GABI & XBT (1)

Bitcoin certificates resume trading following Global Advisors acquisition of XBT Provider

Press Release
Embargoed until 06.00 a.m. (CET) Tuesday 14th June 2016

Bloomberg Tickers – COINXBT.ss COINXBE.ss

Bitcoin certificates resume trading following Global Advisors acquisition of XBT Provider

The XBT Provider instruments Bitcoin Tracker One (Ticker: COINXBT) and Bitcoin Tracker EUR (Ticker: COINXBE) resumed trading at 09.00 a.m. (CET) at Nasdaq Nordic in Stockholm. Nasdaq has approved Global Advisors (Jersey) Limited as the new guarantor of the ETC’s (Exchange Traded Certificates). The XBT Group has also, effective today, become a subsidiary of Global Advisors (Jersey) Limited (GAJL).

Bitcoin Tracker One and Bitcoin Tracker EUR are designed to provide investors with convenient and liquid access to the returns of the underlying asset, bitcoin. XBT Provider is at all times fully hedged, and always holds bitcoins equivalent to the value of ETCs issued.

Johan Wattenström, CEO and co-founder of the XBT Group said:

“We would like to thank Nasdaq and Global Advisors for their hard work and commitment to achieving a fast resolution. We have been very satisfied cooperating with all involved parties and are looking forward to a long-term partnership. As part of Global Advisors, we now have the capabilities and means to accelerate the expansion of our business and provide investors with a broad range of products and services for safe and easy exposure to bitcoin markets.”

Daniel Masters, Co-Founder and Director of GAJL added:

“We believe bitcoin will change the world. Acquiring control of XBT Group is a unique opportunity to increment our strategy of creating access to bitcoin as an asset class. XBT’s products offer one-click, delta-one exposure to bitcoin via a wide range of electronic trading platforms. We look forward to sharing with XBT the benefits our best-practices and experience managing the Global Advisors Bitcoin Investment Fund.”

ENDS

For all media enquiries:

Global Advisors (Jersey) Limited
Phone: +44 1 534 513100
Email: info@globaladvisors.co.uk

NOTES:

  1. XBT Provider AB (publ) is a public limited liability company formed in Sweden with statutory seat in Stockholm. The issuer is incorporated under Swedish law and registered with the Swedish companies’ registration office under registration number 559001-3313.
  1. The XBT Group companies under the control of GAJL will adhere to all frameworks regarding compliance, reporting, risk management and corporate governance that would apply if XBT Group were conducting such a business under Jersey regulations. The full prospectus, as well as the audited annual report, is available on xbtprovider.com – a new prospectus incorporating these changes will be issued as soon as possible.
  2. Global Advisors (Jersey) Limited (a Registered Private Company – number 102184) and its predecessor companies have provided professional asset management in commodities since establishment in 1999. Based in St Helier, Jersey in the Channel Islands the company currently focuses on bitcoin investment products and blockchain technology companies. GAJL is regulated by the Jersey Financial Services Commission.
  3. The Global Advisors Bitcoin Investment Fund PLC, is an expert Fund constituted under Collective Investment Funds (Jersey) Law 1988.
  4. Mangold Fondkommission is a Stockholm based brokerage and Investment bank. As a member of Nasdaq Stockholm, the company assists XBT Provider with clearing services and acts as a liquidity provider for Bitcoin Tracker One and Bitcoin Tracker EUR.

 

USEFUL LINKS & TAGS:

http://www.xbtprovider.com/lang_en/

http://www.globaladvisors.co.uk

@xbtprovider

@GABIJersey

#bitcoin

 

How 420,000 might be bitcoin’s magic number

28th November 2012 was a slow news day. There was a lunar eclipse — the second that year — and it was the first day since 1990 that the NYPD reported that no one was shot, stabbed or slashed in New York.  There wasn’t much to report. And while journalists around the World searched for a scoop one small story went uncovered – the reward for mining a block on the bitcoin blockchain had just halved.

Commencing in January 9th 2009 when the Bitcoin blockchain initiated, each and every one of the 209,999 blocks mined, created at a rate of approximately one every ten minutes, in an uninterrupted 24/7/365 operation, had attracted a new, autonomous creation by the network itself of 50 new, never before seen, bitcoin.

A lot had changed since 2009. The first block mined had 1 transaction (the special “coinbase” transaction that captures the reward) and no other activity. By 2012 the network size and activity had grown significantly and there were 543 transactions in the “pre-halving” block.

