"Everything you need to know about gold"
(The original version of this article was published at Talkmarkets.com as New Lows For Bitcoin and Ripple )
Cryptocurrencies are collapsing. Just a few hours ago today (Thursday), the price of Bitcoin (BTC-USD) touched $60k, down 23% from its $78k price in my original article on TalkMarkets two days ago. The selloff in Ripple (XRP) was worse. Its price at about the same time as Bitcoin reached its latest nadir, was $1.14 – down down almost 30% from its $1.60 print on Tuesday.
Here are some of the latest news items concerning government and central bank stances on cryptocurrencies. Each item is followed by my comments…
…..June 18, 2025 (Reuters) – South Korea’s central bank governor said on Wednesday he was not against issuing won-denominated stablecoins but had concerns about managing capital flows. At a press conference in Seoul, Rhee Chang-yong said “Issuing won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce use of dollar stablecoin. That in turn could increase demand for dollar stablecoin and make it difficult for us to manage forex,”
Chang-yong is quite clear that potential “demand for dollar stablecoin and (would) make it difficult for us to manage forex,”
My comments… Who cares? Should adoption and use of cryptocurrencies be dependent on any government or central bank’s ability “to manage foreign exchange“? If cryptocurrencies provide a possible altrernative to fiat currencies, then, complicating things by adding another layer of regulation and increased market intervention doesn’t benefit anyone.
…..Febuary 11, 2025 (The Times) The governor of the Bank of England has downplayed the idea of launching a central bank digital currency, warning that there is still no “must-have” reason for developing the technology.
Speaking to an audience at Chicago Booth Business School in London, Andrew Bailey said there needed to be a case for providing benefits that existing commercial alternatives could not.
My comments… Bailey is correct. There is no “must-have” reason for developing the technology FROM THE PERSPECTIVE OF THE BANK OF ENGLAND. Anyone who wants privacy in financial transactions and an alternative to ongoing monetary debasement and regulation would disagree.
…..June 17, 2025 (NBC News) The United States Senate passed a landmark cryptocurrency bill that would establish the first regulatory framework for issuers of stablecoins. Sen. Bill Hagerty, R-Tenn., author of the GENIUS Act, said in a floor speech “With this bill, the United States is one step closer to becoming the global leader in crypto. This bill will cement U.S. dollar dominance, it will protect customers, it will drive demand for U.S. treasuries.”
The article pointed out that Washington continues to wrestle with how best to regulate the fast-growing cryptocurrency industry. Just two Republicans — Rand Paul of Kentucky and Josh Hawley of Missouri — voted against it.
My comments… How does “becoming a global leader in crypto” reestablish U.S. dollar dominance? If stablecoins are tied to the dollar, then what is the point? If approved by the House, the bill is exactly as stated above: “the first regulatory framework for issuers of stablecoins”. Thumbs up to Senators Paul and Hawley!
CONCLUSION
The global trend in cryptocurrency regulation should be seen for what it is – a continuation of governmental efforts to control and regulate every aspect of money and finance.
Any positive benefits derived from the growth and use of cryptocurrencies are minimized and negated when government gets involved. The risk to high-flying Bitcoin in terms of its price and popularity is greater than other cryptocurrencies because it is a big ($2T) target.
Two trillion dollars is a lot of money currenly flying under the radar. Probably not for long, though. (also see Will Cryptocurrencies Become Fiat Currencies?)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED
PRICE VS VALUE
Most investors do not understand the difference between price and value. If they did, the prices they are willing to pay to invest in certain things would either be higher or lower, depending on the fundamentals. Usually, though, an investor is more likely to overpay; either out of ignorance or as the result of wishful thinking. Case in point: Bitcoin.
BITCOIN AND OTHER CRYPTOCURRENCIES
As an investor, I need to be able to analyze and assess real fundamentals in order to arrive at realistic valuations for prospective investments. Only after the valuation process can a price be applied which is a reasonable estimate of value.
The typical Bitcoin investor doesn’t have a clue as to what the value of his investment is. What he does know, is that its price has gone up – a lot. The price action is what attracts the typical investor; not the fundamentals.
As a result, the price of Bitcoin bears practically no relationship to its fundamental value.
