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Which Will Crash First: Stocks or Bitcoin?

By Rick Ackerman Posted on December 15, 2024, 5:00 pm EST Last Updated December 13, 2024, 1:49 am EST

I’ll trash bitcoin in a moment — my new hobby — but first a yellow alert for everyone who thinks the stock market’s inevitable collapse is most likely to happen shortly after the first of the year. Although that seems quite plausible, fulfilling popular expectations is not how Mr Market usually works. Think how many lives he could wreck if the collapse were to begin any day now, at the height of Santa season. We should be especially cautious because premium levels for put options on the S&Ps have fallen to near-record lows. Although that does not tell us exactly when the crash is likely to begin, it does make one thing all but certain: The stock market’s initial plunge will be so breathtakingly swift and steep that put prices will soar in mere hours to stratospheric levels where no one will want to buy them. Count on it.

Concerning Bitcoin, I couldn’t resist the temptation to weigh in at WSJ.com after they ran an article last week that attributed Bitcoin’s extremely high price to ‘scarcity’. The headline drew the usual crowd of youths who seemed to agree. Reaching deep into market history, one of them helpfully pointed out that Bitcoin has outperformed all other investible assets over the last decade. Who knew?

Whatever he believes, it is indisputable that Bitcoin  — unlike tulip bulbs, which can produce beautiful flowers — has an intrinsic value of zero.  Granted, there’s nominal value of perhaps $2-$3 per token because the blockchain within which cryptos are created can be used to effect and record financial transactions securely. But $100,000? That’s absurd, considering Bitcoin cannot accomplish those tasks nearly as efficiently as credit cards or cash.

Violent Money?

And what kind of crazy ‘money’ explodes in value from five cents to a hundred thousand dollars, with $50,000 fluctuations along the way? Bitcoin’s psychotic instability is actually the main reason for its popularity. As such, it is used almost solely for speculation rather than for purchases, recalling the joke with the punchline: Those aren’t eatin’ sardines, mister, those are tradin’ sardines!

The big banks have cynically embraced Bitcoin because they have no skin in the game and because it adds liquidity to a global shell game they created to spin nearly unlimited quantities of ‘money’ from digital ones and zeroes. The argument that bitcoin has become worth so much because it is so scarce is precisely the same argument that was used in the 1600s to push the value of a single tulip bulb as high as a million dollars.

Bitcoin is methamphetamine for the vast multitudes who missed out on the boom in stocks and real estate. Now, an army of hucksters is offering these losers a second chance. Small wonder that more than a few of them should expect Bitcoin to reach $1 million or more. Bitcoin mania is a con-job, and it cannot but end the way Tulipmania did nearly 400 years ago.

  • Ben December 16, 2024, 8:40 am

    “[I]t is indisputable that Bitcoin — unlike tulip bulbs, which can produce beautiful flowers — has an intrinsic value of zero. […] Bitcoin mania is a con-job, and it cannot but end the way Tulipmania did nearly 400 years ago.”

    What’s the difference between an apple seed, an apple tree, and an apple? Nothing. They’re the same things, in different stages. Bitcoin is like the ~500 year old system from which it sprouted.

    • DanielK11980 December 18, 2024, 9:20 am

      There’s a lot of difference, strange analogy.

      • Ben December 19, 2024, 12:45 pm

        “There’s a lot of difference, strange analogy.”

        The downfall of the West (and thereby the world) is summarized thus…

        Demon of Pride: Schism –> Protest –> “Enlightenment”
        Demon of Greed: Capitalism (risen from “Enlightenment”)
        Demon of Envy: Marxism (born of the anti-Church French Revolution)
        Demon of Lust: Divorce -=> sexual revolution –> LGBTQP
        Demon of Sloth: irreligion –> welfare states (or vice-versa)
        Demon of Gluttony: the self and self-indulgence as the “moral” foundation
        Demon of Wrath: woke-ism –> Islamism –> Damnation

        Capitalism claims to be a lot of things that actually predate it, but it is only three simple ingredients: interest on debt –> speculation (Bitcon is just one countless many) –> “winner” cleans up the losers (and these days, you’re either one a fast narrowing class of mega-rich winners or one of the countless losers).

