The value of Bitcoin has increased by more than 600 percent.
One hundred hedge funds have been set up to invest exclusively in Bitcoin.
And as of the end of last month, nearly a third of Bill Miller's hedge fund was said to be invested in Bitcoin.Nathaniel Popper of the Times provides a lucid introduction to this year's steaming hot investment.
“You could get a possible run on the bank if one large investor withdraws and that causes the price to tank," says one trader. But that appears to be a minority worry. Almost everybody frets about a possible collapse of stock prices. Almost nobody, aside from grumps like JPMorganChase's Jamie Dimon, seems to think that Bitcoin will wilt in the heat of irrational exuberance.
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2 comments:
My feeling was that bitcoin cannot survive the IRS tax treatment of it. Each spend of a bitcoin is a sale of a capital asset. I imagine that no one is reporting their usage to the IRS, which is the only reason the price has not yet collapsed.
Surely taxpaying is not a top priority for Bitcoiners. And maybe it shouldn't be. If I change dollars to euros and the euros gain value against the dollar by the time I spend them, am I supposed to declare a realized capital gain?
Incidentally, Nathaniel Popper was on NPR this morning. He's written a book on Bitcoin, "Digital Gold," and, like Dimon and others, is an admirer of the blockchain setup that handles Bitcoin transactions.
Is Bitcoin's stratospheric price rise a bubble? Popper concedes that it probably is.
Slight correction: Some of those 100 new hedge funds are investing in other cryptocurrencies, but they probably have to use Bitcoin to do so.
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