Bitcoin Gets the Gold Treatment- Futures Roll Over FOMO Crowd
We Told You First- Bitcoin is Going to Be made To Heel per its Banking – Government Overlords.
There is no Bretton Woods agreement to repeal here. Therefore, just control the upstart before if gains traction is all that needs to be done. And it is being done right now. Bitcoin as a potential alternative to sovereign fiat is being strangled in the crib right now via futures listing in the US and banning in the Asian markets. We were warned. Yes it will continue to go up and down i nmassive vilatile moves, but now longs getting in using futures will lose money because of the volatility adn the leverage they cannot afford. This is a tax on the ignorant common man feeling the anxiety of missing out unfolding in real time.
From a Previous Post on How Bitcoin will be made to “Heel”
Technology that removes the banks’ clearing risk while keeping the client captive in their system. Technology is disruptive, yes. But market structure, regulatory agencies , and marketers that lobby and shill for the Banks and Government will win. Technology has no protective moat by nature. It is that quality which will allow Bitcoin to be owned by the powers that be.
As the cash in India is being replaced by Visa cards, so shall the Bitcoins be replaced by bank or nation state branded versions of themselves. [EDIT- Futures Do Nicely as well- Soren k .] Are you ready to exchange more freedom for convenience?
Bloomberg today saw no possible correlation between trading desks opening up to arb bitcoin futures and its drop off a cliff.
Bitcoin plunged as much as 21 percent, briefly dropping below $13,000 in overnight trading. There seems to have been no particular catalyst for the selloff, with extreme volatility remaining a hallmark of the digital token. By 5:40 a.m. Eastern Time bitcoin had recovered some of losses to trade at $14,539.60. In a sign that cryptocurrencies are becoming more mainstream, yesterday we learned that Goldman Sachs Group Inc. is setting up a trading desk to make markets in digital currencies.
In other words, buy the dip because it is becoming mainstream. Pay no attention to the prop arbitrage desk that will destroy futures longs even while the bank clients are hedging their BTC longs through them. You know, like when miners hedge production through bullion banks? Mainstream is code to a flow trader (i.e. one who has no original idea in his head and front runs client flow and hammer smaller participants) as for “there is enough stupid money in it for us to arb the shit out of it. After we do that, we will destroy the public longs
We find this fascinating as headlines like:
- “Gold Rallies $50.00: ‘It is overbought’ says analyst” In unrelated news: Russia declares war on US
- “Gold plummets $3.00 as people realize its a worthless pet rock, may cause cancer”
pervade the financial MSM whose sponsors have nothing to do with gold by and large. Enter BTC which has not yet cemented its potential in the public mind as a replacement for fiat, and must be strangled in the crib.
Incensed? You Bet We Are
We were compelled (incensed) to bang this post out despite being on vacation. Written from the road hastily but accurately. Seriously. How many times can you be warned?
Here are some links to previous posts on the concepts of market structure as tool of control, an interview with Vince Lanci actually saying “Sell Bitcoin futures and buy Gold on a dollar for dollar basis” last week in an interview with Daniela Cambone when asked about the relationship between the two.
Some articles on bitcoin’s market structure and as a futures product .
Futures as a form of regulation in Bitcoin
Bitcoin will be co-opted by Banks
We have said this several times in the past. Bitcoin is not your savior from Banking Oligarchs. It is electronic. It is not physical and therefore can be co-opted by the banks themselves. Banks are not going to give up their franchises. If they cannot beat Bitcoin, they will create their own. The CME has embraced Blockchain technology. Banks are starting their own crypto currencies. Believe us when we say, either the government, or the Banking industry will shut it down. If they cannot, then they will buy or control it.
This is a war between Mice and Cats. Every time the Mice (people) find a new way to avoid the Cats (Banks) monopolistic ways, the cats do something to throttle the Mice. Sometimes it is by developing their own Tech. Sometimes it is by using the government regulatory agencies to help them. Sometimes it is via a fear campaign.
