Shark Tank Star Calls Bitcoin 'Garbage' Over Failed Real Estate Deal

Francisco Memoria

Shark Tank star Kevin O’Leary has recently claimed he sees bitcoin as “garbage” and that it’s a “digital game,” over what appears to have been a failed real estate deal he tried to use bitcoin in.

Speaking to CNBC during its “Squawk Box” show, Kevin O’Leary noted he believes the flagship cryptocurrency is a “useless currency,” as when trying to transact large amounts the person received the funds wants “some guarantee of its value.” He said:

To me, it’s garbage, because you can’t get in and out of it in large amounts.

O’Leary’s poor experience with the cryptocurrency came as he tried to buy a Swiss real estate with BTC, and was unsuccessful because the other party seemingly wanted a “guarantee that the value comes back to the U.S. currency.”

In an example the billionaire used on the show, he said that if one would want to “buy a piece of real estate for $10 million in Switzerland” the guarantee would have to be there, meaning the person using bitcoin could end up paying more because of its volatility.

You have to somehow hedge the risk of bitcoin. That means it’s not a real currency. That means the receiver is not willing to take the risk of the volatility it has. It’s worthless.

O’Leary added he isn’t a fan of any cryptocurrency, and that invested in cryptocurrencies before as part of a challenge. He revealed he “bought all the crypto crap” and that the $100 he put in crashed 70%, to now be worth $30.

The investor’s purchase was likely made early last year, when most cryptocurrencies were close to their all-time highs, and before the bear market. Bitcoin, for example, dropped from a near $20,000 high to a $3,200 low before recovering.

To ‘Mr. Wonderful’ “today the hot digital is bitcoin,” but “tomorrow it could be whatever. Despite O’Leary’s distrust of cryptocurrencies, he has reportedly invested $100,000 in a startup that makes it easier for users to convert spare change into bitcoin or other cryptocurrencies.

Featured image via Randstad Canada, Flickr, CC by 2.0

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

Featured Image Credit: Photo via Pixabay.com