Tag: bitcoin

Bold Calls: Jan 2021

On By Chen Yu YanIn Bitcoin, Equity, Fundamental Analysis, Technology, Trading1 Comment

Dear Uninformed Readers,

I’m back! After a long hiatus that’s caused by study and being lazy in general, I am back to being able to focus on what I enjoy best, Netflix and chill. And also studying the random, dark, untouched areas of the market. Anyways, this new bold call update will signify my return and hopefully (New Year Resolution time) I will be able to update regularly this year (aiming for weekly but will be happy if my update frequencies can average fortnightly).

So before I start, I’ll have a quick summary of the results. My previous bold calls pretty much all came true. Property prices peaked in 2017 in Australia and equities did great (11.46% returns for the ASX 200). China smashed my expectations and increased 21.78% and closed 4030.85. Basically, I’m a lot less rich than what I should be considering how good I am and how right I was… *sigh*

So on a new note, let’s talk 2021. I start by focusing on a few fields this year. China will certainly cause geopolitical chaos with the US this year as RCEP kicks in. The deals they’re making with the EU won’t help either. As geopolitical tension rises, so does Gold and Bitcoin. The relentless QE programs and record low interest rates (that doesn’t look like it’s going anywhere higher anytime soon) will essentially devalue any currency. The thing with trade is that if you lower your currency and gain a competitive edge, it really fucks up the balance. So the current trend is, everybody print money, and we all deflate together, and we all die slowly… together.

First bold call, Bitcoin is going to $100,000 baby!!!! HODL!!!

Second bold call, Gold will hit $2,500.

Last bold call, the S&P500 will hit the 4200 mark.

Now to explain myself. Once again, I’ve pretty much put all my eggs in one basket (the QE basket). The amazing, fabulous, miraculous effect of printing money based on credit is that you can keep doing it. As long as you have more credit. And right now, the US has CREDIT! With Trump out (and I’ll explain what happens should he refuse to leave power later) and Biden in, we can expect more money pouring into the market to make sure the economy doesn’t shit itself (see image below).

This is exactly how the Feds work. True story.

What happens is that this money will end up in the hands of corporations. Even if it’s handed out straight to the public, they will need to spend it somewhere, let’s say paying for their mortgage or buying consumer staples, the corporations are where the money will end up at. The remaining money, will push themselves into whatever looks half decent to invest and drive up their prices as investors, both uninformed and informed rush in because let’s face it, it’s free money! As long as credit holds up, this is inevitable. As money rush in, the corporations make money, the stock markets go up. And because there’s so much money in the markets, given the ratio between the inflow and the size of the economy, money is suddenly worth a lot less (not necessarily inflation, because everyday items may not increase that much in price, just the investment products including real estate).

Oh, that reminds me. Fourth call, real estate is back! I’m thinking 10% in the Australian markets.

Anyways, continuing on with my rambles, as money is worth less relative to these investment products, people rush in natural to attempt to beat the basic devaluing of the currency. Bitcoin prediction is because everyone is crazy! And crazy means it will shoot to the moon. And that’s pretty much it… 2021 will be fairly uneventful (when viewed in this angle).

Ooh, almost forgot, if Trump doesn’t want to leave power, scrap the S&P prediction. Gold and Bitcoin should still go up because duh!

Anyways, after a shitty 2020, I hope you all can have a good 2021. My best regards to you and may you be happy everyday.

Yours Sincerely,

The Uninformed Trader

Bold Calls: Jan 2016

On By Chen Yu YanIn Bitcoin, Equity, Fundamental Analysis, Futures, Policy, Technical Analysis, TradingLeave a comment

In private, I’ve made some bold calls. This affects my trading and I see it as a way for me to exercise my ability to predict long term movements based on an unique style of analysis. I won’t bore you with specifics as that isn’t the point of this entry.

In 2015, over a ramen lunch with close friends, I made a bold call to say that the US equity market will fall 30% from the peak, the Aussie will fall 40%, and China 50%. This was around June 2015. So far, China is looking to have almost hit my target as it is almost touching that magical 2600 mark. Honestly, being a massive Chinese hedge fund, the Australian markets is gonna tank a little as well. I guess we’ll see some results by mid year. The US markets are probably the most difficult to predict. I believe it will be heavily affected by who gets elected for presidency this year.

My new bold call for 2016 is Gold (gold vs US to be precise). I am fairly bullish on gold and I expect an initial target of $1200/oz followed by a rally to $1400/oz (it is currently $1100 as I am writing this). This is based on increasing volatility, the distrust in the growing Chinese/other emerging economies, a beautiful technical bottom plus reversal patterns emerging.

My second call would be for bitcoins. As mentioned in my very first post here, the block chain technology is worth a lot of money. The ability to decentralize the settlement system alone is enough to save enough money to make Scrooge McDuck drool. This along with the fact that we’re half way to mining everything out means that suddenly there is a supply squeeze that can raise the prices faster than twitch chat raising dongers (a very specific reference so kudos if you got this one). My personal target is $1000/coin but I believe we have to wait for around the end of the year for that to come about.

