People are agaga over Bitcoin and other cryptocurrencies, like they were about software programs thirty years ago, and the Internet and Telecommunication companies in the late Nineties. Remember World Com? Financial journalists think its a big story, currency-commodity/LeonardoDeVinci art ready to replace currencies and other means of exchange on earth. The journalists are novices to currency/commodity and similar markets. Their questions are prepared by writers. Journalists like to talk with the in-crowd. They interview persons with state, status and investments in cryptocurrencies, and each interviewee wants to support artificial electronic payment systems with crypto.

Bitcoin arises from a software program/technology called blockchain. I cannot describe it. Probably, most investors owning crypto have no idea how to describe blockchain technology.

It is said that 21,000,000 Bitcoins exist. I do not know if anyone knows 21,000,000 is an accurate figure. There likely has been no audit. No telling how many of the other cryptos exist.

Bitcoin trades only electronically. Where, no one will say? It seems doubtful taxing authorities know where and how trades are made. It is rumored that the unscrupulous and the criminal use crypto and Bitcoin. Someone (Peter Thiel?) says the North Koreans and the Chinese use crypto to conceal activities. Reportedly, China calls crypto an “alternative investment.”

Bitcoin trades 24 hours a day, 365 days a year. Buying and selling is always available from which ever device which supports the trading. The number of Bitcoin, sold or purchased, does not seem pertinent to persons interested in the price. Hence, there are no volume figures. It is possible for the price of Bitcoin to drop seven percent over a weekend and be unchanged from Friday’s price on Monday. There seems no regulation governing any part of purchase of sale.

SO, the price movement never stops. What drives the trading to increase the price ten-fold (March 2020 to April 2021)? Many computer generated programs founded on modeling, might be involved. Those are primarily mathematical schemes intending indicating to a buyer or seller when to act. More than one person has the skills to construct modeling, so there may be thousands of models giving buy and sell signals, perhaps at the same time. A consistency is likely in each model – everyone uses the same approach. Is modeling a completely reliable means to buy or sell?

Traditional graph reading seems less reliable. Every price move seems alone: No volume, No interest rates or fluctuations in the dollar, a weak stock market or a general buy signal and no correlations to other graphs or products, also graphed. Crypto trading suggests emotion and impulse (the ADD kids in elementary school) dictate price moves. 

So who are the traders? They seem to have the endurance of the crowd playing video games. No one seems to buy for the long term, capital gains at a lower tax rate after a year. There seems to be no buy and hold. Bitcoin has price movements of 20 percent in a week. Its volatility runs contra to long term stability.

But volatility attracts traders: Make ten or five percent in a day, or more over a week. It is volatility without certainty…Some call that the greater fool theory. The whole of Crypto facts and trading might be best said by Mark Twain, describing mining: A mine is a hole in the ground with a liar on top.”

When oil was running over $100 dollars a barrel, and going higher, studies were made on prices and actions and attitudes of market participants. Those studies have to be brought out and accessed. 

With crypto currencies it is difficult to believe participants are acting independently of one another absent regulation. 21,000,000 bitcoins times $5,000 per coin, an estimated $1,500,000,000,000 market value (1.5 Trillion dollars or more). Take a multi-millionaire who bought 500 Bitcoin in March 2020 at $5,000 a piece, $2,500,000 purchase price. Sell it today at $50,000 plus a piece, and that multi-millionaire can buy a house or houses, after taxes. It is likely that multi-millionaire is not investing alone but in concert with other liked-enriched individuals. 

The glory days of the market before 1930 may be upon us. Pooling big money, to buy or sell at a price and let the market ride, but manage it in favorable directions. Mishaps, missteps and malfeasance to small investors were common before 1930. The history of those actions and market drivers favor wealthy cliques, rings and groups. And markets that trade in the age of Reddit, Robin Hood and Internet communities are nearly impossible to track, to control and to police.