CBOE Global Markets Inc. launched futures contracts on Bitcoin (XBT) last December. This is the first time ever that financial institutions have had the opportunity to short the cryptocurrency. Will this development end the amazing rise of Bitcoin?
Here is what we know about Bitcoin today:
1. One Bitcoin was worth US$0.003 on March 17, 2010. Today it is worth about US$17,000. So if you invested $1 on that date, about seven years and nine months ago, it would be worth $5.6 million today- a compounded annual rate of return of over 600%, compared to the stock market’s annual rate of return of 7%.
2. The recent meteoric rise of Bitcoin is a conundrum because bitcoin has no intrinsic value. The currency was launched in 2009 with a white paper authored under a pseudonym as a digital payment method managed by an network of computers on the internet that independently verified transactions using using cryptography. Some believe it is transformational and could even displace traditional money.
3. Bitcoin Address 3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r is the richest Bitcoin Address in the Bitcoin Rich List. It is the only Address in the Bitfinex Cold Wallet. It contains about 127,672.45 Bitcoin valued at $1.9 Billion, or 0.72% of all Bitcoins. These bitcoins were purchased for $383.
4. Bitcoin has now emerged as the single biggest event of the decade, often compared to the invention of the internet. The underlying Blockchain technology has enormous promise in changing the way business is done in every conceivable way. From supply chains to fund transfers.
5. Bitcoin has begun to go mainstream. Or has it? 1,000 People own 40 Percent of the market. Even more alarming 4% of accounts hold 95% of bitcoins. So the concept of widespread ownership of Bitcoin is false today. It is unlikely that these concentrated holdings will be diluted. In most asset classes, large individual and institutional holders do collude to manipulate price. Bitcoin is not an exception.
6. Central Banks have taken notice. Several Central Banks do not treat it as currency. They see it as a storehouse of value like commodities such as silver and gold.
7. If Bitcoin were treated as an equivalent of all the gold in the world (which would fit in an Olympic size swimming pool) worth US$7 trillion today, one bitcoin would be worth $400,000 each.
8. Many say Bitcoin is a fraud (JPMorgan CEO Jamie Dimon), while others say it is a new era of finance (Mark Yusko, Morgan Creek Capital) that will eliminate interference by banks and governments in monetary systems. Some call it an index of money laundering worldwide.
So what happens next?
It appears the rise has been meteoric over the past six months will continue until the flood of retail interest subsides which will result in extreme volatility as panic spreads among retail investors triggering a stampede for the exits. Will that happen? No one knows. However, most experts predict that the rise this year is unsustainable.
Contact Arcus to schedule a presentation on the future of Blockchain and managing change in the world of business and commerce.
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Change Management Strategy: Arcus Leadership Series on Managing Change
10 Steps for Effective Change Management. Arcus Consulting Group has launched a major initiative to explore growth, innovation and change as key elements of corporate and business unit strategy. Read More.
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