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Bitcoin was the perfect post-crisis bubble: Morning Brief

Myles Udland
Markets Reporter

Tuesday, November 26, 2019

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Reflexive contrarianism

It's Thanksgiving week and what better way to celebrate than to remember the crypto mania that started to really spread its wings during the 2017 holiday season.

Over Thanksgiving weekend 2017, Bitcoin surged above $9,000 for the first time. By the week of Christmas, bitcoin had topped $20,000.

Then the bubble popped. The price of bitcoin fell more than 70% from late 2017 through December 2018. Bitcoin evangelists, of course, will remind us that after bottoming in early December 2018, bitcoin has more than doubled.

But as we near the end of the decade, it is time to reflect back on which financial market moments help define this post-crisis decade. It's a decade that saw U.S. investors enjoy an almost unbroken bull market despite a similarly steady stream of calls that the top was near and the pace of gains unsustainable.

It's also a decade of investing that saw several mini-bubbles come and go. App economy plays like Groupon (GRPN) and Zynga (ZNGA) hit public markets before cratering. Marijuana stocks were all the rage and then that bubble burst. The sneaker bubble appears next in line.

No mini-bubble, however, captures the ethos of this decade quite like what happened with bitcoin and crypto assets.

The 2010s were a decade defined by reflexive contrarianism and a belief that alternative facts are as good as, well, actual facts. And as Bloomberg's Joe Weisenthal noted on Monday, during the crypto bubble and in the months after — when the true believers were in full-on denial that the bursting bubble was in fact bursting — the hot thing to say was that it's not really bitcoin but blockchain technology that is most interesting.

Bitcoin has seen better days. REUTERS/Anton Vaganov

That idea, as Joe notes, has pretty much been put to rest. Yes, there are still many companies working on blockchain applications. That isn't going to end. But "blockchain technology" is more or less just a different way to organize information, a database that follows specific rules. The public-facing mania and interest in blockchain that accompanied the parabolic rise in the price of bitcoin is over.

Now, we are just left with bitcoin and the realization that esoteric technological developments don’t create readily-investable opportunities overnight. Iced tea never needed the blockchain.

Which is fine. Bitcoin is an interesting asset that is highly-volatile and has garnered considerable interest among institutional investors. There's just not a whole new way to organize civilization coming because the price of this digital asset went higher and more people grew curious about what the deal was with bitcoin and the technology stack on top of which it sits.

The second-order "smart" take that an obvious bubble in the price of bitcoin was actually masking some latent and more substantive revolution in how digital databases can be organized is just what this decade ordered.

This take offered a sense that the thing we were all seeing with our own two eyes wasn't really there.

A story for this decade if there ever was one.

By Myles Udland, reporter and co-anchor of The Final Round. Follow him @MylesUdland

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What to watch today

Economy

  • 8:30 a.m. ET: Wholesale Inventories month-on-month, October preliminary (-0.4% prior)

  • 9 a.m. ET: FHFA House Price Index month-on-month, September (0.4% expected, 0.2% in August)

  • 9 a.m. ET: S&P CoreLogic CS 20-City MoM SA, estimated 0.3%, prior -0.16% 

  • 9 a.m. ET: S&P CoreLogic CS 20-City YoY NSA, estimated 2.01%, prior 2.03%

  • 10 a.m. ET: Richmond Fed Manufacturing Index, November (6 expected, 8 in October)

  • 10 a.m. ET: New Home Sales, October (708,000 expected, 701,000 in September)

  • 10 a.m. ET: Conference Board Consumer Confidence, November (127.0 expected, 125.9 in October)

Earnings

Pre-market

  • 7 a.m. ET: Best Buy (BBY) is expected to report adjusted earnings of $1.03 per share on $9.70 billion in revenue

  • 7:30 a.m. ET: Dick’s Sporting Goods (DKS) is expected to report adjusted earnings of 38 cents per share on $1.91 billion in revenue

  • Other reports: Abercrombie & Fitch (ANF), Burlington Stores (BURL), Hormel (HRL), Dollar Tree (DLTR)

Post-market

Read more

Top News

Chairman and CEO of Alibaba Group Daniel Zhang Yong attends the Alibaba Group's listing ceremony at the Hong Kong Stock Exchange (HKEX) in Hong Kong, Tuesday, Nov. 26, 2019. (AP Photo/Kin Cheung)