Why I Buy Bitcoin During Crashes Despite Calling it a Bubble

in bitcoin •  7 years ago 

Bitcoin has continued to decline since my last video, only just recently jumping back up to the mid $8k's at the time of writing this. For many first-time investors, this is likely a painful experience and shows the harsh realities of investing (that there is risk involved, especially for cryptocurrencies).

A lot of people are confused as to why I still buy into Bitcoin despite calling it a bubble. This is because one is a bet on perception (when I buy Bitcoin) whereas one is a bet on reality (when I call Bitcoin a bubble).

Bitcoin adoption has been slow, with roughly 1% of transactions or less being used for actual commerce (I seriously doubt Bitcoin gets most of its value from the 'digital gold' argument either given it just lost 60% of its value in a month and a half). Many investors in this market are very emotionally driven and there is a lot of mob-like mentality and parroting of key opinion leaders. Almost always, behavior like this leads to bubbles. While we often cite the dot-com bubble, there have been many other mini-bubbles where people's perceptions disconnect from reality (e.g: 3D printer stocks).

This is exceptionally common in tech due to lack of understanding by investors, and this is even more extreme in cryptocurrencies due to its low regulatory nature and political ideologies skewing it toward a younger, more volatile demographic.

I continue to buy Bitcoin because, as stated in my previous description, I suspect that many people missed out on the meteoric rise of Bitcoin in the 2H17 and won't miss out on another pump if it occurs. This is based solely on perception, not reality.

Lastly, on the more practical side, I am keeping an eye on many altcoins in the event that their Satoshi levels come down to more attractive buys.

How are you playing this market and what are your thoughts moving forward? Thank you for watching / reading!

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The imposition of regulations by governments should not surprise us. The attacks upon crypto at the Davos summit and the widespread attacks upon crypto in the mainstream media reflects the fear that the global elites have of a new technology that threatens their business model. The current crash in global stock markets reflects the rising rates in the bond markets which in turn threatens the world economy. When the world economy enters the next recession big money will rush for the exits from the stock and bond markets. Some of that money will go into gold and silver as it did in 2009-2010 and some of that money may well go into crypto as a long term investment in a new technology that holds major potential for making the world a better place.

You keep calling bitcoin a bubble yet fail to put its rise in value over 2017 in its proper context. World central banks have created billions in cheap money that has gone into propping up stock and bond markets both of which have achieved record highs due to this blatant manipulation of all asset classes . Some of the cheap dough has undoubtedly gone into crypto.

You should address the bigger issue of what happens to crypto when the world economy crashes. The current movements on global bond and stock markets are like the first tremors before an earthquake. They are warning that our current economic model that is wholly dependent upon cheap credit is nearing a major crash. Don't believe me look at the work of economic historians such as:

Jim Rickards -
https://jimrickards.blogspot.co.uk/

Dr.Paul Craig Roberts (former assistant secretary to the US treasury) -

https://www.paulcraigroberts.org/2017/10/18/greg-hunter-interviews-pcr-looming-economic-catastrophe/

David Stockman (Director of the Office of Management and Budget under Reagan) -
http://davidstockmanscontracorner.com/good-riddance-janet-you-were-a-colossal-failure-part-1/

Nomi Prins (former managing director at Goldman Sachs/Bear Stearns) -

http://www.nomiprins.com/thoughts/2017/12/31/the-next-financial-crisis-will-be-worse-than-the-last.html

Dr.Chris Martenson -
https://www.peakprosperity.com/blog/113721/its-looking-lot-2008-now

Very interesting post, thank you. I am quite new to the crypto world and would like to know your opinion on the usefulness of Bitcoin. Do you see the function in the future as something like being the crypto-gold or do you think Bitcoin will be eaten by alt-coins? I am looking forward hearing from you!

