
I agree and might even go a step further. NATO has outgrown its purpose. It was supposed to be a defense arrangement but turned imperialistic. It began to aspire to expand into countries that aren’t even North Atlantic; including Ukraine. Meanwhile who doesn’t think that if Britain or France or other members were invaded, there wouldn’t be a joint response? With or without it. Heck, Ukraine isn’t in NATO and the bloc is behaving as if it were. Kinda makes you wonder what is the point.
My hope is that Trump does indeed fulfill his mandate. He sits down with Putin and comes to an agreement about what’s what and peace breaks out. At minimum, get the US out. Then in the unlikely event the worst fears come to be realized and Russia does try to roll over Europe, the rationale for a response is not just hypothetical, but real. You only get big war if you really need it, instead of having one just because you might.
End of NATO?
https://www.msn.com/en-gb/news/world/former-nato-commander-warns-end-of-alliance-could-be-days-away/ar-AA1A3baW?ocid=msedgntp&pc=U531&cvid=fb4bbb50dc2547449f7d749020f2a0bd&ei=20
mum in hospital, needs a blood transfusion ASAP……..no more info right now…
Wishes for her full and swift recovery, Mike.
OK, things better………….
Mum had a blood test yesterday morning, i was just making a late Tea foe her & me around 7 PM. The phone rang & it was the Nurse, mum blood had VERY little Iron in it, she called an Ambulance & get her stuff ready to go into hospital.
They gave her one unit of Blood at 4 am & they retested her……things are much better.
The trying to find WHY her Iron count has fallen……..but t looks fixable.
Keep you guys posted, Thanks
Mike