The next block mined, at a height of precisely 210,000 blocks, as codified years earlier by Satoshi Nakamoto, had a 25 bitcoin reward.

So what?

Nothing much happened. However, a few months later the value of a bitcoin had increased dramatically. Prices had been steadily increasing as the halving approached, they ended 2011 at $7, and rose to $11 by September, 2012.

The high tick by April 2013 was $259.

Needless to say bitcoin has demonstrated stomach-churning volatility in the past and this meteoric rise met with considerable turbulence. None of this may in fact have had anything to do with the halving, it’s impossible to determine that one way or the other. But even so, there had certainly been an extraordinary chance to profit.

So now we look forward to the next pre-ordained halving, at a block height of precisely 420,000. We sit at 408,138 at the time of writing, with the next halving expected on or around 11th July 2016. At that moment the 25 coin per block reward halves again, to 12.5

It is interesting to think about whether we will see another price rise following this next event. I’m confident that there won’t be fireworks on the day itself, and indeed there is some prospect that prices will rise in advance of the event, fully discounting the effect ahead of time. I don’t see that happening currently.

At this moment the value of all bitcoin in circulation is $6.7 billion. At the old rate of issuance, that puts $575m of new coin in circulation per year. Prices so far in 2016 have been relatively stable. That tells me that there is enough new investment and real time demand to match the creation of $575m new coin. It seems obvious that if that dollar-sized demand persists, which I believe it will, that the price of bitcoin must rise to meet it.

Naysayers and haters will say — in addition to the normal criticism of bitcoin — that a drop of $288m per year in supply is not meaningful when compared to the $6.7 billion inventory.

That’s not how commodities work.

Just think about what happened recently in the oil market. Taking the USA alone we now have more oil and refined products in inventory than since records began, over 2 billion barrels. Yet the price of oil has risen 60% from the $25 low point early in the year.

OPEC has hinted that the oil production introduced to the market will no longer rise. This will do very little indeed to change the inventory picture. It will remain engorged. So why the massive rally?

Because commodities price on the rate of change of inventory, not on inventory.

When bitcoin dipped in price in June 2015 I stated passionately prices couldn’t remain in the 200’s https://www.linkedin.com/pulse/elliptic-curves-fermat-bitcoin-daniel-masters?trk=mp-author-card

I’m equally convinced that today, a price of $440 is, once again,  too low.

This article originally appeared on Linkedin on April 20, 2016

December 2015 – Program Newsletter

 

2015 – the Year in Bitcoin

 

Performance

We are delighted to report that our bitcoin investment program achieved a return of 40.57% for our most recent reporting period ending 23 December. This gain caps a very strong fourth quarter, bringing us to 37.40% for 2015 as a whole.

2015 has been an excellent year for our program. We have seen a solid appreciation in our benchmark, the USD price of bitcoin (on our valuation dates), and the program then outperformed that by 1.72% this year, and by 18% since inception. There is reason to be pleased and also to be optimistic about the future. Bitcoin has proven strongly resilient to multiple hindrances. What we have seen in 2015 is acceptance of bitcoin and blockchain as powerfully disruptive technologies. The narrative has evolved from “It’s a ponzi and money laundering scheme” (2013) to “It’s cute but it will never work, expect it to fade away soon” (2014) to “OMG – we better figure out how this works” (2015).  [Much of the historical evolution of this thread can be found on our site http://news.globaladvisors.co.uk ]

To end the year, we are retransmitting a recent piece we published, apologies if you had already seen it. However, we believe it to be a good overview and is the source of the comments on our bitcoin price prediction recently published in Reuters.

Best wished for a healthy and prosperous 2016!

An explanation of why bitcoin and Blockchain are important.

[Bitcoin, bitcoin, Blockchain, blockchain]

Nomenclature

“Bitcoin” – a computer network.

“bitcoin” – a currency on a computer network.

“Blockchain” – an open, synchronized, peer to peer, immutable, global ledger.

“blockchain” – a ledger, similar to Blockchain but closed, private or permissioned.

“TCP/IP” (Transmission Control Protocol/Internet Protocol) – the basic communication language or protocol of the Internet.

 

I’ve had innumerable conversations about bitcoin and Blockchain. I can’t think of another topic in my business career to date that has stimulated such broad and deep curiosity. I am intrigued. It is hard to pinpoint what the buzz is really about and why there are so many approaches to the subject, so I have attempted to capture it here.