Usually, it is all three. Banks are developing their own proprietary Blockchain products. Governments are restricting ways to use Bitcoin. And finally it is done under the cover of “stop the crime”
- Interview: If You Don’t Own Bitcoin and Hold Gold, Read This
- Recco Read: Doug Casey Measures Bitcoin’s Moneyness on the Gold Scale
- A Real Gold Guy’s View Of Crypto, Bitcoin, and Blockchain
and other Soren K. Posts on Bitcoin HERE
As stated in several posts by the Soren K. Group, and Vince, who is a bonafide rockstar in areas governing market structure, subjective probability, and commodity investment and trading in general. [Edit-And the only one of us crazy enough to put his real name on these articles.-Fay Dress]
Bitcoin lies at the intersection of all 3 areas. In the aggregate we said the following:
- Bitcoin futures will be sold to you as your only safe reliable regulated way to get bitcoin.
This means if you buy bitcoin futures, you are buying a cardboard cutout of the product. You are buying a tracking stock that settles in cash and MUST, when all is said and done trade at a lower less than “physical” bitcoin.
You traded freedom for convenience again. Good Fido! Here’s a lesson from people who understand this as it happened to Gold.
- Ways to demoralize, control, or co-opt a grass roots movement into a product that threatens sovereign “debt- money”and restore some economic freedom.
If you can’t control it outside your nation’s borders bit there is pent up demand in your nation, you can make it illegal and/ or implement draconian measures to impede its use on your country. This is the China way.
News flash! China is a newbie when it comes to manipulating its people. And frankly it doesn’t have to be subtle as their people are under no pretense of being in a democracy.
But in “democratic” countries one must protect its citizens from evil doers, give them “free markets” and get the public to swap freedom for convenience. Manipulation , Manufactured consent, and controlled opposition are the tools.
So guys like Jamie Dimon, talking sock puppets who in an attempt to protect government fiat vilify Bitcoin one day; and who apparently didn’t get the note that the tactic of demonizing bitcoin had been replaced by “co-opting” it flips his script in a week. JPMORGAN promptly after being reminded there will be a futures market and money to be made; they actually imply it is a store of value, a new gold.
Are you serious? When bitcoin does become a store of value, it will be as a result of its potential for price appreciation being killed. Price appreciation , by the way, that was a reflection of what would happen to gold if they took their foot off its throat. Bitcoin needed to be controlled; for it showed the vulnerability to government issues fiat as trustworthy. Is it not obvious? Where corporate and government interests can intersect, they do- and the public gets killed at the crossroads.
1- increase accessibility and stoke public grass roots movement retail demand
2- eventually trade at a discount to Bitcoin itself because it is settled in cash- a bank arbitrageurs dream!
3- This de-facto regulation of bitcoin combined with tail-wagging dog price transparency will make the product “come to Daddy”.. daddy being the government which has no interest in Btc succeeding in its original form, it’s other daddy being the banks who will make a sitload of money raving “physical” bitcoin to cash settled futures, and destroy its status as money without borders.. at least in the USA.
We circled back to Vince for a comment:
If you bought bitcoin futures as an investment, you are going to get fleeced. Or better said, your profits, if they come, will have a “little off the top” when you cash in. This is the expense of swapping convenience , “safety” and taxation, for OTC “exchange” counter party risk.
He continues that it’s not bad if you know what you are getting into:
This is not a negative on the product. It does give you transparent access to a market with “wild west” issues. You may very well make money on a 5 year hold, but not as much as if there were no futures, not as much as owning BTC itself.
On investing vs trading:
Bitcoin is now a trading vehicle. It will be relentlessly arbed by bank prop traders, which is all fair to me. But it is the selling of it to a public that is woefully under capitalized, undereducated, and in search of a financial messiah to solve their fear of missing out anxiety.
So what price should futures trade at compared to spot?
I don’t know. (Laughs) And to just say that in this age is itself a “no-no”. But anyone who knows and is in the markets will not tell you unless they are talking their position. What I can offer is the differential will become a product of cost of production, cost of storage, opportunity cost of money, and taxation. plus anything I haven’t thought of yet
He goes on seeming to work out the potential arb in his head as we chat.
