Over 700 points gone in the blink of an eye. It was a counterattack designed to inflict maximum damage…
On Monday Night Australian time, China unleashed its tariff bombshell. A US$60 billion retaliation to Trump’s recently announced tariffs. A new escalation for this ‘trade war’.
While the Dow did end up closing slightly up from the intraday low, it was still a 618-point drubbing. The kind of result that will leave markets reeling from the drop.
This isn’t about trade anymore though. This is everyday people suffering the consequences of a battle over egos. One that doesn’t look likely to end anytime soon.
But, you probably already figured as much for yourself. 2019 has been a strange year for politics and markets. It feels as if we’re entering uncharted waters, especially with some of the loopy economic policy going about.
One sector making steady progress
However, while everything else is going to all hell, one sector has been making steady progress. A market that has consistently been on the rise all year. Perhaps the least expected market of them all.
Indeed, the whole crypto arena has enjoyed a fairly good run this year. Prices are starting to make some real headway again. Sure, they’re not at the late 2017 levels just yet, but they’re climbing.
The past week in particular has been huge for bitcoin. From roughly US$5,750, the price for one whole coin has risen to over US$8,000 at the time of writing. A 40% gain in seven days.
More importantly though is the fact that it continues to break new highs. While I believe technical metrics are pointless for crypto, I won’t deny that breaking key levels like the 8,000 dollar mark aren’t important. Psychologically, it is something that resonates with investors.
Perhaps the FOMO (fear of missing out) is back. Well, the fear certainly is anyway…
A threat to the dollar
Last Thursday, US congressman Brad Sherman motioned to ban cryptocurrencies. A move that we have seen plenty of times in the past.
This time though, the rhetoric was different.
Typically when the government bashes on bitcoin they call it a currency for drug dealers, arms traders and terrorists. It’s a powerful tool for the black market in their eyes.
I don’t have time to counter these points today, but you can find plenty of other sources online who will. Fact of the matter is, the US dollar is far more intrinsic to black market trade than any crypto. But I digress.
Let’s get back to Mr Sherman and his remarks:
‘I look for colleagues to join with me in introducing a bill to outlaw cryptocurrency purchases by Americans, so that we nip this in the bud. In part because, an awful lot of our international power comes from the fact that the [US] dollar is the standard unit of international finance and transactions. Clearing through the New York Fed is critical for major oil and other transactions. And it is the announced purpose of the supporters of cryptocurrency to take that power away from us.’
He’s right about one thing, it truly is awful how much power the US dollar has.
For the most part though this is downright hilarious. It reads like a government lackey who is admitting just how scared he is to lose control.
Clearly Sherman can feel the financial walls closing in around him. Without his almighty dollar, how will he whip the rabblerousers into submission?
The answer is of course, he can’t. Which is exactly what bitcoin was made for. In effect, Sherman has argued — unwittingly and ironically — for the very reason of why we need crypto. So hacks like him can’t control the value of transactions around the world.
The silent coup
What is staggering is just how out of touch Sherman really is. See, while he’s fretting about losing power, he doesn’t realise just how impactful the crypto movement is in his country.
Behind the scenes, adoption and use of crypto is on the rise in the US. I’d wager it’s at an all-time high, but no one has the data to back it up.
What I do know though is that retailers are coming on-board faster than ever. Whole Foods, Nordstrom and Starbucks are just three of the latest companies to dive in. Each of which are major consumer brands worth billions of dollars.
However, you probably didn’t hear about it because no one is making a big deal out of it. In fact, Starbucks hasn’t even officially declared the fact. The only way we know it’s real is because people have been paying with crypto in stores.
The media doesn’t care about crypto adoption. As long as bitcoin is still well below its all-time high of US$19,000 it doesn’t rate a mention.
Plus, in the past we’ve seen several botched attempts to make crypto mainstream. Some certainly succeeded, but many also failed. Usually because of the slow processing time or ungodly fees.
Today though, these issues are practically irrelevant. After plenty of tweaks and development, we now have apps and platforms that make crypto payments seamless and cheap.
It’s these apps and platforms that will be key to the proliferation of adoption.
We’re still in the early days here, but once this crypto revolution picks up momentum it will gain traction. It may very well sneak right up on those who aren’t looking.
Bitcoin may just be the safest bet of 2019. The world just doesn’t know it yet.
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