Thank you for your kind comment. I am a historian and have been studying crypto for a while now. Bitcoin was developed in reaction to the 2008 financial crash which showed that the current monetary system was no longer fit for purpose.As the chair of the CFTC has said without Bitcoin there wouldn't have been any blockchain. Bitcoin started this revolution in new technologies. Sadly, in our rapidly changing world you have to invest and innovate to keep up with the times. Facebook looks old and is in need of new ideas as Zuckerberg has admitted otherwise it will go the way of the dodo bird.
Bitcoin's core developers have sat upon their laurels and not been working to develop its potential. Of course, everyone mentions the Lightning Network as Bitcoin's saviour. Even when it is finally introduced it won't seolve all of Bitcoin's problems as Charlie Lee founder of Litecoin has noted.
Bitcoin has first mover advantage in its favour still. It is a household name. However, being first is not the same as being the best. Second and third generation blockchain technologies have come out that have improved upon Bitcoin.
You should pay attention to the so called Flippening whereby Bitcoin may eventually lose its dominant position in the crypto market probably to be replaced by Ethereum.
Check out this website on this subject:

http://www.flippening.watch/

Bitcoin is seen by many as crypto gold but I do not think this was the original vision of its creator see Bitcoin's whitepaper written by Satoshi Nakamoto:

https://bitcoin.org/bitcoin.pdf

The only thing I would recommend is do as much research as possible before investing hard earned cash into crytpo. Beware of false prophets who make all sorts of ridiculous claims for bitcoin/altcoins. One last thing try to have a varied portfolio of cryptos don't put all your money into just one coin.
Good luck and be careful out there in crypto land.

Have loved all your content and, on the whole, agree with your analysis. The one point I would disagree with though is that the bubble has not popped (or that bubbles instantly "pop" at all.)

Looking at the dot-com bubble, which I believe cryptocurrency most closely resembles, the peak of the market was in March 2000 and then there was a long downtrend until September 2002. There wasn't one clear, major trigger for the change in sentiment but sentiment seemed to change. We actually didn't see new highs in the Nasdaq until November 2014. (When all of the hype of the dot-com era had actually come to realisation 14 years on). The inflation adjusted Nasdaq only just reached its new high this January. (Michael Lewis' book Panic is amazing on this)

Other bubbles fuelled by wild speculation to consider: US Housing Bubble - Peaked in July 2006, bottomed out in Feb 2012 and finally reached new highs in Dec 2016. (Using CORELOGIC CASE-SHILLER U.S. NATIONAL HOME PRICE NSA INDEX)

The Japanese Asset Bubble: peaked in 1989, the Nikkei225 then fell until March 2009 and it's still never reached those previous highs. (Nikkei 225 has peak at 38000, today sits at 24000.)

I can't see new money coming in to the space until these coins / tokens have actual utility - all of my friends which i would imagine taking a gamble on this, have. The rest of my friends will only buy it if required to and some point in the future to actually transact. I think we've seen the point of maximum speculation and it is now a good idea to get out while you can. Because, using previous bubbles as an example, this could fall for a lot longer, to a point much lower. Given how long it can take bubbles to hit their lows, it can be particularly difficult to deal with psychologically if you lost a large chunk of your money AND had ample opportunity to get out.

The point of mass-adoption where I see new highs being set is also so far away. I'm from the UK and I can pay and receive money instantly for free using my bank account so this system is going to take a lot of beating. (I believe there is a delay in the US system). There are very very few people that are seriously worried about the centralisation of banks. Certainly not to an extent where they want to keep a significant portion of their wealth attached to a password or private key they cannot reset or retrieve from a customer support line if needed.

The whole of society needs to change to adapt to this new technology. In 2001 the sites of the dot-com bubble had to wait for high speed broadband, cheaper hardware and trust in onine payment methods to develop. Similar infrastructure changes and change of public mindset will be required for bitcoin/other cryptocurrencies to actually be used.

Keep up the great work. I find your opinions very useful when it comes to forming my own and I think your channel is one of the best i've found in this space.

You should be worrying about the mega bubbles in the stock market and bond markets. When they coming crashing down and that is only a matter of time then the whole world is going to feel alot of pain.

You really don't get why bitcoin was created judging by your comments. It was not created so that greedy people could speculate on its price. It is meant to be an alternative to the fiat money system that has failed the world so miserably and created gigantic debt problems that threaten the world economy with disaster.
You should read the blogs of Nomi Prins, former managing director of Goldman Sachs/Bear Stearns or David Stockman who was in charge of Reagan's budget department in the 1980s.
They clearly explain the dysfunctional nature of our current economic model that has created a situation where 8 billionaires own as much wealth as the poorest 3 billion people.
As Dr.Chris Marenson and Professor Michael Hudson have pointed out, this is creating enormous political volatility that has been responsible for the Brexit fiasco in Britain and the election of Trump.

