December 1, 2017
Wow what a ride in Bitcoin, Ethereum etc in the last day. This really shouldn’t be a surprise considering the amount of new wallets created on Thanksgiving. As we figured the Thanksgiving discussions convinced more than a few people to dive into the Hot Crypto Waters! Bitcoin reached new heights trading up to nearly $11,300. Then it proceeded to drop to nearly $9000 before settling in near $10k again. If you think about it, pretty fundamental the move based upon the lack of supply and all the new accounts created in the last week as Coinbase has more users than Schwab now! Here is the chart:
We are quite sure many are going to bash this mania and compare it to the good ole Tulip mania of the 1630s. Don’t fall for it, they are nowhere near the same and for most, many just use it as a simple analogy, when in fact many don’t even understand the driving forces of the mania back then. Notably the fact that people back then were just beginning to garden in a way that wasn’t just for sustenance, but rather for display, notoriety and status. Much like collecting art and we all know how much someone paid last week for such a collectible, now don’t we.
So the mania back then was more akin to a new and exciting phenomenon, but that is where the comparison ends. Tulips are organic, expire and certainly not easily transferred around the globe, nor are they able to be chopped into tiny decimals that still bear the same characteristics and properties of the original…We can go on and on what our investors and readers need to know, is that this Blockchain mania is not a mania at all, rather it is a direct result of the countless ineptitude of our overlords in government. The people are saying we have had enough of your debasement and there is now an alternative way of doing things. Nobody knows the future, nobody knows exactly where this story ends, but we want are readers to be reassured with, is that this Blockchain technology is like no other and the establishment is indeed scared. Why, because there is nothing they can do, like the prior letter we penned entitled “Bitcoin exists everywhere and nowhere,” stated it’s decentralized and cannot be stopped. We can go on and on and on, but when millions start to catch on, we will then see the true power, as for now, it’s just in its infancy.
Remember the good old economic principle of supply and demand? Now think of the fact that in total there are only 16 million or so Bitcoin and Billions of people. Then think of the possibilities and to all the Naysayers saying Bitcoin can disrupt financial and economic systems and should be eliminated. Your shadow banking derivatives are in the 100s of Trillions and when those collapse, they will bring down the entire Ponzi. Bitcoin is only worth a bit over $150Bln so if this thing collapses, the ECB and BOJ can merely recover that in 2 months of QE.
What the establishment really wants to say is that if this thing gets any bigger, their Ponzi collapses and that’s the real fear. Did anyone see Stiglitz on Bloomberg, damn did he look worried…So take solace in the fact that these heavy hitters will bash it all day long, call it a fraud, call it a bubble, call it tulips, but in reality, they know the truth. The truth is their assets valued in dollars are rising because the dollar and all fiats are losing power and Bitcoin and crypto are like pouring gasoline on that fire. That’s the truth and you heard it all hear first!
Speaking of bubbles check out these charts:
SP500 hit our yearend target on news of Tax Plan passage, which will obviously be a buy the rumor sell the fact:
Then there is this chart of the SP500 + US 30YR bond which we use as a passive stock/bond long both only gauge, which is now at the top end of a 2yr trendline and peeking out a bit:
“Let the truth be told and shall you spread it to all your patrons, for in life honesty is the beacon of light and by shining it upon us all, fear and darkness defeated"
Cheers!
Finally, we will decidedly end our notes with our reaffirmation of the growing need for alternative strategies. We would like to think that our alternative view on markets is consistent with our preference for alternative risk and alpha driven strategies. Alternatives offer the investor a unique opportunity at non correlated returns and overall risk diversification. We believe combining traditional strategies with an alternative solution gives an investor a well-rounded approach to managing their long term portfolio. With the growing concentration of risk involved in passive index funds, with newly created artificial intelligence led investing and overall market illiquidity in times of market stress, alternatives can offset some of these risks.
It is our goal to keep you abreast of all the growing market risks as well as keep you aligned with potential alternative strategies to combat such risks. We hope you stay the course with us, ask more questions and become accustomed to looking at the markets from the same scope we do. Feel free to point out any inconsistencies, any questions that relate to the topics we talk about or even suggest certain markets that you may want more color upon.
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Capital Trading Group, LLLP ("CTG") is an investment firm that believes safety and trust are the two most sought after attributes among investors and money managers alike. For over 30 years we have built our business and reputation in efforts to mitigate risk through diversification. We forge long-term relationships with both investors and money managers otherwise known as Commodity Trading Advisors (CTAs).
We are a firm with an important distinction: It is our belief that building strong relationships require more than offering a well-rounded set of investment vehicles; a first-hand understanding of the instruments and the organization behind those instruments is needed as well.
Futures trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors.
Nell Sloane, Capital Trading Group, LLLP is not affiliated with nor do they endorse, sponsor, or recommend any product or service advertised herein, unless otherwise specifically noted.
