Jim Duffy comment: Breaking Bad – and bull and bear views of Bitcoin

The chatter on crypto websites suggests a bullish move in sight for Bitcoin, says Duffy. Picture: Ian Howarth.

The key character, Walter White – played by Brian Cranston – makes big bets with his life as he builds a methamphetamine empire centred on his love of chemistry and need to look after his family.

There has been a cult-like aura built up around him since the show, where he adopted the new moniker Heisenberg. It is a handle that stands out as audacious, menacing and entrepreneurial. So, this week when the unrelated Heisenberg Capital made a bold announcement on the cryptocurrency Bitcoin I was immediately suspicious and curious.

It does not surprise me in the world of crypto that a venture capital company would name itself after one of the most colourful characters to hit our TV screens. The name lends itself to risk. Investing in cryptocurrencies like Bitcoin means one has to think seriously about what level of risk one is happy to work with. So, when Heisenberg Capital doubled down on their Bitcoin investments and predictions, it made me even more curious.

This venture capital firm specialises in making investments in start-ups and companies that work in the cryptocurrency sphere. They have invested in blockchain-related companies and entrepreneurs since 2011. But, the bold declaration via Twitter that they see Bitcoin becoming hegemonic as it grows rapidly in value has surprised the crypto world.

The price of Bitcoin this week increased to its highest level this year, resting at $5,900 – up more than 12 per cent in a week. The chatter on crypto websites suggests that there is a bullish move in sight for this coin. But further research reveals a whole myriad of price predictions. Some say Bitcoin will tank and we will never see it again. Others have it pegging out at over $250,000 by 2023. But the announcement by Heisenberg Capital that a $100,000 Bitcoin is coming to a crypto exchange near you has made the community sit up and take notice.

A while back, Max Keiser, the founder and chief investment officer of Heisenberg Capital, said Bitcoin’s price would be propelled by the technical characteristics of its protocol. He said: “Bitcoin is the monetary black hole that will gobble up all fiat and rise to more than $100,000 doing it.”

The rationale for this forecast is based on the technical characteristics of the Bitcoin protocol. In short, that the underlying functionality of the technology is vastly improved, coupled with the fact that circulation is capped at 21 million coins, means that Bitcoin will grow and grow. Consequently, investors will move their cash into it away from other ‘altcoins’ draining them of capital and thus propelling Bitcoin to new highs and demand. Should this be the case, or even close to it, billions of pounds of investments in smaller cryptocurrencies like Cardano and Ethereum would tumble and these companies could struggle to survive. If Bitcoin was to attract the majority of all investment in this space, then it would be catastrophic for the whole industry. Hence the massive backlash on social media.

As the cryptosphere wakes up from its long bear market slumber, there will be winners and losers. Bitcoin, it seems, will always have an edge, as it all started with the Satoshi Nakamoto white paper. It appears to be like a dominant IBM, while some of the altcoins are more like Apple 20 years ago. Only, while IBM made big profits and global products, Bitcoin ultimately does not offer anything like this.

Can it be the digital gold that some say will increase its value? Perhaps, but the adoption globally and by larger venture firms than Heisenberg Capital will have to play out. By nailing its colours to the mast, Heisenberg has created the debate, while continuing to fuel the enigma that is Bitcoin. Investing in this cryptocurrency is like guessing what will happen in the next five episodes of Breaking Bad. Mercurial to say the least.

Jim Duffy MBE, Create Special.