Excellent post, I watch all of your videos but have been looking for different analysts because you haven't been posting frequently and the most serious ones share the same opinion as yours.

I do believe in cryptocurrency and its underlying technology, the main purpouse I jumped into BTC was because I wanted to see a world of finance without intermediates institutions biting a chew in fees.

The most promenient use cases for cryptocurrency in general are:

Store of wealth in the "cloud", eliminating the need for banks to store physical FIAT;

Fast reliable and cheap international transfers, which today not only are expensive but also slow because if you live in a country other than the US you can't simply transfer the money directly, let's say Canada to Brazil, you need to convert CAD to USD and then USD to BRL, leaving thousands of fees and spreads on exchanges, not to mention heavy government income taxes;

Abolition of credit card instituions (another man in the middle), for day to day transactions, this one will hopefully inprove the world economy as a whole, because if you don't know, MASTERCARD, VISA and etc charge percentages of EACH sell from the seller, turning this case scenario one of the best in adoption of cryptocurrencies, pushing the prices of everything down.

However, let's not forget that governments doesn't like the fact they can't charge income taxes directly from the storage and use of cryptocurrencies not do other financial institutions such as banks and credit card companies like the fact they will loose massive revenue as people start their transactions without them.

It is fine to enter this market for pure specullation aiming portfolio diversification and higher returns; however, if people knew the power they have in their hands right now, worldwide adoption of cryptocurrencies would make governments and other financial institutions to bow in front of us.

Hoping to see the day I'll be able to buy a hot fresh bread from the local bakery with cryptocurrencies. In the past they accepted cash only, in a few years it started to accept debit/credit cards, let's see how long does it take for them to start accepting crypto.

Love the comment about the stealth fighter + rain!

Cryptocurrency is powerful but so brittle; with the price driven largely by emotion such as fear and greed. At the moment, I use some of the new financial products such as Monzo or Revolut; they are fast, easy to use with quite tranparent fees and instant update to my account information. All driven from my cell phone.

Cryptocurrency is so far from this reality. Even Litepay (am a LTC holder) promises much and I hope it delivers in buckets but at the moment; it is just hot air.

My own financial well-being has been tested and Cryptocurrency make up less than 10% of my entire investment portfolio (incl. pension and equities etc.) but still, the last month has been a stomach-churning ride. Still, am dollar-cost-averaging across BTC, ETH and LTC with occasional dives into NEO when the NEO/BTC or NEO/ETH looks favourable. That's it.

Out of interest, what is your % allocation for Cryptocurrency when compared to your entire investment portfolio?

Keep the great content coming along.

Thank you so much for the content, I've been watching your videos for some months now, though this is my first time commenting in any platform.

Since I entered the market I've been very enthusiastic with everything related to cryptocurrencies. I really didn't understand most of what was the tech (try to understand the tangle for example... not the easiest thing), but I felt like buying in was a way to be a part of something new.

The discussions like is BTC a medium of exchange or a store of value. Is it both? Can any of them replace the current financial system? Can any be a part of it? Were absolutely fascinating to me.

Since then, my (very) diversified portfolio, which I kept until October last year (about 15 alts... NEO, QTUM, XRP and many others), I choose to convert to only 3: NEO, BTC and XRP.

The thing is, the more I read, the more skeptical I became (yeah, the tangle? Not really sure if anyone understands why it is so good), So I've started to get the impression that only speculation was moving the prices (which I've only confirmed with NEO and XRP).

Most of the alts I've had, I really didn't "get". Not technically, not as a business, not as a currency... you name it.

Now I only own 2: BTC and XRP.
I think this two have strong enough foundations, so I can actually see it as more than vapourware.

I'm trying to play as Richard Heart said, selling the bounces.
I am rebuying my positions when the dip reaches my order, but I think that the market, even after this red weeks is like... too much of a good thing.

There is more money in the market in general as it can be actually useful and until I see a much smaller number of altcoins with a much more independent price movement I don't plan to put new money on the market, nor to buy any more positions than I already own.