Technology has permeated every aspect of our lives, sometimes explicitly and sometimes in ways we don’t readily perceive. We have been down a road that started with a green screen and a hard drive isolated from the outside world. Then we started networking our computers with dial-up modems to connect across phone lines. Next came high-speed connections and mobile. “Sharing” was the next leap. Sharing our social profiles, our information and work in the cloud, our thoughts through blogs, our careers on LinkedIn, our real-time lives on Periscope. Sharing has gone as far as to create a new paradigm – “The Sharing Economy”, where we even go so far as to share our homes.

In 2009, Satoshi Nakamoto. Satoshi created bitcoin – in his own words “a peer-to-peer electronic cash system”. Satoshi, like many great inventors, didn’t start from scratch. He built on a number of recent technologies and developments. Some had failed, like Hash Cash and e-Gold. Some had recently become part of the math and science lexicon, like SHA 256 (a secure hashing algorithm which can create a tiny, unique identifier for any amount of digital data) and Elliptic Curve Digital Signature Algorithms (ECDSA – which creates public addresses and private keys to permission changes to what is held at those addresses).

He didn’t know what he had unleashed. One wonders how far Tim Berners-Lee might have imagined the influence of his work would spread at the moment he first managed to connect two computers and gave birth to the Internet.

So what was so significant about Satoshi’s creation? Satoshi created the World’s first permanent and public memory – and this has profound implications.

Let’s work backwards, starting with bitcoin. Why? Because if one tried to explain TCP/IP to the uninitiated the complexity would be a downer. However, show someone how they can instantaneously send data in text, video, numeric or pictorial form across the World you have their attention.

Bitcoin has a value. At any given moment, 70-odd exchange venues bring together willing buyers and sellers of this digital currency. You can exchange Euro, Sterling, Dollars, Yuan, Krone and even Nigerian naira for bitcoin. To all intents and purposes trading proceeds in bitcoin just like in any other currency pair. Rather than record your balance on a bank statement or in physical cash though, bitcoin only exists as a ledger entry. You pay over your ‘fiat’ money in order to increase your personal balance on that ledger. The ledger in question is the Blockchain. Thousands of copies of this ledger are maintained on servers distributed globally. Those servers can be as small as an individual computer or as large as a massive data centre. The ledger is “distributed” – so the perfect inverse of the legacy bank system where one central authority controls the ledger and changes to it. I can tell you easily who runs HSBC’s ledger. It’s hard to make that determination for the Blockchain, but in short, it is everyone – and no-one. Satoshi’s brilliance imparted on the Blockchain magical characteristics: distributed, unforgeable, synchronized, locked, immutable, time-stamped and ordered are just some. The Blockchain protocol delivers all these things in the absence of any centralised authority. The Blockchain is in the order of 40GB of data and if you have a copy (which is publicly available) sitting on your laptop, you have a precisely accurate version and account of every bitcoin transaction that has ever been done. An immutable Public record. As technologist Jeff Garzik put it “Blockchain is an audit log, a difficult to censor history”.

So what is a block? It is just a file. There are over 386,000 blocks in the Blockchain at the time of writing, with a new one created approximately every 10 minutes. Each file contains information that, once locked at the end of the ten-minute cycle, becomes a definitive record of all bitcoin transactions that took place in precise order. Each block contains changes to the ledger that occurred in the preceding 10-minute window. There are 10 to the power 48 addresses available on the Blockchain. 10 to the power 48  “pages in the ledger”. Each address has a unique private key. Anyone with the private key – usually a 32-byte hexadecimal number – can make changes to the unique address which that key controls. Most commonly, the ledger functions much like a bank ledger would. Bob has a page on the ledger on which is written his balance of 1 bitcoin. Bob want to send Alice that bitcoin so the balance in his account must go to zero and the balance in Alice’s account must increment by 1. If it were dollars you would call Citibank and ask them to make that change. With bitcoin Bob would apply his key to an instruction – using a digital wallet – whereby his private key “signs” the instruction and creates the transfer. Once signed the instruction is broadcast over the Internet, is recorded by all the computers that form the bitcoin network and — once the latest 10-minute cycle expires — that block, that data file, that next iteration of the ledger, becomes locked, agreed, published and distributed – never again to be altered.

