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What is happening to Bitcoin?


What the bleep is happening to Bitcoin, and why? 

Its value hit a historic peak on Monday, October 6. A bitcoin was worth $123,857 that day. 

Of course since I called that a "peak" you have probably already figured out that the value has come down since.  Pretty dramatically, too. On Monday, Oct. 20 that was down to $110,245. On November 6. $103,976. 

Then came the big drop. Before Thanksgiving, the value got as low as $86K before beginning to claw its way back up.  

Here's a link:

Bitcoin value real time chart - Google Search

In part the problem is the Federal Reserve. Bitcoin speculators want interest rates down?  Why? Because higher interest rates tend to support to dollar, and Bitcoin is likely to prove the beneficiary of a flight from the dollar.  If I can't get much of an income stream from just owning US bonds, I may well sell the bonds (for dollars, naturally) and then convert those dollars into the dominant cryptocurrency.  This impulse would then contribute to the demand for Bitcoin, pushing its value up.  

But of course that hasn't happened. Or at any rate it is only happening veeeeeery slooooowly.  The Fed is keeping the base rate up, although many speculators seem to have believed it would move more quickly in dropping that rate.  

What we can say, then, is that the speculators got ahead of their skies.  They bought into Bitcoin over the summer under the impression that the rates drop was underway and would proceed quickly. So that expectation became baked into the value of Bitcoin, and of crypto generally, and the recent dramatic fall happened because they have been disappointed. 

Of course "satisfying the expectations of speculators" is no good reason for adopting one central bank policy rather than another. Even if the speculators include the family of the President.  Which seems to be the case here. Eric Trump and Don Junior play leading roles in a "mining" company called American Bitcoin. 

Oh, wait, did I just bury a lede? 


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