I don't doubt that it can go either way (a bounce into a new bullish cycle or more weeks (months) of a bear cycle) so I'm trying to play safe.

Things can change, but that is my opinion for the moment.

Sorry for the long post.

According to the firm Autonomous Next, the number of hedge funds investing in digital assets like Bitcoin has grown rapidly to more than 100. Since the launch of Bitcoin Futures on the Chicago Mercantile Exchange in December 2017, it shouldn’t be a surprise to anyone why the price of Bitcoin is down 50% from the high.

bitcoin.PNG

Only Retail Investors chase price and buy high and sell low, while the Professionals buy low and sell high. The Hedge Funds have purposely sold Bitcoin futures to get in a better price.

At the moment, there is a war taking place between the buyers (Hedge Funds) and the sellers (Retail Investors) called capitulation. That line in the sand was at $9000. Capitulation is when investors give up any previous gains, by selling, in an effort to get out of the market. Capitulations are outcomes that result from the maximum psychological and financial pain that can be endured by a group before throwing in the towel. The Retail Investors are throwing in the towel after seeing a more than 50% correction in the Bitcoin price to the buyers, the Hedge Funds. With 100s of millions of dollars to invest, we are witnessing an accumulation phase by the Hedge Funds between $6000 and $9000.

The Hedge Funds are loading up and buying from the Retail Investors. But to fill all their buy orders, as the sell orders dry up, price must go down to the next stack of sell orders. We are approaching what I believe will be the bottom of bitcoin at $6000. My first target is $12,000 and my second target is $17,000 over the next 3 - 9 months.

The easy money has been made over the last 12-18 months. With the big boys in the game now, the rules have changes. The question is, are you ready to play to win with a new play book?

This post is my personal opinion. I’m not a financial advisor. Do your own research before making investment decisions. By reading this post, you acknowledge and accept full responsibility of any gains or losses.

bitcoin.PNG

Again, another good video by you, and you’re very intelligent....BUT again, you still are not addressing so many factors when I comes to a “bubble“.... again, first of all we have 1/2 of 1% of the world being involved in crypto, and a very huge demand from many who want to be involved but don’t know how, are not able to, or they are not ready yet. This fact alone shows that it is NOT a bubble. Supply vs. demand simply states the fact! Very few fiat gateways. They are expanding rappidly.

Just this week on Robinhood, 1.2 million users are waiting in line to use it to buy crypto. The square trade app is already having similar results. Coin base is still the number one downloaded app, with nearly 1,000,000 downloads every week. There is a HUGE demand, but it is difficult to get in. Exchanges are blowing up with new users, so much so that it can’t even handle the volume. Binance for example opens up, and in one hour time. Gets over 300,000 new users, in one hour! Not to mention, the United States stock market alone has around $27 trillion. Worldwide CryptoCurrency Market Capitalizations $500 billion. In looking at the supply and demand ratio there, there’s no comparison. If anything is a bubble, its the US stock market for sure. Just imagine when there is an 8 to 10% marketshare in crypto currency, which is just the beginning, and it takes up to 40 to 50% participation and marketshare. The potential for crypto currency to even eventually hit $100000,000,000,000.10 years down the road is a very real possibility. At that point, yeah, I’ll call it a bubble.

Also, you just don’t seem to believe crypto currency as a whole. Philosophically, looking at the technology, the projects, etc., doesn’t seem to play much of a factor for you. As David Hay says, I believe that in the same way we use the Internet now to access information, we will eventually have the same phenomenon with The way we access money in crypto currency.

It’s funny that in your mind you actually said that “you hope you are putting people at ease with this video.” I think your videos do anything but put people at ease LOL... quite the opposite, my friend... you are really good at freaking people out, and I think you kind of get off on it and a weird twisted way LOL. no surprise that you said yesterday in your video that it “pisses you off when people say ‘It’s FUD’”.... because you are the king of “FUD”. LOL... The notion of crypto currency being a “bubble“ is total bullshit. Plain and simple. It is FUD! The news that you referenced yesterday is total BS, twisted, and the reporters feed into that big time. Most of the news articles were total bullshit, from China, to South Korea, and now India. It is FALSE REPORTING! It is spreads FUD! People panic, and get out. It just is what it is.

