Image: 123RF
A digitally manipulated photograph of ethereum in which they forgot to change the image in the reflection - Image: 123RF

What shall we do with a drunken market?

Contrarian, incorrigible and bereft of market conventions, Bitcoin is back on a bull run, surging to R127,000 a coin on the ZA market (now over $8,000). Here's the latest trading (Friday AM) on ice3x:

As you can see from the above, Ethereum and Litecoin are also on the charge. So, what's behind this new surge? The answer seems to lie in the decision by some pretty conservative institutional investors to start buying into crypto. Among them,  Old Mutual's gold and silver fund ($220m) which announced that it had started quietly buying Bitcoin in April "with a mandate to allocate as much as 5% to cryptocurrencies".

This from Bloomberg:

The idea is to take profits from bitcoin as it advances to reinvest in gold and silver assets, fund manager Ned Naylor-Leyland said in an interview on November 16.

 “Bitcoin was explicitly designed to be digital gold,” said Naylor-Leyland. “So if you’re going to have a small proportion of a fund in bitcoin, it should be in a gold fund, because that’s exactly the point. It’s about bringing the ownership of disciplined money into the modern world. Bitcoin is paving the way for the reintroduction of gold as global money.”

See that last sentence - "paving the way for the reintroduction of gold as global money"? Said with a straight face? It seems that fund managers are allowed to say the darndest stuff these days.

The insider-outsider status of crypto with the major finance houses remains a feature of the market. Also on Bloomberg (wake up Reuters, you are falling behind on this story), the columnist Matt Levine has taken a darkly comic view which you really should read.

From his column:

But it is awkward. If you are buying bitcoin futures, it is probably because you think that bitcoin will go up. If you think that bitcoin will go up, it is probably because you think it will be more widely adopted as a currency and a store of value and an alternative to the current financial system. But if you really thought that, you'd just buy bitcoins. You're buying the futures because, deep down, you prefer the existing system. "The need for a bitcoin ETF," I once wrote, and it is just as true of a bitcoin future, "is an argument against buying it."

Meanwhile, if you are looking for the next big thing in crypto, look no further than Wax. Here's a real-world application for crypto that has millions of dedicated followers who transact online all the time. Wax will monetise the transactions of online gamers who buy accessories for their characters.

From the Wax blog:

WAX (short for “Worldwide Asset eXChange”) is a decentralized platform that will augment trust in the virtual goods market, is solving these problems. WAX is powered by the Ethereum blockchain, allowing all virtual item market participants to exchange goods, settle transactions, and efficiently administer fees. In economic substance, WAX enables virtual asset owners to create their own asset exchanges with the use of a simple widget that allows all virtual asset owners to securely exchange virtual assets without ever leaving their gaming screen, facilitating the most efficient virtual goods market experience ever put online.

Here are two videos in which our very own Hanna Ziady and her panel take you through the Bitcoin world and ask if it is sustainable. 

Or you could just watch this prediction of what the crypto market crash will look like:

This column does not constitute good investment advice. Or mediocre advice. Or any advice at all, actually.

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