Disclaimer: The information in this blog represents the opinions of its author and is for educational purposes only. It is not intended as investment advice. Cryptocurrency markets are extremely risky so you should only invest money you are willing to lose.
Sellers? .... Helllloooooo.... Anybody?
As Jim Cramer put it succinctly in an interview with CNBC, "Where are the sellers?". Everyone, from individual investors to institutions, from grandmas to bar-mitzvah boys, is pumping money into the cryptocurrency ecosystem. There are buyers and there are hodlers, but where are the sellers?
The results of Google's 2017 Year In Search are in, and bitcoin was second only to hurricane Irma. Like a crypto-vortex, it just seems to keep on sucking more money into the cryptocurrency ecosystem.
The stats on short sales and money flow tell the story. Hedge funds have been badly burned by trying to short into a market with such powerful upward momentum - this resulted in a significant decline in bitcoin short sales prior to the introduction of futures trading.
It Wants To Go Up
Hedge fund manager Michael Novogratz commented on the temperament of the market going into the much anticipated CME futures contract “The market trades like it wants to go up, not down,” Novogratz explained in a recent interview. “We are in a speculative mania, and my sense is we are still fairly early.”
Clinging For Dear Life
With investors pouring billions - now over half a trillion - of market cap into the crypto space, banks are clinging to their fiat currency holdings for dear life lest they disappear down the crypto-rabbit hole - because there’s a good chance those banks will never see them again.
Not The Case
If this were just a speculative bubble, with people trying to sell for more than they paid, then dollars would be going in and coming back out - but that is simply not the case.
Bank of America, the second largest in the US, seems to grasp this uncomfortable truth only too well. The US Patent and Trade Office just approved B of A's patent for a multi-tiered cryptocurrency exchange platform for its customers where investors and businesses can store and trade digital assets instantly.
Crypto Market Cap Is Unidirectional
Now THAT's a bank wayyyyyyy ahead of its time - its own cryptocurrency exchange. The bank is so afraid of its own fiat currency holdings disappearing down the crypto-rabbit-hole forever that it has introduced 3 tiers of accounts whereby investors can speculate on cryptocurrencies while keeping their funds with B of A.
B of A has been an early adopter of blockchain and they’re making a smart play because they see the writing on the wall - crypto market cap is unidirectional - so where do you think all that money is coming from? Straight out of the banks’ fiat currency holdings.
And guess what? - most of it is probably never coming back - so why not hold onto it with your own crypto-exchange? Smart.
Not Even For A Lambo
In what is perhaps the most powerful evidence that cryptocurrencies are here to stay and crypto money flow is one way is that large holders of cryptocurrency can't even bear to part with their holdings to spend their money. An entire industry of crypto-asset backed fiat loans is emerging just to fill this void.