Bitcoin's Intrinsic Value

First, they laugh at you. Then they call it a fraud, then they say there's intrinsic value.

A recent report from JP Morgan featured the following chart, which is circulating quickly through the crypto space this morning.

It's wonderful that JPM is finally ready to admit that bitcoin has intrinsic value, and it's not at all surprising that they see the current price as overvalued in comparison to their calculations.

Yes, bitcoin is well above the mining cost at current rates, but what JPM has failed to take into account is that frequently, when miners are running a surplus, they will start hoarding coins. By withholding supply from the market when times are flush, they aim to further limit liquidity and send prices even higher.

Of course, this also has the opposite effect when prices are falling and miners are forced to sell to cover their overhead. A quick glance at the above chart shows that mining cost is closely correlated with price per coin but they do often disconnect.

Traditional Markets

Just a month ago, markets were pricing in a speedy comprehensive trade deal between the US and China. By now, they'll probably be happy if things just stay as they are. 

Last week was all about Huawei and how President Trump has made it extremely difficult for them to continue operations in the United States. This week, we have a new type of escalation in tensions between the world's two largest economies...

The South China Sea is a heavily disputed territory in which China has been asserting dominance over the last few years. Following the deterioration in trade talks, it seems that the US Navy has been emboldened to challenge China's authority in their own backyard.

Stock markets around the world have taken a bit of a dip following the naval maneuvers.

Still, looking at the big picture, this morning's dip is barely noticeable. 

Crude Awakening

The second best performing asset this year is one for which price is largely controlled by a small group of individuals. Of course, I'm talking about crude oil.

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Please note: All data, figures & graphs are valid as of May 20th. All trading carries risk. Only risk capital you can afford to lose.

Disclaimer: This content is for information and ...

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