Friday, December 8, 2017

Bitcoin: The Most Euphoric Bubble Of All Time

Bitcoin has exploded in the past 2 days, going up 50% in a short period of time and nearing $20k on GDAX. This Bitcoin bull run has no real catalysts aside from arguably a Lightning demo, but realistically is nothing more than Bitcoin doing what Bitcoin does best: Rocketing to the moon. Bitcoin and cryptocurrencies are, in my opinion, one of (if not the) most euphoric bubbles of all time. This doesn't mean it is the largest bubble - there have been many bubbles that are larger. Rather, the level of emotion involved has escalated beyond levels seen in most historical bubbles due to: 1) The internet increasing amount of hype 2) Younger demographics of those investing 3) Amount of Retail Investors 4) Libertarian feelings against government and central banks Furthermore, the bubble is escalated even more by loose monetary policies which has increased all investors' risk appetites, resulting in additional capital inflows to this nascent asset class. Note that when I call Bitcoin a bubble, I'm not saying you can't make money. On the contrary, I think it is one of the best opportunities to make money in a long time. However, Bitcoin is not WORTH even $10,000 in my eyes. You can justify the price of Bitcoin in four main ways: 1) Transaction Medium 2) Remittances 3) Microtransactions 4) Digital Gold The video contains details on each. Briefly, here are my criticisms: 1) Declining current utility value as transaction medium given increased fees, clogged up network and clunky user interface (UI). Lightning will improve fees and speed, but UI will still not be idiot-proof which slows adoption. At max, $10b in current utility market cap from this. Hard to identify PV of future utility value, but doubt it is much given how long I suspect mass adoption will take. 2) Same as with its use as transaction medium - UI is not friendly and existing solutions will likely continue to be easier for the lay person. 3) Not even useable for MTX until future, but could contribute slightly to PV of future utility value today. 4) Not an inflation hedge like many people say, given much of volume is coming from JPY (deflationary) and USD (low inflation) at the moment. Bitcoin & gold seem to co-exist, not fight. Gold is more exposed to macro factors than Bitcoin. All in all, I don't see buying Bitcoin right now as investing (ironic given my channel name). It is more speculation, which is a great game to play as long as you understand it is the game you're playing. "Hodl" can also end up with greed. Don't let people who call your actions "weak hands" bother you. Such actions can protect your downside. Best of luck to everyone in this crazy market. ================ If you like my content, you can support me through using ANY of the affiliate links below (I receive small compensation). The beauty of affiliate links is that I can pick and choose what I like rather than have companies approach me - everything I linked below (with the exception of Trezor since I like Ledger), I use myself frequently. ================ My Recommended Hardware Wallets: Ledger Nano S (preferred): Trezor: Ledger Blue (expensive): ================ My Favorite Book for Investing in Crypto: Cryptoassets: This book is, bar none, my favorite book for investing in cryptocurrencies. It doesn't bog you down with technical jargon, but instead focuses on all the elements you should understand before you invest. It's a comprehensive book for both beginners and experts. Beginners will find information about major cryptocurrencies (not just Bitcoin) as well as details on historical market events (that you can draw on for future) and events to watch for moving into the future. Experts will find the chapters on valuation particularly useful. For those of you involved in traditional investing, this book is even more of a godsend as finance info is explored (correlations with other asset classes, ETFs, etc). ================ My Recommended Exchanges: Coinbase / GDAX / Bittrex If you sign up to Coinbase using link above, you and I will both receive $10 each after you buy your first $100 of Bitcoin using Coinbase. Coinbase is much less intimidating for beginners. Once ready, move up to GDAX for cheaper or zero fees. For altcoins, I recommend Bittrex. ================ Legal Stuff: I am a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for me to earn fees by linking to and affiliated sites. None of what I provide in my videos is investment advice. Please do your own due diligence. ================ Twitter: SteemIt: Medium: Seeking Alpha:

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Item Reviewed: Bitcoin: The Most Euphoric Bubble Of All Time Rating: 5 Reviewed By: BUXONE