Posted on 12/07/2013 7:34:43 AM PST by markomalley
It was inevitable that a few short days after Wall Street lovingly embraced Bitcoin as their own, with analysts from Bank of America, Citigroup and others, not to mention the clueless momentum-chasing, peanut gallery vocally flip-flopping on the "currency" after hating it at $200 only to love it at $1200 that Bitcoin... would promptly crash. And crash it did: overnight, following previously reported news that China's Baidu would follow the PBOC in halting acceptance of Bitcoin payment, Bitcoin tumbled from a recent high of $1155 to an almost electronically destined "half-off" touching $576 hours ago, exactly 50% lower, on very heave volume, before a dead cat bounce levitated the currency back to the $800 range, where it may or may not stay much longer, especially if all those who jumped on the bandwagon at over $1000 on "get rich quick" hopes and dreams, only to see massive losses in their P&Ls decide they have had enough.
Which incidentally, like gold, is to be expected when one treats what is explicitly as a currency on its own merits in a world of dying fiat - with the appropriate much required patience - instead of as an asset, with delusions of grandure that some greater fool will pay more for it tomorrow than it is worth today. Sadly, in a world of HFT trading, patience is perhaps the most valuable commodity.
As for Bitcoin, while the bubble may or may not have burst, and is for now kept together with the help of the Winklevoss bros bid, all it would take is for another very vocal institutiona rejection be it in China or domestically, where its "honeypot" features are no longer of use to the Fed or other authorities, for the euphoria to disappear as quickly as it came...
Two day chart, showing the epic move from $1155 to $576 in hours:
And longer term chart showing the overnight action in its full glory:
Bitcoin is another get-rich-quick fantasy.
Except for those who got out early.
True, and also those who never got in.
Yeah, it's inherently contradictory. There can only be one or the other.
There is no real definition to “hyperinflation”. Some use it as “out of control inflation”, whereas for others it is an act of rejection of a particular currency. Similarly, deflation is sometimes considered a pricing phenomena, whereas others consider it a reflection of money supply or credit. Personally, I use “hyperinflation” to mean the active rejection of a currency (infinite velocity, plummeting value versus more stable currencies, etc.), and “deflation” to be a measurement of credit. Neither term, as I choose to use it, is a term about prices, but rather underlying conditions — the pricing phenomena is the result of those conditions. By those definitions (rejection of currency, collapse of credit), there is no inherent contradiction. They could both occur simultaneously.
Given that others choose to use the terms to reflect pricing, however, I can see why you would say they are contradictory.
No. No. No.
You have made an assertion without backing it up.
Hyperinflation is the complete loss of confidence in a currency leading to a catastrophic increase in the price of goods and services.. Deflation is the drop in prices attributed to the increase in a currency's purchasing power.
You have not shown a connection between them at all.
Wow! You must be quite a stud, posting your address and phone number in your profile then insulting people like that. I must say: I am impressed. /s
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.