This facilitates a ledger, better than the legacy version, perfectly aligned with the internet, offering all the functionality that a bank ledger would offer but so much more and all in the absence of a central authority or controlling third party.

The “Eureka!” moment here is that ANY data can be stored in the blocks of the blockchain.

Now we can look past bitcoin as a currency and view it as a disruptive technology.

For the rest of this article I will describe use cases where the  world businesses may be remodelled using bitcoin and blockchain, as well as some comment on bitcoin valuation.

Use Cases 

A key concept in taking this forward is the “Smart Contract”, using one of bitcoin’s most powerful characteristic: bitcoin is not just money; it is programmable money.

A Smart Contract comprises an IF THEN statement and an “Oracle”. An Oracle can be any internet-based, accessible data source or sources. An example of an Oracle would be the settlement price for Heating oil as published on the CME website, or the temperature in Chicago at a given moment as published on Weather.com.

Two counterparties could deposit an amount of bitcoin into an address on the Blockchain and IF the Oracle reads a given result THEN the bitcoin would be sent to one of the contract parties as determined by the code.

Bringing in more features, IF your dog’s GPS chip shows a circumnavigation of Central Park, THEN pay your dog walker $25 in bitcoin.

IF your electricity meter shoes 50Kw of energy consumed THEN pay your electricity company. IF General Motors receives $25,000 from your wallet for the car you are standing next to on the showroom floor THEN a) Issue an unlock code for the car to your phone, b) update your Blockchain based insurance to cover the new vehicle, c) update your Blockchain based DVLA or DMV records to reflect ownership – then just drive off.

What bitcoin and Blockchain can do is to merge your financial assets with your digital life. You no longer send discrete instructions to your bank, broker or credit card company to make payment for goods or services. The goods and services pull money, with your permission, as you consume them. In each case you deal peer-to-peer with the counterparty or provider.

So now we can list other potential use cases:

  • Insurance – multi-party micro-insurance where no central underwriter or insurance company exists, risks are socialised to many private insurers and payments are made directly and automatically.
  • Crowdfunding – raising equity in a global currency from large numbers of investors where a single unique copy of both offering information and ongoing accounting information are made public, secure and immutable.
  • Trading – Stocks, bonds, commodities can be exchanged either as Smart Contract investments or by physically tagging the assets with a fraction of a bitcoin – known as “colouring” bitcoin. The bitcoin so coloured represent the ownership document for the asset and can be instantly and frictionless exchanged.
  • Peer-to-peer lending – free global markets in lending bitcoin based on reputation, algorithmic credit scores, limitless counterparties.
  • Mesh networks and distributed storage – these are technologies that exist, sharing resources such as bandwidth, digital storage, power grids. Bitcoin allows thousands of payments in small denomination to be made allowing for example spare capacity on millions of computers to be shared by others. The barrier to this technology in the past has been how to make payment efficiently.
  • Accounting – a company that recorded all of its transactions with others on the Blockchain would be able to produce real-time accounts and audit.
  • Identity – Pictures of faces can be stored on the blockchain, verified by third parties, linked to activity leading to a global passport.
  • Secure document signing – an obvious application with document being stored on the Blockchain or being stored remotely with a unique hash of that document stored on the Blockchain to demonstrate control at a given moment.
  • Patent recording.
  • Artistic copyright.
  • Property Title.
  • Provenance.

 

Satoshi did not conceive these examples when he created bitcoin it was, in some ways, an accident.

Valuation – Bitcoin $4400

These considerations lead to my investment thesis in bitcoin itself. Bitcoin is a currency, currency as a content type, programmable money and real estate on the Blockchain.  It will not replace Fiat money, it will form part of the product of a migration away from a narrow, monotonic, Fiat currency system we now know to a rich, multi-currency, user-friendly ecosystem of payment mechanisms – all tailored to purpose. The utility that bitcoin brings in doing things that consumers want yet Fiat money will never be able to do is the dominant factor. The promise of distributed ledger technology is so great and the currency that laid the foundations of this revolution will surely be a big part of the financial future that it brings.

I believe strongly in the price appreciation potential of bitcoin. The investment thesis centers on the idea that bitcoin is a cheaper, faster and more global form of currency payment than can be seen in any other form. It also takes tremendous strength from being fully aligned with the internet. Continuing with our theme “money as a content type” we know that today we send email, post on Instagram, Facebook, blog sites, YouTube etc. You can embed text, video, pictures and sound in such communications. Well with bitcoin you can embed money too.

