Somebody pinch me please. This has to be a dream.
Less than two months after the richest man in the world, Elon Musk, tweeted that bitcoin is “almost” as bad as fiat money, and after a bunch of toying around with cryptocurrencies and posting interesting things on social media, his company Tesla has now revealed that they have added a large chunk of BTC to their balance sheets.
As someone who’s been involved in this industry for eight years, the feeling is completely surreal. We knew this day would come, but now it’s finally here.
The era when journalists and clients would ask us when mainstream adoption will happen is over. Mainstream adoption is happening right before our eyes, and it is taking place before the entire world.
There’s no doubt in my mind that in the coming weeks and months, we’ll see many more Fortune 500 companies making similar announcements as they look to diversify their tremendous cash balances out of the flailing U.S. dollar and into more solid stores of wealth.
All-time highs all around
It seems to be a good day for it. The Dow Jones Industrial Average, the Nasdaq, and the S&P 500 have all achieved fresh highs today, as have many individual stocks including Google, Twitter, and Disney.
In the crypto market, we’ve also seen a few other coins joining bitcoin in forging new all-time highs. Most notable are probably polkadot and ether, with the latter recently seeing the opening of a brand new futures contract.
It’s important to note that just like the CME bitcoin futures that launched at the peak of the bull market in December 2017, the ether futures will be cash settled, meaning that they exist purely for speculation, and no cryptocurrency will actually change hands.
Now, many people seem to think that the opening of bitcoin futures way back then somehow caused the bubble to pop and the prices to come crashing down over the next year. In line with that logic, there may be some concern that the ether futures might signify the end of the current bull run.
Though it’s an interesting theory, we need to remember that correlation does not equal causation. Just because the BTC futures were introduced at the top, doesn’t mean that they caused the drop.
In my humble opinion, the CME volumes were not nearly sufficient to cause any major reaction in the price, but it’s always a game of psychology anyway.
At that time, the market was seen as undeveloped, and the new BTC futures only served to highlight that there were no great options for shorting. As a result, the market may have gotten ahead of itself.
Today, we see the new ETH futures coming in as a sign of mainstream institutional adoption. All the new attention around bitcoin as a unique store of value is spreading to the wider industry, and if BTC can go from underdog to top dog in less than five years, there may just be something to this new world of tokenized assets that’s being built on other blockchains.
What if it is the top?
Well, yes, this is always a possibility. Not sure it would surprise me much either way. There’s been significant speculation in the markets lately, as people around the world are learning that they must be part of the financial markets in order to improve their status in society.
In this unique environment, the most likely outcome seems to be that we’ll see even more money rushing toward the stock market and digital assets, as people look to allocate more and more capital in a giant feedback loop.
A candle always burns brightest before it is extinguished, so it’s very possible that we’re on that last leg now.
Of course, with the amount of fuel that’s flowing into this flame we call the financial markets, it’s quite possible that our analogous candle will turn into a raging bonfire before we’re through.
Yes, many people will get burned, but this is how the game is played. So please exercise extreme caution, especially if you’re new in the markets.
Be wary of things like high leverage. While it may seem to help in the short-term, it is the number one killer of new traders. No matter how hot the markets are, never invest more than you can afford to lose.
