Will Bitcoin Price Ever Be Too Hot?
Unless you’ve been living under a rock, you most likely know that bitcoin price has been flying high for the entire year. Most recently a surge in price has seen the price of bitcoin catapult from $10,000 to over $15,000 btc/usd in no more than a single week so far. At the time of this article, the price of bitcoin is hovering around $16,840. This is a more than 2,000% increase compared to where the currency was just one year ago.
Without question, cryptocurrencies are benefiting in a large way from this newly found attention on digital currencies. Even other cryptocurrencies like Litecoin and Ethereum have enjoyed healthy price movement during the last few weeks. Litecoin, for instance, has moved up in price from under $7 in March to more than $300 this month.
Furthermore, the price of ethereum was under $15 in February of this year and now its value is above $600. But there are still many barriers to entry for mainstream players, believe it or not. The risks of opening an unregulated trading account in an unregulated industry means that one single cryptocurrency hack can completely wipe out someone’s purse of cryptocurrencies.
In fact, it has been speculated that some $64 million in bitcoin has been stolen by hackers who broke into bitcoin mining marketplace, NiceHash. Events like this continue to keep mainstream, conservative investors away from what could be one of the healthiest market booms of the decade.
Billionaire investor, Warren Buffett is very much against cryptocurrency. He’s been put on record saying, “"Stay away from it. It's a mirage, basically...The idea that it has some huge intrinsic value is a joke in my view." But in spite of this, many tech-focused figureheads are rallying behind the decentralized currency market and stocks have soon followed. Right now, there is a mining boom going on and it has nothing to do with picks or shovels.
Take, for instance, Riot Blockchain (RIOT). This stock has enjoyed a very healthy rise in price ever since “transforming into a strategic investor and operator of blockchain technologies.” In fact, since late September, shares of Riot have increased in price from $4.27 to as high as $33.27 this week. Currently, shares are trading around $25.
Digital Power Corporation (DPW) has also benefited greatly from the bitcoin boom. On November 22, shares of the company were trading at $0.56 and this week, the stock price has seen a rise to highs of $5.95. Rumors were apparently floating around that the company was to do business with Amazon, the global online conglomerate. These rumors ended up having no basis as the company made a direct announcement to address the topic on December 6. What management did do, however is raise their revenue guidance 50% from their prior estimates for 2018.
Digital Power expects to report growth in comprehensive income based on the appreciation of its securities held for resale on its balance sheet. Further, revenue expectations are said to be in the ballpark of $36million to $38 million for 2018. This is up from the original expectation of $25 million, which was made previously.
One of the most “notorious” players in the space John McAfee heads up MGT Capital Investments (MGTI) is targeting the bitcoin mining space. MGT recently executed a new purchase order with Bitmain Technologies for an additional 500 S9 Antminer mining rigs, with shipment expected early in the first quarter of 2018.
The importance of this release is that it puts the company one step closer to its goal of having over 5,000 Bitmain S9’s for its mining operations. At this level, the company is anticipating that its EBITDA from mining operations will be somewhere around $2 million per month.
Of course, this was on December 6th. Since then, Bitcoin prices have skyrocketed even further. As many can also see, this move from cryptocurrencies has bolstered new attention from traditional markets as well. The CBOE (CBOE) begun trading bitcoin futures this week and the ticker is “XBT”. Furthermore, rival CME Group (CME) has also said that it will begin handling bitcoin futures contacts beginning on Dec. 18th.
Even Nasdaq (NDAQ) has reported to sources that it plans kick off its own bitcoin futures in 2018. As far as online brokers are concerned, both TD Ameritrade (AMTD) and Ally Financial (ALLY) have said that they will make bitcoin futures available to their customers.
This now begs the question: Who will adopt bitcoin currency as a form of payment and not just a tradable “thing”? Online shopping site, Overstock.com (OSTK) has long been in support of bitcoin and a decentralized payment option. The company has even come out to say that it will keep as much as half of the bitcoin it receives as a store.
In addition to this, Square (SQ) has also made a move into the space to get in on the action. The payment processing company announced in November that it is experimenting with an option for some users of its Cash app to purchase bitcoin.
For now, there seems to be two types of people with very little in between: those is vast support of it like Goldman Sachs’ (GS) Lloyd Blankfein & PayPal’s (PYPL) Peter Thiel and then there are those who are in direct disagreement with cryptocurrency having any value like Berkshire Hathaway’s (BRK-A) Warren Buffett. What side of the fence are you on?