Update:Since we first published this post, bitcoin has crossed the $16,000 mark. As of 11:27 a.m., it's up 25.11% at $16,569.
Bitcoin is at again, breaking another round number on its seemingly unstoppable rise. In fact, it reminds me of my seven year old drawing infinity symbols on a piece of paper and asking if it's a bigger number than the one his sister wrote with 100 zeroes. At this point we can imagine anything.
But who needs an imagination when bitcoin is trading up 13% at $15,055 at 8:18 a.m. today. NatAlliance Securities' Andrew Brenner writes that this strikes him "as the Dutch tulip episode on steroids," but for those of us who have been around a while--and though I don't consider myself old, I'm old enough to have traded stocks through the dot-com boom and bust--this sure feels a lot like 1999. And I'm not the only one who has made that connection. Here's what Nicholas Colas, co-founder of DataTrek Research, wrote in a note on Nov. 28:Frankly, the rush of interest in bitcoin throughout both the financial and general interest media industries is a bit unnerving. It has the feeling of a shoe-shine boy giving stock tips in 1929 or the NYC cab driver with the next can’t-miss dot com idea in 1999. And sequels are never as good as the original.
Which, to those of us who were there, means one thing: Bubble. But that's the thing about speculative bubbles. You can spot them, but you can't predict what will cause them to end (just ask any value investor prior to the 2000 popping of the tech bubble, or watch The Big Short). They can last a lot longer than anyone might imagine. Still, Colas is willing to at least consider what could end bitcoin's uptrend. One possibility: The beginning of futures trading on Sunday. Coals explains why:One thing I learned at SAC is to document everything I thought was important prior to entering a trade. Catalysts – events like earnings announcements, management presentations, trade shows – were on the list in minute detail. So were macro events that might move the stock, as well as market events like rebalances and options expiration. Case in point: the bitcoin futures set to launch next week. I’ve heard plenty of people say these will be beneficial to bitcoin’s price. And with bitcoin ramping to new highs today, that seems to be right. But will that trend continue once the futures start to trade? That is an entirely different calculus. And I doubt anyone really knows what will happen.
Until we do, the trend is your friend.
UPDATE: As if we needed any more reminders of the dot-com boom and bust, Standpoint Research's Ronnie Moas raises his price target on bitcoin to $28,000, from $20,000. In the process, he calls to mind the dueling price target changes on Amazon.com (AMZN) and other hot stocks during 1998-2000. Here's what he wrote:I am not trying to be a hero and compete with people on the Internet for who has the highest price target on Bitcoin. When it was trading at $2,570 on the 3rd of July I came out with a $50,000 price target. Bitcoin is now trading at $15,140. On a split-adjusted basis, if you held on to Bitcoin Cash, Bitcoin Gold and (10X) Bitcoin Diamond, the spin-off coins, you are now sitting on more than $17,000 and a gain of more than 500%. If you got in when I gave you the recommendation in July you can sell 15% and ride the remainder as that (85%) is now house money you are playing with. If Bitcoin ever goes to zero you can't tell me that you lost money. If you want to (still) sit on everything … that is on you.
Good advice that many wished they'd followed nearly 20 years ago.
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