Sorry for being so hard on you, I actually love your videos I watch them every time, but you drive me crazy! You nailed it on the Bifinex and tether issue months ago though, I’ve stayed away from that ever since.

Well said. There are lots of positive developments in crypto which are just being ignored by lots of commentators. Take for example, the Brazilian government developing an app based upon the Ethereum platform for petitions to its congress or the biggest public pension fund in Canada investing in Ethereum.
Long term investments in good crypto projects will pay dividends and help make the world become a better place to live in. There is a new project out called Medichain which gives patients ownership of their own medical data in a secure way and gives specialists access anywhere. It will help boost medical research. How good is that.

He is saying that it is a bubble.

Let's take Investopedia's definition of a bubble.

"A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior. When no more investors are willing to buy at the elevated price, a massive selloff occurs, causing the bubble to deflate."

We could argue all day, but most of the people that got into cryptocurrencies in the past few months, especially Bitcoin weren't driven by utopian promises to unbanked the banked or banked the unbanked but by the prospect of making money. I know when my roommate got in, he couldn't care less about the tech. He wanted the moon and the lambos. I think it is safe to say that it is a bubble, like almost all financial asset are. A bubble is just a market pattern driven by human emotions. But it hasn't popped. It probably has a long way to go.

I love Bitcoin, don't get me wrong. But if you look at it from a technological stand point it is probably overvalued. It isn't ready for the masses and nothing tells us it ever will. Time will tell I guess.

I watched the video and it didn't freak me out at all. In fact I found it reassuring that he was buying BTC in this dips coz I was too. BTC has changed the world by bringing blockchain to the world. We have oppened Pandora's box, it can never be closed.

I don't think we should get attached to any particular coin and just look for the ones with the best real world applications and uses. Bitcoin might or might not survive but crypto will dominate for sure.

Anyway, you bring up some great points and it feels like there is so much room to grow still. Definitely stay out of tether, you're right about that.

A worthy arguement, gets my upvote

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  ·  7 years ago (edited)

You hit the nail on the head when you said that people who are invested into any Crypto are so much passionate about it that they will ready to fight with you or give unreasonable excuses to prove their point.
Two classic examples of it are Verge and Tron.
There is so much hype about these coins, that if you ever try to reason with people on these coins they will berate you and and treat you as if you know nothing. Verge is the stupidest privacy coin. They missed deadlines on implementing features which were there in top privacy coins since inceptions.
I also dont blame people for defending it. Most of the youtube channels are paid to promote specific Cryptos. an insane example of this is Electroneum. anyone understanding the basics on mining and tech involved, can go through their white paper and point out the deep hole in it. Yet, did it stopped passionate Electroneum investors into sending in it. NO. Recently one Reddit user found issues in their code. Instead of acknowldging and accepting that mistake, Electroneum community started bashing that user. This is not how normal tech operates. even big companies like Microsoft etc, do a Beta release so that selected users can do testing, point out issues and provide feedback for companies to work on.
There is absolutely no feedback mechanism in Crypto industry. Atleast for most of the Cryptos.

I don’t consider it a bubble because we’re looking at it like a stock or commodity. Bitcoin is neither, it’s a network. When pricing networks you can’t use the same comparisons because networks aren’t linear their exponential. This means for every new person that enters the network, the value increases exponentially. Crypto had massive adoption last year and will only continue to do so over the coming months and years. Look at it like a binary play. Crypto is either going to go bust or to the moon. In the meantime volatility is the name of the game!

There is one intriguing thing about this network though. Theoretically all the current transactions holders could lose access to their private keys and thus negate the value of the network. In fact, the more centralised the network becomes and the longer you wait, the lower the overall value of the network and it will slowly die out. This is assuming that no new tokens are created (which is still some ways off based on halvening times). What do you think?

Haha. Yes that's entirely true! Once the tokens have all been mined then I would expect bad things. That's why I personally invest in Steem. It's an inflationary token that will be mined at a long-term inflation rate of .95%. On top of that we have this and other social networks backing it up. So, there is some time left for bitcoin because I'm not sure too many people even understand your point and like you said we still have some years before this becomes an issue. Thanks for the comment. Any thoughts on Steem? Would love to hear. Mainly negative if possible. :-)

I 100% agree with you that the value of cryptocurrencies comes from network effects. However, there is also a force that counteracts that namely scaling (or the lack of it). Yes, for every user the value squares ("Metcalfe's law") but also for every user the network value decreases because of network congestion albeit not as much.
On a side note: That's why IOTA is interesting to me because counterintuitively the network becomes faster the more users join (not shilling, just arguing from a technical standpoint).

