EC Everyone Hates Bitcoin, I Hate Bitcoin, So I Bought Some

Going back into Bitcoin with a small position.

A little over a year ago I disclosed having bought a few shares of the Grayscale Bitcoin Trust (GBTC). I bought in the middle of its parabolic run before Thanksgiving and sold it after just two weeks with a 44% gain. I bought it as a lottery ticket thinking that it could easily go to zero but that if it went as high as some thought, well I didn't watch that happen from the sideline having invested time into learning about it. It went up so fast that it was obviously unsustainable which is why I sold so quickly. My writing about it has been fairly consistent if you have to dabble, make sure the risk you take is asymmetric such that a wipeout won't hurt you but if it skyrockets you could benefit.

That aspect hasn't changed in the last year. I also still believe that the idea of safer more efficient transactions promised by cryptocurrencies will come but that we are not there yet. For many months I have asked publicly on Twitter why all of the attributes ascribed to Bitcoin won't instead accrue to some yet to be created cryptocurrency while Bitcoin goes to zero. Lately, I have come to believe that unlike the previous 80-90% drops for Bitcoin, there is no wave of new speculators to come in and bid it back up. This creates a big obstacle for it to overcome in order to make a new high. I Tweeted that sentiment out the other day and someone replied that there are still 7.4 billion people left to discover it. I came back with an article from eleven months ago about how popular Bitcoin was in Africa.

The recent slide in Bitcoin has taken the price pretty far below the cost to mine it. This implies, but does not guarantee, that something has to give. Either the cost will come down which is a good bet at some point (maybe already happened) or that the price will (should) go up but that is more of a potential short-term catalyst. The long-term catalyst is what all the touts say it is. I have no idea if they will be right and I am plenty skeptical, as I have been all along but the touts could be right.

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Michele Grant 2 years ago Member's comment

The problem with #bitcoin and other #cryptos is that without regulation, safeguards and oversight, it will never succeed. And yet the lack thereof is precisely why so many people are attracted to it.

Angry Old Lady 2 years ago Member's comment

Yes, criminals in particular!

Adam Reynolds 2 years ago Member's comment

Wow, had no idea #Bitcoin was so popular in Africa!

Judah David Powers 2 years ago Member's comment

BTC's issue is that the market became so diluted during the meteoric rise that even joke coins designed to make fun of the very idea were accepted and purchased. The market will have to cool off first, so that it can consolidate and have a sustained rise, rather than skyrocketing on the back of press coverage and the "hodl gang."

Bindi Dhaduk 2 years ago Member's comment

So what do you invest in, if anything Judah?

Roland Murphy 2 years ago Member's comment

So true. I remember reading at the beginning of the year how #Dogecoin was created as a joke and had just hit a $2 billion market cap. Crazy. $DOGE-X

Ayelet Wolf 2 years ago Member's comment
Dan Nicholson 2 years ago Member's comment

I'd have to agree with this statement. #Crypto is still too volatile for me, at least until there are more safeguards in place and maybe an ETF. But it is the future.

Moon Kil Woong 2 years ago Contributor's comment

Cryptos don't have a chance of replacing US treasuries. For one thing they don't pay interest. For another thing is that they are all getting devalued faster than regular money because although each one has limits on how many new ones come into existence, every month there seems to be more and all of them increase their count.

Their main issue is general acceptance right now and convenience.

Terrence Howard 2 years ago Member's comment

Very true.

Kris Andersen 2 years ago Contributor's comment

The problem that I see with cryptos is that if central banks allow crypto futures, then there's nothing to stop countries from dumping the dollar as the world's reserve currency and adopting the crypto. What do you think would happen to our $21T debt if that were to happen?

Samantha Wolf 2 years ago Member's comment

Very interesting, I hadn't thought about that.