So, what is the value of Bitcoin? First, it is important to note that the value of Bitcoin is not a function of the token itself, or the limited number of tokens. This is also true of other cryptocurrencies. The value of Bitcoin and other cryptocurrencies is that they can be exchanged between individual parties PRIVATELY on a decentralized blockchain. That is a hugely positive characteristic which is the primary basis for realistic valuation of most cryptocurrencies.
However, we live in a highly regulated society. Our financial system is the epitome of stringent regulation and control. That control is evident in the process involving financial transactions and the transfer of money, including taxation.
Financial transactions on the blockchain are unregulated and can go unreported. As the dollar volume of transactions increases, so does the potential loss of tax revenue.
It is naive and short-sighted to think that any government which claims to have regulatory authority, either directly or through one of its agencies, would not take steps to intervene in areas where financial activity is perceived as a threat to its own control and power. (see Janet Yellen Re: Cryptocurrencies And Terrorists)
A QUESTION FOR INVESTORS
If the value of Bitcoin lies in the private transfer of ‘money’ between investors, and that value is the same basic fundamental that applies to other cryptocurrencies, then why is the Bitcoin price at or near $100,000 while the price of XRP is only $2? Is Bitcoin wildly overpriced; or are other cryptocurrencies underpriced?
There are unique characteristics for various cryptocurrencies and there are differences that make certain ones more attractive than others depending on useful value to individuals. These include fees, transaction speed, conversion costs, stable value tokens, etc. Nevertheless, the decentralized private transfer between individuals remains the common attraction and basis for value in most cryptocurrencies.
IS BITCOIN MONEY?
Bitcoin has been described and characterized as a form of money. But, is it?
Money has three distinct characteristics: medium of exchange, measure of value, store of value. Bitcoin and other cryptocurrencies are, to a limited extent, mediums of exchange. But, they are not measures of value.
Money is used to value other items – by price. Under our current monetary system, we place a relative value on various goods and services by attaching prices to them. The goods and services we buy and sell, our own labor, education, etc. – all have value. The value of various items is determined and a price is affixed using a commonly accepted medium of exchange. Currently, that medium of exchange is the US dollar. For Bitcoin to be considered money, it would need to function as a measure of value. In other words, how many Bitcoins will it take to purchase your next vehicle? or dress? or steak dinner at your favorite restaurant?
We don’t know because there is no reasonably reliable application of value for Bitcoin. In other words, how much is Bitcoin worth? At least with US dollars – for now, anyway – they serve as a medium of exchange and a measure of value.
There is no possibility for Bitcoin to be considered a store of value. Being a store of value requires a retention of purchasing power over long and indefinite periods of time. It is impossible to determine Bitcoin’s value because there is no history of sufficient length to provide evidence that it serves as a store of value. Sufficient evidence would require centuries.
How do you determine a value for nothing, i.e., Bitcoin? A house has value. Companies that produce and provide goods and services have value. Real money (i.e. gold) has value. The much-maligned US dollar, a paper substitute for real money, has a commonly accepted, implied value, even though it continues to lose purchasing power.
Bitcoin is a digital creation which has no value in and of itself. As such, it can never be used as a measure of value for anything else. Think of it this way: How many Bitcoins is your house worth? How many Bitcoins will your next car cost? If you can answer those questions without any calculations, you will know that Bitcoin has become “a generally accepted form of money”. (see Is Bitcoin Money – Does It Have Value?)
CONCLUSION
What is the value of a tulip bulb? (see Tulip Mania: About The Dutch Tulip Bulb Market Bubble)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED
INVESTMENTS TO AVOID IN 2025
While most other analysts usually tell you where to invest, I prefer to tell you where NOT to do so; at least at this particular time. The backdrop of a deteriorating world economy, recurring financial catastrophes and the volatility which accompanies them, plus exacerbation of existing problems by governments and regulatory agencies, make it difficult to recommend investments on a fundamental basis.
Do cryptocurrencies still have value? Some would say yes, absolutely. Others might be rethinking previous expectations for cryptocurrencies. We give the nod to the former – with some strong caveats.
The value of cryptocurrencies has to do with the transaction process. Bitcoin and other cryptocurrencies have value because they provide a process for the private transfer of money.
IS BITCOIN STILL THE NEXT BIG THING?
