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January 13, 2021 | Crypto-Mainia: Sign of Beserk Times

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Exemplifying illiquidity:  of the existing 18.5 million Bitcoin in existence, around 20 percent–currently priced at about $140 billion–are reportedly lost or otherwise stranded in wallets that the owners cannot open.  After 10 guesses at forgotten passwords, credits typically become permanently encrypted and forfeited.

Wallet Recovery Services, a business that tries to help owners find lost digital wallet keys–says it is receiving about 70 requests a day from people trying to recover access to their credits.  See Lost passwords lock millionaires out of their Bitcoin Fortunes.

As exuberant pricing has yielded increasingly negative investment prospects for most asset classes today, financial speculation has gone beserk and even some traditionally sober institutions like pensions and life insurance companies have tossed cash at crypto bets.

All in and then some, open interest in CME’s bitcoin futures has surged by more than 250% since the beginning of October while regulators and governments are increasing their attention on the enabled crimes, wasted energy and madness unfolding.  See ECB’s Lagarde calls for global regulation of Bitcoin to prevent use in money laundering.

All of this promises to end in the usual way, see Bitcoin will break Wall Street’s heart:

Estimates by Digiconomist suggest that the bitcoin network consumes around as much electricity as Chile, 77.78 trillion watt hours on an annualized basis. Bitcoin mining is often concentrated in places with abundant renewable energy such as China’s Sichuan province and Iceland, but increasingly climate-conscious governments will nonetheless likely take a dim view of bitcoin mining’s social utility as a priority for energy use.

The prospect of more onerous regulation may take the shine off digital assets, too. The Treasury Department’s plan to make trading platforms keep more stringent identity and transaction records is just one example of how the attractive anonymity of the system could be undermined.

Also, watch Why investors are piling into Bitcoin despite the risk:

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January 13th, 2021

Posted In: Juggling Dynamite

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