In terms of replacing traditional money the math gets very interesting. Look at a model available online at: http://worldbitcoinnetwork.com/BitcoinPriceModel-Alpha.html. This model theorizes that as money moves out of traditional forms into bitcoin the price of bitcoin would increase to reflect a change in exchange rate. Now it is not necessarily true that if you sell a dollar and buy bitcoin the price of bitcoin goes up by a fixed amount – there is some elasticity in that relationship. But none the less one can expect modest flows out of traditional money into bitcoin to create some relative change in price. You would expect the value of traditionally money to go down and bitcoin up. This model makes the assumption that if you sell $1 of, say, gold, then the total market capitalization of all bitcoin rises by $1. Currently at a price of around $400 you can assume bitcoin has replaced 01% of the $1,000 billion E-commerce market and 0.2% of the $500 billion remittances market. You can explore scenarios online but if bitcoin replaces 1% of gold, 2% of E-Commerce, 2% of the remittance market and 0.2% of the Global Money Supply the price would, by this math, rise to $4400.

This math is what makes investing in bitcoin so strange. Bitcoin is a massively volatile asset on any given day. But long term our view is that only one of two things happens; prices go to zero or $4400 plus. In other words, opportunity is skewed dramatically to the upside on a 10 to 1 ratio.

Therefore, there is little to be gained by trying to time the market when the price is $400. The short term catalysts for bitcoin are clear; a resolution of Global regulations, the so-called bit-license promulgated by the New York Department of Financial Services, Laws created by the Jersey Financial regulator, the emergence of regulated exchanges (by companies such as ItBit, coinbase, and coinsetter) and the emergence of other exchange traded products such as ETFs on bitcoin. The risk in our view is not that you buy at 300, 400 or 500.

One risk is that prices go to zero. The main risk in my view, is that one misses a large appreciation in value though under-investment and hesitation.

 

This document is issued by Global Advisors (Jersey) Limited (“GAJL”), which is regulated by the Jersey Financial Services Commission. It is also registered with the Commodity Futures Trading Commission (the “CFTC”) as a Commodity Trading Advisor and is a member of the United States National Futures Association. Pursuant to an exemption from the CFTC in connection with accounts of “qualified eligible persons,” this document does not require to be, and has not been, filed with the CFTC. The CFTC has not passed judgement upon the merits of participating in any segregated accounts or collective investment funds managed by GAJL or the adequacy of this document. The Programs are available only to “qualified eligible persons” as defined in Rule 4.7. This document does not constitute an offer to enter into any Programs / segregated account or to buy or sell shares in funds which GAJL manages. The prospectuses of the Funds are the only authorised documents for an offering of shares in the Funds. The prospectuses may only be distributed in accordance with the laws and regulations of each appropriate jurisdiction in which any potential investor resides. Investors are reminded that past performance is not indicative of future performance and that they might not get back the amount that they originally invested. Investment in a Program carries a high degree of risk. The Program and the Funds are only suitable for sophisticated investors who are aware of the risks in investing in highly volatile products. The contents of this message and the document do not constitute, nor should be construed as, investment advice. Potential investors should seek their own independent financial advice. The information contained in this document is strictly confidential and is intended only for use of the person to whom it has been provided by GAJL. No part of this document may be distributed to another person, and/or reproduced, without GAJL’s prior written permission. The names, logos, slogans or mottos identifying GAJL’s products and services are proprietary trademarks/service marks of GAJL, and may not be used in any way without GAJL’s prior written consent. GAJL has taken all reasonable care to ensure that the information contained in this document is accurate at the time of publication; however it does not make any guarantee as to the accuracy of the information provided.

 

Record highs predicted for bitcoin in 2016 as new supply halves

2016 could prove to be the year that the price of bitcoin surges again. Not because of any dark-web drug-dealing or Russian ponzi scheme, but for an altogether less sensational reason – slower growth in the money supply.

Bitcoin is a web-based “cryptocurrency” used to move money around quickly and anonymously with no need for a central authority. But despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.

The reason 2016 looks set to be different is that bitcoin’s price is likely to be driven in large part by similar factors to a traditional fiat currency, following the age-old principles of supply and demand.

To keep reading please use the link below:

http://reut.rs/1SaqCKl

November 2015 – Program Update – Jamie Dimon’s Magical Realism

JAMIE DIMON’S MAGICAL REALISM

Magical Realism can be defined as what happens when a highly detailed, realistic setting is invaded by something too strange to believe.

