Tag: capital controls

Episode 84 – Bitcoin Price Factors

by Kurt Robinson on January 26, 2016 in Podcast • 0 Comments

The Episode:

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The Cash:

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The Story:

In December 2015, Martin Rojko of CoinTelegraph.com asked several Bitcoin experts what they expected the price of a bitcoin to be by the end of 2016. The guru, public speaker and “rockstar” of Bitcoin, Andreas Antonopoulos, searched his soul and summoned the wisdom from the depths of his being, and answered: “I don’t do price speculation. It’s astrology for markets and I think it is irresponsible for media companies to do this.”

The fact is, nobody in the world knows what the price of bitcoin is going to be in a month, much less a year. However, taking a snapshot at this stage of the bitcoin evolution, there are four factors which will probably play a huge part in determining the price over the coming years.

The amount of venture capital and angel investment pouring into Bitcoin companies.

In 2013, digital currency related startups has attracted investment of $25 million in VC funding. In 2014, “In total, bitcoin startup investments now total over $400M in aggregate funding” (Source: CBInsights), and in 2015 VC investments ‘topped $1 billion’ (Source: Bloomberg). However this remains to be fully realised in the bitcoin unit price. Big names such as Nasdaq, American Express and Visa are also investing in Bitcoin startups.

Bitcoin has possibilities for endless programmable applications, which will go on to disrupt various industries. However, it is clear that the first target and the primary industry of focus is finance and banking. For 2016, Venture capitalist Tim Draper anticipates many Bitcoin consumer applications, the US government to recognise Bitcoin as a currency and perhaps the first Bitcoin unicorn – that is, the first billion dollar Bitcoin start-up. With all this money and focused effort going into the development of Bitcoin applications as it’s used for international remittances platforms, micropayment, crowdfunding of public works projects, smart contracts and peer-to-peer lending, it can only be bullish for the price, as Bitcoin is used more widely.

2. A decrease in the production of Bitcoin in July 2016.

At time of writing, 25 BTC are produced every ten minutes by diligent miners. In July 2016, the block reward will halve. A stable demand with a reduced supply tends to lead to an increased price. It’s possible that holders of BTC will start buying more in the preceding months, in anticipation of the reduction.

3. Possible failures of the incumbent banking system.

Many people, especially in the Austrian economics camp, are becoming increasingly concerned about a failure of the banking system. Financial gurus such as Mike Maloney have forecast the possibilities of deflation, big inflation, or even hyperinflation of the US dollar, which could have profound effects on the world economy. For many, holding bitcoins is seen as risky. But is it as risky as holding a fiat currency, which has very limited scarcity, and may be printed to oblivion by the perverse symbiotic relationship between a central bank and a national treasury? In times of crisis, or in anticipation of times of crisis, when governments around the world are clamping down capital controls to say who can move what money where, it wouldn’t be surprising if people decided to move it into the most portable money that has ever existed: bitcoins.

The understanding of Bitcoin in public consciousness

Since Bitcoin first leapt into the media, it has been trashed, slandered, accused of being a tool of terrorists and violent drug cartels, and declared unstable and even dead many, many times. However, the sentiment in the media is slowly changing, with many starting to see that cryptocurrency is not going away in a hurry, and there may be real news beyond a sensational headline.

We can see in the statistics on Blockchain.Info that the rate of adoption appears to be steady, or increasing, in the rate of daily transactions and in the total number of addresses.

Perhaps soon, people will start to realise that it’s possible, not just to use Bitcoin to evade capital controls, but also to use it to evade taxes, and government control in general, turning many markets into black markets, and using blockchain technology to distribute state secrets anonymously, realising the dream of the Crypto-Anarchist’s Manifesto. By that stage, perhaps the price will be irrelevant, because the value will be obvious.

The Eps:

Episode 75 – Andreas Antonopoulos: The Disruptarian

Episode 77 – Jeff Berwick: The Dollar Vigilante

Episode 80 – Diego Gutiérrez: SystemaD

The Links:

Bitcoin has died for the 89th time

Experts expect bitcoin price to reach a big number in 2016

China’s stockmarket crash affects all of us

Bitcoin as an asset could help balance portfolios

Bitcoin’s upcoming killer app: Open Bazaar

How to position for the rally in Bitcoin

Bitcoin is built to incite peaceful anarchy

Record highs predicted as new supply halves

Episode 70 – Glencore Risk: Credit Crunch Crisis Crash

by Kurt Robinson on November 18, 2015 in Podcast • 0 Comments

The Episode:

