Return of The Day Traders

At the end of the 20th century, there was no better indicator that the dot-com bubble was about to burst than the millions of everyday people–dentists, lawyers and bank tellers–armed with cheap PCs and internet connections who abandoned their day jobs to trade newly born internet stocks like Excite and Books-A-Million, based on the rantings in message-board posts.

Token bubble traders have it even easier. Middlemen, regulators and tax reporting are easily avoided. Trading is 24 hours, including weekends. E-brokers have been replaced by “exchanges”–some 70 at last count–that offer “makers” and “takers” margin trading, pairs trading and derivatives, charging transaction fees that generally range from zero to 0.3%. One San Francisco exchange, Kraken, says it hired 100 customer-service people in May and June and has more hiring planned. “It’s been really crazy,” says founder Jesse Powell. “We’ve had about five times growth in terms of new signups this quarter versus last, and last quarter was already a pretty significant jump over the previous year.”

No wonder. Newly minted coins are now being crowdfunded at a rate of about 20 per month, and never before has there been an initial-offering market that has risen so fast, with such volatility.

Ethereum, which has the status of Google or Apple in the crypto-world, trades on average 5% or more of its $30 billion float each day, compared to about 0.5% for Apple. Ethereum is up fortyfold year to date, and it’s not unusual for it to move more than 10% in a day. There’s good action even in the less popular coins. Rubycoin, for example, was hatched in 2014 and purports to be an untraceable savings-account coin that pays 5% interest. Like a Pink Sheet penny stock, it recently traded only $37,000 in a day, but gained 9%.

Virtually all of the exchanges offer leverage of up to 5-to-1. So if you bought $10,000 of an ICO like supercomputer-network coin Golem, which ran up 5,000% in its first seven months, you would have $2.5 million. Not enough? Leverage of up to 100-to-1 can be found.