Lots of Bitcoin is a bubble talk as we knock on the door of 2018
But Bitcoin bubble talk is nothing new.
In 2011 Bitcoin was in a "bubble". If you bought BTC at the all time high (ATH) of the 2011 bubble you would have paid $32 for one Bitcoin. By November of 2011 Bitcoin had crashed back down to $2.
In fact, Bitcoin has a "crash" on average of at least 30% once per quarter as this chart below from Mauldin Economics shows...
So does this tell you Bitcoin is a bubble?
It tells you Bitcoin is volatile.
In the "picture in the picture", it shows that there is a constant war going on between the forces of FUD and FOMO.
FUD = Fear, Uncertainty and Doubt.
FOMO = Fear Of Missing Out.
When Bitcoin is on a roll, you get the FOMO.
100,000 accounts being opened per day on Coinbase. Facebook posts praising Bitcoin from your neighbor who believes the Earth is flat. The price of BTC moves up quickly. (By the way, with 100k accounts per day on Coinbase opening up, what else do you think is going to go up besides Bitcoin? The only other two cryptocurrencies Coinbase sells! Litecoin and Ethereum.)
The moment some bad news hits the wires, like China closing down some crypto exchanges, the FUD posts emerge.
Bitcoin is no different than tulips. BTC buyers are idiots at this price. The price can drop in a matter of hours from 16k to 13k.
And round and round we go. The great push pull.
But in the big picture, one thing has been constant.
Every time this Bitcoin bubble crashes, we are seeing it crash from higher highs and crash to higher lows.
Every time FUD scares newbie buyers into selling and a "crash" happens, the bitcoin wolves come out to feast.
And if the dude who bought the 2011 ATH (All Time High) at $32 held, he would be pretty happy right now. I wonder if the dude who bought the recent $19,697 ATH on GDAX will be happy about that BTC purchase in a few years?
If he is a hodler he will be. Or she. Whatever.
Why? Because I think Bitcoin is more of a pin than a bubble.
First off, I see a lot of bubble conflation in FUD posts so you have to choose what you mean when you say Bitcoin is a bubble.
If you think Bitcoin is a bubble, do you:
1) Think Bitcoin is more of a tulip like bubble? When the "real" crash finally happens, Bitcoin will be wiped of the World's financial map with the tatters of bitcoin bulbs worth nothing but "nerd money" to the small minority from where BTC emerged?
2) Or do you think Bitcoin is like the 2000 Tech bubble? In which case many of those stocks were wiped off the map but if you happened to hold a stock like Amazon through the crash, you'd be a pretty rich person today. In the tech bubble Amazon stock peaked at $107 and crashed all the way down to $6. Check the CNBC ticker for where its trading at today....
If I had to pick from the above I would pick #2. Wouldn't you?
But I personally think Bitcoin is more of a pin than a bubble.
I forgot who said it first but saying Bitcoin is a bubble that will pop soon is like saying the automobile bubble will pop soon and we're going back to horse and buggy days.
In other words BTC is a paradigm shift.
The automobile pin that popped the horse and buggy bubble.
In this case its the new version of money value that pops the old establishment version of the money value bubble.
Look at the chart below. It ain't Bitcoin. Its the dollar money bubble.
It shows the trillions of dollars just conjured up by the Federal Reserve out of thin air. And the vast majority of these dollars are in digital currency form, not cash! If you are a holder of dollars, your dollars are becoming worth less and less and there is nothing you can do about it.
In fact, that's what its been like throughout history.
Every government that has created a fiat currency, eventually abused that currency to the detriment of their own people usually by inflating it to the point where it goes to zero and is wiped off the face of the Earth.
Every single fiat currency ever created has gone to ZERO.
What makes you think this time is different with the US dollar and the Euro etc?
Historically there has been nothing you could do about this. You had to use their money.
Bitcoin is the pin that pops the fiat money bubble.
It takes the power from banks, regulators and government and puts it back in your hands.
You can now be your own bank without getting nickeled and dimed.
You can send value across the world, peer to peer without having to ask for permission.
You can use Bitcoin knowing no one can ever make more than about 21 million Bitcoins.
I want to make this a short post so I'll stop the rant there but I think you get the point.
So in the end if you think Bitcoin is in a tulip like bubble, you can continue to bitch from the sidelines, stop playing the game now or hold out and sell whenever the "real" bubble finally gets here.
If you think Bitcoin is more like the tech bubble, ask yourself if it is like the Amazon stock of the tech bubble. If it isn't, you can dump it now. If it is, you can hold on to it and in a few years, you'll be as happy as the dude who bought BTC when it bubbled up to $32.
And if you believe Bitcoin is the pin and not the bubble, you can keep buying the many crashes, wait for that next big money bubble to pop and HODL.
Ok ok. I did name my website "Stack Silver Get Gold Buy Bitcoin" so maybe take some profits on the way up and buy some gold too but that is a story for another time.
Now go get into it.
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