Bitcoin trading with paper tiger; Fed can’t job a rate rise

The Securities and Exchange Commission is scheduled to announce Friday whether the Winklevoss twins can begin marketing their bitcoin ETF.

This is a fund much like GLD or SLV, which are paper contracts to buy or sell gold and silver. It’s a vehicle to get into these commodities without buying the physical metal.

In bitcoin, it will allow you to track the value of the cyber-currency without setting up a digital wallet to buy the cyrpto-currency.

Now I’m sure the marketing material will tell you it’s much safer than getting into bitcoin itself, because the ETF cannot be hacked and yada yada yada.

However, the Winklevii as I call them, who lost ownership to Facebook to Mark Zuckerberg in a contentious lawsuit going back to their days at Harvard, can’t tell you that the value of the ETF will not fall in the event of a hack as was the case a few years ago with a Japanese entity called Mt. Gox.

Bitcoin lost a little less than 50% of its value overnight after this “magical” exchange said it was hack and most of the digital currency it was holding for others were taken.

Now if the bitcoin ETF follows the GLD or SLV funds, it will not hold much bitcoin at all.  The metals ETF don’t give you the precious metal when you buy, no you have a certificate and the funds settle most transactions in cash, no gold or silver.

So I have not seen or expect to see a sharp rise in bitcoin value should the SEC approve the electronically traded fund.


The Labor Department’s reported 235K jobs created in the first full month in office.

This number is strong enough to give Janet Yellen & Co. reason to raise rates next Wednesday given the other strong data points. Certainly the bond market pros see it coming as the yields are rising on all government debt.

Despite all this and the thought that the Fed will lose Wall Street cred if it does not raise, I believe she will blink and say “while conditions have improved and their was much discussion, yada yada yada, the Federal Reserve will hold rates for now.”

They will point to inflation being below trend, which is 2%. They will point to a lowering of Q1 GDP projections and say it needs more time.

Truth is as I have said all year, there will be one rate rise, if that for 2017. And it will not be the Ides of March. Et Tu, Brute?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s