Remember when Bitcoin and other cryptocurrencies were the “next big thing”? For most investors, it was only because the prices were going up in radical fashion.
The anticipation of hitting it big coupled with FOMO (fear of missing out) overcame fundamental analysis and common sense. Aside from the techno geniuses who created them, and maybe a few savvy ‘miners’, who else could explain the process?
The word “process” is critical to an an elementary understanding of any imputed value derived from cryptocurrencies. Simply stated, the value offered by Bitcoin and its counterparts was this: they provided a digital (convenient) process for the ‘private transfer of money’.
Proponents of Bitcoin claimed that the elimination of a middleman/bank and the resulting privacy were huge benefits; and they are.
The privacy is attractive for tax and regulatory reasons; taxes and regulations are obstacles to free trade. But it wasn’t then, nor is it now, realistic to think that any private transaction system will be allowed to function unimpeded for long, if it is successful.
Those who claim to have regulatory authority would not sit by idly without making a concerted effort to intercede. The potential loss in tax revenue would cause any government to declare monetary war.
THE LONG ARM OF GOVERNMENT
In effect, they have. Over the past two years, a long list of examples highlighted by the United States Federal Reserve and U.S. Treasury have stated their concern and implemented preliminary discussions regarding the official use of cryptocurrencies. Other countries have announced variations in a similar vein.
The stated justifications for ‘official’ sanction and use of cryptocurrencies, whatever they may be, are primarily political in nature. Whether it is Janet Yellen citing her concern about money laundering by terrorists, or some other high profile politician clamoring about monetary stability, or consumer advocates calling for user protection; politics will preempt the markets.
Efforts to regulate and control the use of cryptocurrencies remove the basic, singular advantage of cryptocurrencies – transaction privacy. Without that privacy, all that is left is another form of digital currency. Most financial transactions today are digital in nature, anyway, so nothing gained.
Investors who still think that Bitcoin and other cryptocurrencies can make them rich are fooling themselves. Once governments are fully in control, it will no longer be a free market.
Whatever creative names the regulators and bureaucrats come up with won’t change the end result of this exercise, either. Cryptocurrencies will be just another name for fiat currencies.
(Also see Is Bitcoin Money – Does It Have Value?)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!
Sure; $100,000 Bitcoin is possible; but is it realistic? Is a potential gain of sixty-six percent worth the risk of losing a similar amount or more?
VIDEO GAMES AND BITCOIN
After spending the better part of a day at the game arcade with two of my sons and a couple of my grandchildren, and amidst all the ringing bells and flashing lights, I found time for some brief reflection.
There seemed to be a huge disparity between the reflected scores and the accomplishments of the various participants.
For example, why is 200 points a “good” score in one game and 1000 points a “bad” score in another game?
We could ask similar questions, I suppose, about the scoring variations in organized sports, too.
Then, I thought about Bitcoin. What makes investors think Bitcoin is worth $60,000? And why is its price so much higher than other cryptocurrencies?
Comparing Bitcoin To Gold – Store(s) Of Value?
Mark Cuban claims that Bitcoin is a better store of value than gold. Is he correct?
JANET YELLEN RE: CRYPTOCURRENCIES AND TERRORISTS
In comments made during her confirmation hearing last month, Secretary of Treasury Janet Yellen said that transactions in cryptocurrencies, such as Bitcoin, were used “mainly for illicit financing” and suggested that lawmakers and regulators curtail their use due to terrorism concerns.
Here are the statements she made in response to a question from Sen. Maggie Hassan, who asked Yellen during her confirmation hearing on Tuesday about the dangers of terrorists using cryptocurrencies:
STOCKS – BITCOIN – GOLD
Stock prices, according to the S&P 500, are up seventy percent from their lows last April. The Nasdaq Composite at its most recent high point was up even more, sporting a ninety-five percent increase from its nadir. A number of individual stocks have done even better.
For the entire year 2020, however, stocks were up a more modest sixteen percent (S&P 500) and only seven percent for the Dow Jones Industrial Average.
However, the outsized performance of the Nasdaq was even more apparent on a full calendar year basis. For 2020 the Nasdaq was up forty-three percent. Relative to its peers, the average Nasdaq stock was up more than three to four times as much as non-Nasdaq stocks.