Sizzle Fizzle: Consumer Credit Use Sizzle, Apple Fizzles And Bitcoin’s A Coin Toss To End 2017

The end is here. Well, when it comes to 2017 anyway.

But before we send the year off into that good night, we must first assign our final rounds of sizzles and fizzles to take us into the New Year. So, who were the winners — and not quite winners — this week?

Sizzle

Ripple Labs: It pays to play well with others, a fact the team at Ripple Labs can attest to this week with the announcement that the blockchain start-up will be partnering with Tokyo-based financial services company SBI Holdings and its subsidiary SBI Ripple Asia to establish a “consortium” with some Japanese credit card companies to utilize blockchain technology. The news shot the value of Ripple’s digital currency (XRP) up about 20 percent Wednesday (Dec. 27) to an all-time high and made it the third most valuable cryptocurrency in the world behind bitcoin and Ethereum. Because Ripple owns 61 percent of the 100 billion XRP in existence, this week’s record high prices put about $87.23 billion worth into the firm’s coffers — on paper.

Global IPOs: Global initial public offerings (IPOs) have spiked over the past year, driven by strong activity in the U.S. and a record number of Chinese issuances. Nearly 1,700 companies went public this year, up 44 percent from last year and the largest number of IPOs in a single year since 2007. U.S. IPOs raised $49 billion in 2017, double what they brought in during 2016. China similarly saw a record number of companies go public with more than 400 companies launching IPOs in China’s markets. The average return from an IPO this year was 23 percent, in line with the S&P 500 Index which is up 20 percent so far this year. That performance is strong enough that 2018 is also considered likely to be a banner year for IPOs.

Consumer Credit Card Users: After a ten-year interregnum, the latest data out from the CFPB’s biennial report on credit card use in the U.S. indicates consumers are getting their credit card groove back. New credit card originations remain below pre-crisis levels, but are up roughly 50 percent since the 2010 low-water mark. In 2016, consumers opened approximately 110 million new credit card accounts, which is roughly 50 percent higher than 2010 and higher than any single year since 2007. And while delinquencies are starting to give some issuers pause, the rates remain at historically low levels.

Fizzle

Apple: Apple had a double shot of bad news coming out of Christmas this week. First it was sued by two iPhone users over its admission that it slows down older versions of its iPhone (presumably to help them run longer). “BatteryGate” plaintiffs argue that Apple never got their consent to slow their phones, and that the slowed phone was an economic hardship. Apple was also beset with reports that iPhone X sales have been sluggish throughout the holiday season.

Jewelry: There is nothing on this Earth that pains us more than putting jewelry on a fizzle list, but sadly fraudsters love it almost as much as we do — though not with the same purity of emotion, of course. And the problem with those fraudsters, according to Signifyd’s director of merchant advocacy Sourabh Kothari, isn’t just the fraudulent transactions they get through — it’s all the good ones they scare merchants into turning away for fear of being defrauded. In a jewelry market that has gotten highly competitive, that is just a surefire way for traditional jewelers to send their customers straight to another merchant.

Uber: It’s official, if not entirely surprising. Uber’s $68 billion valuation is a thing of the past, according to Wall Street Journal reports, as SoftBank has officially won its bid to purchase 15 percent of the ridesharing firm for $7.7 billion. The deal values Uber at $48 billion — a roughly 30 percent discount to its most recent valuation of about $68 billion. Small sizzle within the fizzle though — SoftBank has also agreed to invest an additional $1.25 billion at Uber’s previous $68 billion valuation.

Bitcoin — The Sizzle Fizzle Coin Toss Of The Week

Bitcoin and its roller coaster valuations have been a recurring topic on this sizzle/fizzle list this year. Sometimes bitcoin is up and sizzling, and thus everyone is sure crypto is the future of money and that blockchain is the future of moving it. Sometimes bitcoin is down and fizzling, though, and thus everyone is sure that crypto is just digital tulips that have come to wipe out foolish investors with dreams of getting rich quick.

And so, it is entirely fitting that as the calendar closes its books on 2017, bitcoin’s last week of the year was kind of a following the bouncing ball coin flips.

Bitcoin went into the holiday season with a big drop. After hitting $20,000 per unit briefly on Dec. 17, the value had fallen to around $15,000 by midweek and was trading at a little over $10,000 by Saturday. So, had the bloom come of the tulip?

On Tuesday, bitcoin rallied, and it had recovered more than half its losses and was trading at $16,000 by the end of the day.

Flash crash? Not exactly.

Bitcoin dropped again 24 hours ago, on South Korea’s announcement that its regulators are contemplating the shutdown of many of the nation’s very active cryptocurrency exchanges. South Korean exchanges will soon require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto exchanges, according to a statement from the Office for Government Policy Coordination. So much for anonymity as bitcoin’s calling card.

“Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in the statement, which comes little more than a week after the bankruptcy filing of one South Korean exchange. “The government can’t leave the abnormal situation of speculation any longer.”

But after that initial drop, the markets recovered some and bitcoin is now trading at roughly $14,000 a unit.

So now what? Even the experts have no idea.

Patrick Byrne, the CEO of Overstock and a guy who is unironically known as “the bitcoin messiah,” says he has doesn’t know. “Well, I don’t know if it’s a flash crash, a trading issue or the new ability of Wall Street to short.”

So Sizzle or Fizzle for the last week of the year? In the face of all of the evidence, we think we’ll just stick with “Bubble.”