When Wall Street crashed catastrophically in 1929, one man made a killing: Jesse Livermore spent the next month buying up as much stock as he could get his hands on. He sensibly kept his dealings quiet by retaining more than a hundred stockbrokers to execute his trades, and within a few months he was down $6 Million: but that was only on paper, after a year he was $100 Million up, and those were the days when $100 Million really was a fortune (nowadays it barely gets you two days of Eat Out to Help Out). But when the public eventually found out what he’d been up to, Jesse was blamed for the entire crash: receiving hundreds of death threats (which is saying something, given trolls in those days had to write out their bile longhand): he was forced to hire armed bodyguards to make his way safely around Manhattan, but that was only the beginning of Jesse’s troubles…
His wife killed his son (before leaving him), he was sued by several mistresses (some of them Russian), and his all-round shenanigans eventually led to the creation of the Securities and Exchange Commission. By 1934 he was bankrupt (for the third time), and he fatally shot himself in 1940 (after dabbling in a financial advisory business). This, then, was the father of day trading…
Of course, we’ve come a long way since then, and things have more or less changed for the better, but the sad life of Jesse Livermore offers us one important lesson: short term market disruption is usually just that…it’s short term.
Bitcoin Bounce
So perhaps the spirit of Livermore was stalking global markets last week, cautiously watching as the price of Bitcoin fell below $27,000 (its lowest level since January): dragged down by an eye catching collapse in the price of the unfortunately named stablecoin, with Terra and Luna all but wiped out, and trading way below their supposed $1 peg. But, of course, Bitcoin’s been here before…and just like the stock of US Steel and Ford in the aftermath of the Wall Street Crash, it’s unlikely to be staying there much longer.
Here’s why…
Bitcoin plays an integral role in the development and deployment of Blockchain technologies, and Blockchain technologies are, unquestionably, the future: they provide a decentralised ledger platform with the potential to make the world better connected than ever before, at precisely the moment when connectivity is more important than ever. So don’t bet against Bitcoin bouncing back…the future is on its side.
Jesse Livermore understood that better than most: there’s nothing so short term as short term disruption.
Executive Overview
Like most of us I was struck by the precipitous fall of Terra and Luna cryptocurrencies last week, and the significant impact that had on Bitcoin prices. But history is on Bitcoin’s side…short term disruption really is short term.
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