As at writing the cryptocurrency is flirting around $12,000 $14,000 $16,000.
I can't write fast enough... Up a bazillion percent so far this year. And everyone is talking about it. For example I know a commercial airline pilot who starting hosting his own Crypto podcast. Or a neighbour, who just 5 months ago was asking what Bitcoin was, that now offers crypto seminars on Facebook. And the email I got last week from a relatively new trader suggesting I invest in his new crypto platform that promises gains of up to 150% per month. Perfect. I knew it was different this time... If you own bitcoin or any of the other cryptos that are making those of us who don’t feel foolish, good for you. For the rest of us, we’ve got some tough choices to make. Firstly you need to understand that a lot of the talk about Bitcoin is pure hype. And just because it's a popular topic doesn't mean I need to get involved. I'm no expert in it, and just because others are involved doesn't automatically mean I should be as well. It reminds me of a Charlie Munger quote, "Someone will always be getting richer faster than you. This is not a tragedy." I run my own race and ignore the noise and opinion. Also consider the recent price surge this past week hour comes with tremendous risks. It’s important to keep in mind that the price of a single Bitcoin, unlike the indexes, is not regulated by any monetary authority. And until that occurs most institutions will not get involved. So what are the downsides of Bitcoin? No one really knows, although it's incredibly volatile. And in my opinion, that’s the problem right there. At the beginning of this year, Bitcoin was trading around $700. It’s now flirting around the $16,000 point. Heck, it could be at $30,000 by next Monday. The only constant in financial pricing is that the market always moves in both directions. And the downside for Bitcoin could be seriously ugly, even devastating. There are constant news stories of government regulation, electronic wallets being hacked, and the loss of personal credentials from malware attacks. There is also the fact that Bitcoin may already be in bubble territory.
Here's a few (fun) facts^.
Just 5-months ago when Bitcoin was at $2,200 a survey showed that 15% of respondents said it was undervalued. At todays prices, 37% of respondents say it's undervalued. In another survey, 84% of respondents believe Bitcoin will hit 30,000 before the Dow Jones (which currently stands at 24,250) The market cap of Bitcoin is now larger than 98% of the companies in the S&P 500, including Bank of America that:
- was founded in 1904, - is the second largest banks by assets, - has 4600 branches, - 208,000 employees, - $90billion in revenue and - $2.2 trillion in assets.. Remember that most punters run on prophecies. Professionals investors however have a plan.