Any rational investor at this point should own some amount of bitcoin and / or ethereum. The asymmetric upside potential vs. going to zero makes a $1000 investment have very strong upside with limited downside.
This leads to weird rationalizations where people compare losing their $1000 investment to the “what it” scenario of Bitcoin going to $500k or $1 million, in which case $1000 suddenly feels negligible. Of course, Bitcoin going to a million dollars per coin doesn’t make any sense, but the “what if” and FOMO are strong drivers for some people.
Bitcoin is decentralized fiat currency which you can perceive to be very valuable like the USD or worthless like the Venezuelan bolivar, as none have any intrinsic value or fundamentals besides trust.
The strength of those properties in Bitcoin are fairly unique and unprecedented. It makes it an ideal means of storing value in the long term. I think the main downside is the amount of speculation that’s been going on and the volatility that results from that speculation. That’s likely to change as it becomes more and more mainstream and more people use it as an emergency savings account protected from fiat devaluation rather than an investment.
I agree that the unlimited upside some people are touting doesn’t make any sense, but I think it does have the potential to grow further. I don’t know how much, but it’s still a niche area. Would be interested to see what the world looks like where most people have 5% of their savings in bitcoin.
Compound interest is often treated as magic, but like the magic of special and general relatively, it only really kicks in under conditions that don't really matter to ordinary people.
Money going into an index fund will increase roughly 10x over the course of 30 years or so. This is nice; if you can stop living paycheck-to-paycheck by age 30 and save 10% of your pre-tax income (which is not a given), you can have a comfortable retirement, and the more frugally you live in your youth the more comfortable a retirement you can achieve.
But you won't get rich that way. Best case scenario, if you are absurdly frugal and save nearly all of your money, prudently invested, for forty, fifty, sixty years, you can get one big bang at the end after decades of deprivation.
To get rich you need to win the metaphoric lottery, by founding a unicorn startup, or going all-in on a series of absurdly risky investments, or by just winning an actual lottery.
Should any rational investor put some over their portfolio in roulette spins every year?
By the same logic any rational investor should own some Tesla stock: hide potential upside in battery tech going forward and "limited" downside.
Problem is at least one of these options has some fundamentals.
But... I think in many ways BitCoin has passed that point. There is never going to be another 100x growth. Time to find the next thing.
https://www.investopedia.com/ask/answers/050115/what-types-o...
I’ve worked in crypto in for 5 years, it’s disheartening the number of industry names that just talk up their own book/holdings.
Be bullish on crypto, fine, I am to a degree. Also why not spend some time being honest about risks so Joe Bloggs investor doesn’t get wiped out through fomo.
BT could easily crash back to $3k if people get spooked
That said it seems like a more solid foundation of interest now.
If you think it will break the previous floor on fear alone, absent the technical uncertainty and unsustainable rapid growth leading up to the 9k crash, let alone the institutional investment this round, you are speculating without any real basis.
Do you see the flaw in arguments of extremes?