We are delighted to report that our bitcoin investment program achieved a return of +13.55% for our most recent reporting period ending 24th November. This gain follows a +19.95% profit achieved during the previous month, with further significant gains in the post-reporting period (+12% as at the time of writing). While there is substantial volatility our performance reflects the fact that bitcoin prices are on the move, up.

The period was punctuated by one of the most violent rallies in our experience. Seemingly out of nowhere the Chinese markets erupted in price and volume over a three-day period. After frenetic activity prices and volumes then dropped, erasing over half the gains.

The fund has remained fully invested in bitcoin while underweight GBP. Orders were placed to reduce leverage below 100% at levels somewhat higher than the eventual 4 November high of $504. We felt that selling would materialize at these levels, but it happened sooner. We therefore missed an opportunity to enhance our returns by trading the pullback.

Our views however remain the same: our two-year price target for bitcoin is in excess of $2000 (six times this period’s settlement price) and as such trading a pullback to enhance returns is dangerous and must present exceptional risk reward. We just didn’t quite get there. More importantly, what pullback there was held the breakout level of $300 – which is now providing excellent support and, seemingly, a launch-pad toward higher numbers.

In terms of causality some of the culprits(s) were hard to identify. The FT carried the story of MMM, a pyramid scheme using bitcoin promulgated in China. We just couldn’t see the footprint of this. The volumes were too high; the forensics of the blockchain didn’t support it. MMM may have been a catalyst, and perhaps a strong one, but not enough to justify over a billion dollars a day of bitcoin trading for three consecutive days. It felt more like a tipping point. For some time, China has been cooling. Domestic investors have faced sharply falling equity, commodity and real estate prices. The Chinese Government has intervened to slow the depreciation of the Yuan, introducing magnified trading ranges; however the direction of travel is clear. So it seems that Chinese interest in bitcoin has exploded, whether for diversification, or perhaps as a vehicle to evacuate capital from China, or even as a ticket to a pyramid scheme. We care not which but the effect is palpable.

So it seems we can’t let a month go by without some commentary on the backchat to bitcoin. In that regard I wish Gabriel Garcia Marquez had explained Magical Realism to Jamie Dimon.

In One Hundred Years of Solitude Marquez described Macondo – a tropical village where everyone is fed and happy and no one dies. Gypsies arrive in Macondo with wondrous things, including ice, which is described with awe, like an illusion, which burns to the touch and then disappears without a trace.

Jamie Dimon inhabits a highly detailed, realistic setting. He sits atop monolithic financial institution that has become so large and powerful it can barely be distinguished from the Governments, Central Banks, Regulators and Sovereigns that it works with. Indeed, we recall during the darkest days of the financial crisis it was JPMorgan to whom the US Government looked for both guidance and direct action. Former shareholders of Bear Stearns can attest to that. Since the crisis JPMorgan has consolidated an unassailable position in global finance while admitting to a vast litany of transgressions, for which tens of billions of dollars in fines have been paid – to the Governments, Central Banks and Regulators. The “clean up” has been far reaching and has demised once great, competitor banks like UBS, Barclays, RBS and others. JPMorgan have always been first to step up, first to confess and first to settle and pay. Jamie has proved true the epithet “Go ugly, early”

The hard fought, costly, walled garden from within which JPMorgan operates will generate $95bn in revenue this year. So when Jamie talks about bitcoin he is looking down from his ramparts – and he lets us all know that.

“There will be no real-time, non-controlled currency in the world. There is no government that is going to put up with that for long. It’s just not going to happen … When the Department of Justice calls and says, ‘it’s an illegal currency and it’s against the laws of the land, and if you do it again we will put in you in jail’ it’s over” – Jamie Dimon at the Fortune conference, November 2015.

Ironically, no-one, but no-one is more familiar with the “Call from the Department of Justice” than him. The DOJ enforcement website can be searched, and if you do so for JPMorgan you will find dozens upon dozens of cases.

Jamie’s comments are his First Amendment entitlement. He may well believe what he says. But his entire premise is wrong. Bitcoin was not conceived or engineered to avoid government control any more than the Internet was designed to do so. It was designed to do banking better. And it does.

The Bank of England, in concert with the Financial Conduct Authority, HMRC and the UK Government have established a more interesting position.