        But these are not to be argued, only revealed in time (which there isn’t a lot left, in this most sinful era).

        However, it must be pointed out that the master we serve is necessarily the one who must reward us. And because the Devil hates mankind with endless passion, his every reward is in some way a punishment… until the the final punishment. You don’t like Marxists, but you and the rest of the Capitalists will never stop feeding the very real Demon of Greed who then shares his power (that you give it, and that we all give to them through our “harmless” sins) with Envy and all the rest.. THEY are not divided, for if they were their plan would have no chance to succeed. But WE are divided thus WE fall.

        Merry Christmas.
        Can’t say it’ll be a Happy New Year, though.
        At least, not for long even it turns out to be.

  • PRS December 15, 2024, 8:39 pm

    You don’t get the value of Bitcoin like a lot of people don’t. Sure it has no intrinsic value but neither does the US dollar. What’s a Twitter account worth with 1M followers? It’s the same principal. You have a worldwide financial and computing network with hundreds or millions or billions of users. That is value. Some day you’ll recognize it.

    &&&&&

    You sound pretty green, Ryan, especially when you compare BItcoin to…. Twitter shares???? For what it’s worth, I have been forecasting the crap out of Bitcoin, most recently with a quite bullish call that kept subscribers long on the say up, then got them short a split hair off today’s spike top. Here is the update to the actionable ‘tout’ on my home page. Ordinarily, only paying subscribers can see it:

    $BRTI – CME Bitcoin Index (Last:101,205)
    Sunday, December 15, 5:16 pm EST 0

    _______ UPDATE (Dec 16, 1:52 a.m. EST): BULLSEYE! The 106,677 Hidden Pivot I’d suggested using to short this rabid badger caught the top of a $3,900 spike within one-tenth of a percentage point. It was a new record high for Bitcoin, and the precipitous reversal that followed could have been worth as much as $2,378 so far to any subscriber who was paying close attention. The ‘camouflage’ trigger I’d advised using to hold entry risk down to a practical minimum is a proprietary trick, but for the record, the short would have triggered at 106,314 less than two minutes after the top was in.

    • Ben December 16, 2024, 10:09 am

      PRS: “Sure it has no intrinsic value but neither does the US dollar.”

      Was a dude on YouTube named “Rawdogletard” who used to make videos about the silliness of Bitcoin. He addressed that very point but, unfortunately, his videos and channel have disappeared from YouTube. But I have a memory, so…

      The USD _is_ backed. Rawdog aka CoryC didn’t completely explain it, but he was right to say that the Dollar’s backing is our military. But that only scratches the surface and, if the explanation stops there, paints an unreal picture of the U.S. as an extreme bully. No, no, no… the world, for the most part, trusts us to use our military and resources — including nuclear weapons, especially — with due caution and reluctance and for the purpose of _maintaining_ order, not conquest. That’s why the Dollar remains trusted: because in the loony bin that is the world, we are by far the least insane _and_ most capable to maintain relative peace in the world.

      And though I’m fairly certain you and (certainly) countless others laugh and say otherwise, it is a fact that we’ve had an unprecedented era of peace ever since the Dollar became the world reserve currency. So the point stands, no matter what the peanut gallery has to say about it.

      Now, to be fair, Bitcon COULD become that reserve currency IF the U.S. was to adopt it as its currency. But LOL! WHY would we do that?! It’s slow, woefully inefficient, and, at the end of the day, not immune to all the things Bitconers say it is (such as inflation of supply). Why should we go through all the trouble to transition to it when we’d only wind up with a shoddier version of what we already have? Makes no sense, whatsoever.

      &&&&&

      The main business of planet earth is shuffling paper, most of it esoteric IOUs. The size of this market is 20x-25x global GDP in actual goods and services, and it is all done in dollars. Nothing can take the dollar’s place in this market.

      RA

      • Ben December 16, 2024, 9:24 pm

        You can say that again. As Aristotle said of interest on debt: “it is not natural for money [thereby debt] to breed”. But that’s what we’ve made it to do, even to the point that birth rates, worldwide, have taken quite a dive. We’re no longer a pro-creative species, on the whole, but sterile prisoners of paper. Forget about AI destroying mankind. We sealed our fate long ago.


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