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The Cash:

The Story:

How do bubbles blow up, and how do they pop? Why do booms boom and eventually go bust? There are many reasons behind this. One is the oligopoly that many banks enjoy in many countries, meaning they don’t necessarily have to stay competitive to maintain their market share. Another reason is the fact that many banks’ deposits are guaranteed by law, such as in the USA and in Australia – reducing the incentive for depositors to be careful about where they put their money. A third reason is bail-outs by central banks, in what was once known as a “Greenspan put”, where bankers can take profit for themselves, but if they lose, they can rely on Federal Reserve to get them out of a jam.

All of this irresponsible money floating around can mean that sometimes banks get involved in assets which perhaps they shouldn’t. The story of the investment bank Lehman Brothers holding sub-prime mortgages, leading to the GFC in 2008, is one of the best examples. Today we have another example, where banks around the world, including Deutschebank, are holding extremely risky assets issued or derived from the Swiss multinational mining giant Glencore. As faith in these banks drop, we may see Glencore, Deutschebank and other institutions throwing in the “kitchen sink” – that is, releasing all of their bad news at a time when investor expectations are already at a tremendous low.

In this episode, we discuss the financial state of Glencore, and how it might have a role in the next “seven year cycle” financial crisis. Join us in a boom-bust rollercoaster on the next episode of … The Paradise Paradox!

The Links:

George Soros – system collapsed quote

Deep Dive: Glencore Implied Volatility, Growth for Autos – Weird Bloomberg video

Economists expect Fed to raise interest rates

Banks’ Glencore exposure is a $100 Billion Gorilla on Bloomberg

Glencore chases credit rating upgrade

Kitchen sink expression

Child labour and paramilitary allegations against Glencore

Glencore closes below one pound

Why did the Australian stockmarket lose so much money yesterday? (30 Sep 2015) on Vice

Glencore shares tumble on Hong Kong stock exchange (13 Nov 2015)

Glencore “Social value creation”

Here We Go: Fund Manager Warns “Something Just Blew Up In The Global Financial System”

Part 3: 20 More Signs That The Global Elite’s Ship Is About To Sink

Glencore: how did it go so wrong, again?

Commodities Prices Tumble as Investors Worry About 2016 Growth

Manufacturing matters: why it is important for an economy to have a manufacturing base

Episode 62 – Global Crisis: A False Economy

by Kurt Robinson on October 5, 2015 in Podcast • 0 Comments

The Episode:

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The Cash:

The Story:

Many people poking around the Internet have been acutely aware that something big might happen around September 13th or September 23rd 2015, having watched Jeff Berwick’s Shemitah videos or read “The Harbinger”, or having calculated the days between financial collapses in the Wall Street “Seven Year Cycle”. Then the dates passed, and, depending where you were, it might have seemed like absolutely nothing happened. Another December 2012, another non-event, no end of the world and no financial collapse. However, when we look at the news a little more closely, we can see that something did happen, and the events may have put the world economy onto the edge of a precipice.

Sharemarket corrections occurred in the USA, the UK, Australia, and China, among others. Australia’s stockmarket has been plummeting down since April, and on September 29 the ASX 200 took a 3% hit, sending its price down below 5000 for the first time since July 2013. The market recovered, but still seem reminiscent of sudden recoveries that happened right before the Global Financial Crisis really set in.

A few months ago, the Greek government instated capital controls, preventing the flow of money, restricting withdrawals to 66 euros per day. A few days ago, the Chinese government took a similar measure, restricting transactions to 50,000 yuan ($7,800) from October 1st till the end of the year, and 100,000 yuan ($15,600) for the whole of 2016. Capital controls are commonly a desperate measure, an indication that a currency is failing – that too much damage has already been done. If Greece finds itself in such a position, and China finds itself in a similar position, shall we see the same fate for the rest of the PIIGS, and the rest of the BRICS?

It’s a great show, and if you’ve been smart, hopefully you don’t have front row seats, because people in the first three rows will get wet. Could we be heading for the next global financial crisis? We explore this economic rollercoaster on the next episode of … The Paradise Paradox!

[Edit: Kurt said in this episode that it’s not possible to buy physical silver in Russia, but it turns out that is inaccurate. Many Russian banks will sell silver certificates, or allocated holdings, but at certain branches you can also buy physical silver, and there are coin shops and online outlets as well.]