Last year, Jamie Dimon… the CEO of JP Morgan… famously declared Bitcoin was a “fraud”.
He even claimed that if “we had a trader who traded bitcoin I’d fire him in a second for two reasons. One, it’s against our rules. Two, it’s stupid.”
Of course, Jamie’s analysis and conclusion were based on the kind of sensible thinking you’d expect from the top man at a top Wall Street bank…
As he explained to the crowd at the New York financial conference he was addressing…
“You can’t have a business where people are going to invent a currency out of thin air… It won’t end well… someone is going to get killed…”
What a load of rubbish.
A arrogant banker talking Bitcoin down
I remember thinking at the time it was attempted sabotage… laced with a slug of sour grapes.
Dimon wasn’t in on the trade.
He’d missed the boat.
More, than that… JPM and other Wall Street banks want all the investors’ money… just the way it’s always been.
They don’t want people getting rich without them, in cryptocurrencies – without them getting their cut!
So of course, Dimon was going to bash the ‘King of Cryptos’… talk it down.
And he timed it well.
This was back in September.
Bitcoin was already in the news that week…
The Chinese central bank had just announced plans to ban cryptocurrency trading – and the price of Bitcoin had fallen 30% in days.
Dimon’s outburst poured petrol all over the fire… sending prices lower.
Not that it lasted long…
Wrong again!
Within days Bitcoin had shrugged it all off and the price was hitting new highs!
Dimon’s put-down had failed.
It’s a cycle we’ve seen time and time again…
Bitcoin surges as more buyers push the price higher…
Some negative comment from a banker or central bank takes the wind out of the sails and the price falls back…
Someone pronounces the Death of Bitcoin…
Attracted by lower prices, buyers come roaring back in and Bitcoin prices rise again.
Well, fast forward four months from Jamie Dimon’s Bitcoin-bashing, and he seems to be backpedalling a little.
On Tuesday this week, he told the world he regrets making those “fraud” comments.
OK, it’s not like he’s suddenly done a full U-turn and become a Bitcoin fanatic.
Maybe he just realised that banks badmouthing Bitcoin is exactly what the crypto sphere thrives on…
That his crypto putdowns simply feed the frenzy of Bitcoin buying from people railing against the old financial system.
Anyway, he’s distancing himself from what he said.
But I’m sure he won’t be the last big guy having a pop at cryptos.
World’s best (old school) investor calls time on cryptos
In fact, on Wednesday the world’s most successful investor, Warren Buffett stepped up to the plate to have a go.
CNBC has the story:
“Weighing in on the current cryptocurrency craze, billionaire investor Warren Buffett said that he believes the future of bitcoin is bleak. “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”
A pretty vague put-down there from the Oracle of Omaha, but a put-down all the same.
Now I love that guy.
He’s someone that’s the master of his trade.
Only… his trade is stocks and bonds and other traditional securities.
It isn’t Bitcoin or cryptocurrencies.
That’s not his beat at all.
And fair play to him.
He’s sticking to one of his lifelong mantras: don’t invest in anything you don’t understand.
The trend is still playing out
The thing is, all the time these smart guys are calling an end to the cryptocurrency trend, the trend keeps on chugging along.
I’m not talking about the day to day moves, guys…
Bitcoin and Ripple and Ethereum and all those other alt-coins you read about can keep zigging and zagging a much as they like.
And after the huge price increases we’ve seen over the past year or so, you are going to get decent size corrections.
We looked at that in Monkey Darts last week.
It’s normal and healthy.
But the general trend for cryptos is still positive.
And there’s plenty of momentum to keep it that way…
240,000 new crypto users in an hour!
For starters, more and more people are getting involved with investing in or trading cryptos.
I read earlier that the world’s biggest cryptocurrency exchange, binance.com is adding “a couple of million” registered users each week.
On Wednesday, 240,000 users signed up to its platform in one hour!
Another main exchange, Coinbase has talked of opening 100,000 new accounts in a day.
That kind of growth is not the sign of a dying trend.
And if we can use past examples of disruptive new technologies as a guide, there could be plenty more to come…
Lessons from the internet’s tipping point
September 1993 is a month that has huge significance in the history of the internet.
Before that, in the 1980s and start of the 90s, the internet was just getting going.
It wasn’t what we know today, with every household and every member of the household using it on a daily basis…
You probably had to be a bit of a nerd to be using the internet.
And the way you interacted with your fellow nerds was via Usenet bulletin boards. It was largely a university campus thing.
Anyway, every year in September saw a big influx of new users to the Usenet community.
These were new kids starting out at college and getting to use the internet for the first time.
And it was aggravating for long-time users, as the newbies didn’t know what they were doing.
So, they’d keep asking questions that had been asked many times before.
They’d ignore the accepted ‘netiquette’ the old guys were used to.
They’d generally be a pain in the backside.
Luckily though, it was a short-term phenomenon.
Once the September influx was over, things settled down… until the next year, when another bunch of newbies would turn up…
So, an annual irritation that the long-time Usenet crowd just put up with, knowing that it would calm down in a month or so.
But in September 1993, something happened.
The Eternal September… and what it means for Bitcoin
The Usenet guys noticed something odd.
That year, the blip of new users didn’t stop.
They kept coming.
And coming… through October… November… December.
What had happened was that internet pioneer, AOL, had decided to give access to Usenet to its home users.
Millions and millions of them.
September 1993 is considered the ‘tipping point’ for the internet.
In tech circles it’s dubbed ‘Eternal September’ – when the internet reached a critical mass that meant the technology gained widespread adoption.
And it’s the same with any major new disruptive technological advancement.
Think about the early days of eBay or Amazon or Facebook.
I’m old enough to remember when they were new things.
You’d read about people buying and selling things at this online auction.
Or one or two of your friends would tell you about a new way to communicate called Facebook.
Then more and more started using them.
And then mass adoption.
Now almost everyone uses these things.
The same thing with mobile phones.
And it could be that it’s the same thing with cryptocurrencies – except that it’s in the early stages now.
The mass adoption is yet to come.
This from Matt Bourke at investinblockchain.com:
“Bitcoin adoption today is where the internet was in 94/95 or where Facebook was in 2005.
“When you compare the user count of the internet in 94 or Facebook in 2005 to their user count today, the number seems miniscule. However, comparing the growth of those years to the years leading up till then, you see that, as a percentage, the growth was explosive, but still only a fraction of what was to come.”
The implication is that there is plenty more growth potential to come.
And although it’s hard to find a definitive number of how many people are actively using cryptos, this gives an idea:
15 million Blockchain users.
That’s a tiny percentage of the eligible worldwide population.
Let’s say Matt Bourke and others are correct…
That we’re in the early stages of adoption of Bitcoin and cryptocurrencies in general…
If so, we can expect a huge uplift in participant numbers in the years ahead.
And given that Bitcoin and many other cryptos are limited in supply, that sounds very positive for the price trend over the medium to long term.
I know prices have been volatile lately.
And there’s likely to be plenty more volatility in these exciting markets in the short term…
But volatility is not always something to run away from.
For anyone with a bit of spare cash they’re prepared to risk, volatility can mean great profit opportunities.
If you’ve not done this before, though, I recommend you get a little help from someone who does this for a living.
You won’t find a better place to start out your crypto journey than our Crypto Kickstart Programme.
It’s a great way to dip your toe in and the guys will show you all you need to know.
Get instant access and their top crypto recommendation HERE.
I’ll be back next Friday – have a great weekend.
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