To sum up, bitcoin and gold will be the best performing currencies in 2016 (I’m counting gold as a currency because it pretty much is) and your phone is ringing because I’m calling it!

So… time for Bitcoin Futures?

On By Chen Yu YanIn Bitcoin, Technology1 Comment

Recently, the US Commodity Futures Trading Commission (CFTC) has pretty much settled the argument on whether or not Bitcoin, the popular virtual currency, can be regulated. They filed charges against Coinflip Inc but did not impose any penalties and apparently was settled without anything being confirmed or denied. I am not saying that I expect to see Bitcoin futures any time soon but trading Bitcoin contracts on the CME would be pretty sweet (albeit unlikely). For more information on that, please go research with a few keywords on any search engine and you will pretty much find all the articles that are useful in this regard. I am not writing this to provide any insights and to argue whether or not the CFTC was correct in their decision making, rather, I wish to highlight the more prominent and less discussed (nowadays at least) topic of why Bitcoin is worth anything at all!

Though… I should just state my opinion, just for the record. I do agree that it is a commodity. Bitcoin is used more for investment than purchases. Most of the people either trade it or buy and hold similar to investment in equity or gold. Technically, you can also buy goods and services using gold at whichever store that finds it acceptable to take gold as payment (I dare say most would if you give them enough) but most regard it as something to hold (or wear, I don’t judge). This property is congruent to what we can observe for Bitcoins. Some very specific stores accept it as payment, while most prefer to buy it simply to hold (I have yet to hear of anybody wearing Bitcoin as bling so please inform me if you find some photographic evidence). All in all, I agree that it should not be considered as a currency due to (and I’m gonna give a few other examples that I’m too lazy to flesh out but should be fairly obvious. It is a certainly failure as a research student but I prefer to see it as a win for my laziness) the lack of liquidity, relative focus in investment purpose, and the small net value (calculated in the billions rather than trillions like mainstream currencies).

A lot of people marvel at how Bitcoin went from practically worthless to over $1000 to the now $200 per coin commodity (and I use that word in a very general sense). Ooh, I should mention that those values above are in US dollars. I live in Australia but I’m gonna try to give everything in terms of a better (read: more useful finance-wise) currency. It seems that people nowadays have all axiomatically accepted that Bitcoin is worth something. Where that comes from no longer seem to matter, or at least discussed in as much frequency as it once was.

Popular opinions include the underlying technology of the Bitcoin itself, the idea and innovative method and how much people treasure a cryptocurrency that gives anonymity in the current age of big data. This is one that I personally support as I believe that these all give value. A fundamental principle of business is that it must create value for its customers and clients. In the usual sense, this value can be reflected by the generation, or aid in generating wealth. However, Bitcoin offers something totally different. it doesn’t generate wealth, but allows wealth to be distributed anonymously and safely. Arguments for illegal uses aside, this makes a very interesting and very handy way for businesses to conduct transactions. Recently, 14 banking organisations (including Lloyds, Barclays, UBS, Commbank, Goldman etc.) are looking to invest in Bitcoin application and technology.

Some argue that the technology of Bitcoin can be applied to replace the current central clearing system of markets. This could be true given that the participants who now also have a new duty do not increase their prices to cover the additional cost, or raise prices simply because they’re providing a new service. Block chain and crowd verification is useful perhaps to fool HFTs, but that doesn’t seem likely either as the market requires transparency to function more efficiently (my PhD research may make me a bit biased in this regard but the evidence for this is too strong to simply ignore) so purely from the perspective of increased costs to the market, we cannot justify the block chain applications.

Alternative currency? What about using it as an alternative currency for places with political instability or high inflation? Well, Bitcoin isn’t really known for stability. There are also other currencies more suitable for these situations, like using the US Dollar for example. It is stable, it is big, and it is trusted by anyone who knows where the US is on an atlas. So this argument also breaks down right from the start.

“But wait!” You exclaim as you take a sip of scotch and readjusts your tablet and sitting position due to the fire from your fireplace starting to get a bit too warm (this is how I picture my audience…) “If Bitcoin can’t be used in the secondary market, and can’t be used as a currency, and is an unstable commodity, what on earth is it good for?”

A good question (as expected from my reader!). Well, it is the concept that decentralizes a clearing system that makes it so useful. The ability to remain anonymous while clearing transactions based on a general consensus (OK… I know I didn’t sell that well) is something that we can really use soon in the future where all our purchases will be recorded in the ‘big data’ one way or another. When supermarkets are emailing me discounts on feminine hygiene products because I went shopping with my girlfriend once or twice, it really makes you think. Maybe if I paid for her stuff with bitcoins rather than my card that is linked with my rewards card, I won’t get all the ads. Anonymity is, to borrow the slogan from Mastercard, Priceless. On the other hand… if we all use Bitcoins, think of the value that we miss out from the reward points and the chance to save 20% on tampons…

Think of the points people!