Ellen's Baby Goat Rally?
Cryptocurrency has been on a 2-week tear since the lows of Feb 6th - the longest sustained rally since the dizzying pre-Christmas highs. What's going on?
Besides the usual - hard-fork battles (this time it's litecoin cash), global payment platforms (goodbye Stripe, hello Litepay & Coinbase Commerce), and pundit predictions, Senators, celebrities, investing legends and insiders are all weighing in on the future of cryptocurrency, with wide-ranging effects.
Ellen Degeneres did a great segment on her show that, while amusing, pointed out an important comprehension gap for the average investor: it's hard for most people to wrap their head around the concept of owning an asset that has no physical, material or tangible existence in the real world.
Feel-Good Senate Hearing
A Senate subcommittee hearing would be the last place you'd expect feel the love in the air for cryptocurrency, but that's exactly what we got when CFTC chairman Chris Giancarlo won the hearts of crypto-lovers everywhere with his personal story of trying to interest his kids in investing, to no avail, until bitcoin came along. Check out the hush that fills the chamber when he says "... as a dad".
"We set up small brokerage accounts, but other than my youngest buying some shares of a video game company, we couldn't pique their interest." Then, suddenly, over the past year, everything changed. "They were all talking about bitcoin - asking me what it was and should they buy it."
Senator Warner Shoots For The Moon
More heart-pounding testimony for crypto-lovers everywhere came from Sen. Mark Warner (D-VA) who cautioned that cryptocurrency could quickly become a system-wide issue for the economy based on the simple observation that at its current rate of growth, it will surpass $20 trillion by 2020, a market capitalization more than 40 times what it is today.
The most astonishing aspect of the Senate hearing was that a little over a year ago cryptocurrency was relegated to the shadowy corners of the dark web and not only did it fill this bright Senate chamber for 2 hours but everyone in the room pretty much seemed to agree that cryptocurrency as part of our economy is not going away.
Don't Sugar Coat It, Charlie
Legendary investing guru Charlie Munger for one would love to see cryptocurrency go away. Venturing way beyond the rhetoric of bubbles and ponzis, Munger went as far as to call bitcoin and cryptocurrency "disgusting, detestable, noxious poison".
In comparing our regulatory approach to that of China he said "Our more relaxed approach is wrong - the right answer is to step on it hard." Ouch.
Ethereum founder Vitalik Buterin, who has cautioned in the past about exuberance over price projections, sent a realistic but somewhat chilling tweet that contained both sound investment advice ("don't risk more than you can afford to lose") and perhaps a bit of over-the-top caution.
He referred to cryptocurrency as "hyper-volatile" and said that they could "drop to near-zero anytime".
Vitalik's advice is timely and prescient. It looks like the lows of Feb 6th are holding and crypto markets are beginning to skyrocket across the board and take investors on another wild ride. Ethereum is up more than 60% from its Feb 6th low, and litecoin has more than doubled. So pretty soon investors will probably be throwing caution to the wind.