The UK Government is somewhat sick of the selection of domestic banks they face. They have also been instrumental in the “Clean up” but it’s apparent from the comments of Osborne and Carney that they are still far from impressed with both progress and status. They are fed up. No amount of fines, imprisonments, new regulations, restructurings, good bank / bad bank, public ownership seems to prevent fresh scandals. Small so-called “challenger” banks are making few inroads – they seem to be offering internet-based, small-scale version of the legacy constructs. Now, it would be hubris even to suggest that bitcoin and blockchain are the alternative or even remotely evolved to a point of practical functionality. What is clear however is that important people in positions of governance see bitcoin as a fresh, new approach, with eerily appealing comparisons to widespread digital disintermediation in other fields of commerce. In a world devoid of effective new solutions to enduring problems within the financial system bitcoin is a breath of fresh air, and perhaps while only a “vision” at the moment, we are reminded that in the land of the blind, the one-eyed man is king. 

This document is issued by Global Advisors (Jersey) Limited (“GAJL”), which is regulated by the Jersey Financial Services Commission. It is also registered with the Commodity Futures Trading Commission (the “CFTC”) as a Commodity Trading Advisor and is a member of the United States National Futures Association. Pursuant to an exemption from the CFTC in connection with accounts of “qualified eligible persons,” this document does not require to be, and has not been, filed with the CFTC. The CFTC has not passed judgement upon the merits of participating in any segregated accounts or collective investment funds managed by GAJL or the adequacy of this document. The Programs are available only to “qualified eligible persons” as defined in Rule 4.7. This document does not constitute an offer to enter into any Programs / segregated account or to buy or sell shares in funds which GAJL manages. The prospectuses of the Funds are the only authorised documents for an offering of shares in the Funds. The prospectuses may only be distributed in accordance with the laws and regulations of each appropriate jurisdiction in which any potential investor resides. Investors are reminded that past performance is not indicative of future performance and that they might not get back the amount that they originally invested. Investment in a Program carries a high degree of risk. The Program and the Funds are only suitable for sophisticated investors who are aware of the risks in investing in highly volatile products. The contents of this message and the document do not constitute, nor should be construed as, investment advice. Potential investors should seek their own independent financial advice. The information contained in this document is strictly confidential and is intended only for use of the person to whom it has been provided by GAJL. No part of this document may be distributed to another person, and/or reproduced, without GAJL’s prior written permission. The names, logos, slogans or mottos identifying GAJL’s products and services are proprietary trademarks/service marks of GAJL, and may not be used in any way without GAJL’s prior written consent. GAJL has taken all reasonable care to ensure that the information contained in this document is accurate at the time of publication; however it does not make any guarantee as to the accuracy of the information provided.

Therewillbe

Bitcoin – There will be blood

23 years ago I walked onto the NYMEX floor at the old World Trade Centre. In my then, brief, 30 odd years of life I had never experienced sights, sounds or smells like it. As the market closed the scrum of bodies dissolved and the look of exhaustion, fear and in some cases desperation on the faces that turned towards me was haunting. I will never forget it.

Natural gas had just broken above $2 per MMBTU for the first time in history. That move heralded a secular change in the value of a commodity which had lain dormant since its price was deregulated a few years earlier. A few factors set the move in motion, largely a move from coal to gas fired power generation and domestic heating of a burgeoning number of new US homes. All amplified by a lack of winter storage. The reasons were probably unknown to the traders.

Natural was heading for $15.

Today we don’t have an exchange floor in bitcoin or any other commodity. If we did then the faces at the end of play yesterday would have looked the same. Bitcoin exploded in price in the culmination of several days of increasing upward pressure. And then collapsed.

Who knows what led to the meteoric rise? My guess is the real driver is a resurgence of demand for bitcoin in China as one of the few non-Chinese related assets available to domestic investors ring-fenced  in an otherwise weak-China world. Bitcoin offers one of the few alternative. The stories circulating about short term, bitcoin financed, ponzi schemes such as MMM are good cocktail party material but don’t rise to  plausible causality. The volume on Chinese exchanges has far outstripped any possibility of that.

We have maintained our 100% long position. Admittedly we did place some sell orders above $600 – though knowing my propensity for greed in bull markets I wonder if I might even have cancelled-when-close.

Things are quieter today and, like the changing of the seasons, all of a sudden $400 bitcoin looks cheap.

That’s a price I only dreamt of a month ago.

This article originally appeared on Nov 05, 2015