I have to wonder: if bitcoin is a medium of exchange and in spot form may be difficult to tax properly, but profits on BTC futures are taxed at capital gains.. couldn’t that imply a discount in some instances as high as 20%? I don’t know, but those using BTC to dodge taxes in expatriating money criminally would certainly have that as a possible differential. But how that arb works, I haven’t figured yet.
Look, at its basic level, the futures settle cash, they are not fungible with BTC, they cannot be. There is no above ground fungible unified supply in exchange vaults yet. Therefore it must trade at a discount to the real thing. The other factors that need to be considered are cost of mining and storage in energy terms. Maybe there is an arb between BYC, Futures and electricity.. it certainly is going to be a huge profit center for smart proposals desks like Goldman. Don’t short Goldman in the year after they get their arb up and running. It will be free money to them.
Come to think of it, if you are not in a position to sell BTC futures and buy Gold as a risk arb like i recently said in a Kitco intrview, just buy GS stock. They will certainty profit being long, short and sideways in Bitcoin futures. Don’t dig for gold, but the company that sells the shovels here.
We told you it would happen. Bitcoin in futures form is now getting a taste of what it is to be a pariah wrapped in a pretty bow to the public while being demonized by the govt implicitly.
This is market structure sponsored by a corporatised government that will do any thing to protect its most precious franchise its debt as money schematic that has hi jacked the fiscal lifeblood of our financial system with a heroin addicted contaminant.
Will botcoin (not a typo- the algos are coming)rally again? Of course it will. But now we can all watch in real time as over the nextb5 Years Bitcoin “physical” will succumb to bitcoin futures due to its higher volume and more liquid markets. It will undermine the pseudo crypto exchanges which do actually need regulation.
But make no mistake about : every broker and bank will be pitching cryptos now to you the public. And it is a tax on you. Bigger forces are now being put in place to make bitcoin less volatile, lower in price, and a sleepier asset. Hence it will become in their pitch “a store of value”. This is a joke.
Remember all the gold nuts complaining that paper gold isn’t physical gold? Well he’d we go again.
Government shutdown avoided, Spanish regional vote solves nothing, and bitcoin tumbles.
Congress passed a bill to keep the U.S. government funded until Jan. 19. The bare minimum needed to avoid a shutdown, the legislation means lawmakers can head home for the holiday break, but makes for a difficult start to 2018 as a wide range of divisive fiscal and social issues have to be faced. Measures contained in the bill will allow President Donald Trump to sign the tax plan as early as today.
The election in Catalonia saw separatist parties win a small majority of seats in the Barcelona assembly. The result keeps intact the uneasy status quo that’s endured since October, rather than take the Spanish region closer to independence. With ousted Regional President Carles Puigdemont still facing arrest if he returns from his self-imposed exile in Brussels, and Spanish Prime Minister Mariano Rajoy’s People Party losing almost all of its seats in the assembly, an easy way forward seems elusive. This uncertainty is being reflected in markets this morning, with Spain’s IBEX 35 Index dropping as much as 1.6 percent after the open.
Markets ready for a holiday
Overnight, the MSCI Asia Pacific Index rose 0.3 percent, while Japan’s Topix index closed 0.2 percent higher as the avoidance of a U.S. shutdown helped lift sentiment. In Europe, the Stoxx 600 Index edged 0.1 percent lower at 5:40 a.m., with the results of the Catalan election making Spanish stocks by far the worst performer in the region. S&P 500 futures added 0.1 percent, the 10-year Treasury yield was at 2.485 percent and gold was slightly higher.
The core PCE deflator for November, the inflation gauge favored by the Federal Reserve, is due at 8:30 a.m., with consensus seeing a pickup to 1.5 percent. At the same time, personal income and spending numbers will be published, with durable goods orders for November also at 8:30. At 10:00 a.m. we get the latest reading from the University of Michigan sentiment gauge and new homes sales data. At 1:00 p.m. the Baker Hughes rig count will be the last piece of significant data in what has been a good week for oil.