Adoption coming in so far has been the highest it's ever been, however, the rate of change of this phenomenon is nowhere near a justifiable correlation compared to the price action that we have been seeing over the past few months. As CI says, most people who even use crypto right now is using it solely for the means of speculation, and nothing else. Your argument of adoption is flawed and invalid.

I agree that adoption doesn't fully justify the price action. I believe what was more likely is the creation of the derivatives market and allowing strong hands to push everyone around. To me that makes more sense. But, I don't think the people doing it want to kill the market, they just want to cash in. This in my opinion, means the short trade will reverse when there are massive profits to be made. They're too greedy to kill the cash cow. They are just in the business of fleecing. Also, on a personal note I don't own andy bitcoin. I'm invested in Steem mainly because of the social aspect of the coin and the fact it has many great technical features. Steem has held up really well over the past 90 days when compared to bitcoin. What's your opinion on the future of the Steem blockchain? Thanks for your comment!

Valid point, using that kind of logic I can't really say that one school of thought is better than the other especially in the kind of market we're in. Only 1 way to find out...

STEEM is great, one of the few coins with a value that has the greatest ties with its objective value tbh. Im currently in the process of trying to buy some but my exchange isnt cooperating with me at the moment because flash crash and all -_-

It didn't really have mass adoption the past year though. Yes, the awareness increased drastically but the use of them really didn't increase nearly as much as it might seem given how much volume and new addresses are from pure speculators. Most of these folks, including myself, aren't using Bitcoin for payment processing. Also important to note that most bubbles can be discovered just by looking at the psychology of the participants in the market - and the behavior here is as bad as it gets.

I think so. The behavior is aweful for sure. Mainly because most people investing are here to get rich quick. Seasoned investors are still skeptical. It may be a bubble but it’s much less bubblishis at this prices. The underlying issue is do you believe in the technology. If so, then good buying opportunity, if not then you probably shouldn’t be investing at all. I personally don’t like bitcoin long term and have invested into Steem to get exposure to the crypto market. I will be keeping an eye out for any better opportunities in the future but for at least the first half of 2018 I’m going with Steem.

Described like that it's a decentralised Ponzi

It’s a speculative market all the way. New new money to prop up old money. But, I wouldn’t call it a Ponzi because it’s not fraud. It could be a bust but still wouldn’t call it a Ponzi. BitConnect on the other hand...that was a Ponzi!

Ha ha, you're the only chap I know that invests in bubbles, but I respect your unwavering opinion.

The question I have for you though is, why invest in Bitcoin, when you could easily invest in Steem, or EOS, or Ethereum, or something that actually has a use-case instead.

Because you are right, all people use Bitcoin for is speculating, but the others I mentioned can actually benefit you... so would you say that they are in a bubble too?

I am invested in Ethereum and Steem for the record. Those are bubbles too as a direct result of Bitcoin - nearly all cryptocurrencies are (I'm using the word "nearly" just not to be absolute, but I personally believe all of them are), just some are less so than others. It's worth noting that the success of other cryptocurrencies hinges heavily on Bitcoin due to its public awareness and perception.

At what point do you think they will deserve their value?

Also BTC has the largest and most established network and long term survival. It’s under continuous development and spins off fork assets.

  ·  7 years ago (edited)

This is a question I would like him to answer, good point. Btw, I lot of people have come to the conclusion that bitcoin is a store of value, like gold. Having that in mind, I give you the question back: why people invest in gold if they can invest in companies that have a product ?

I agree, and to me, investing in gold is pointless... especially if you don't hold it yourself.

IS SIMPLE: If you REALLY believe in crypto then HODL and (if possible) buy more. Questions?

Didn't like your answer about investing just because the perception is going to change. We invest because we believe that one day cryptos are going to be useful. Are they overvalued now? Yes but who cares, it's going to go so much higher when it will really be useful. Just be patient in the meantime.

We invest because prices might not go that low again before cryptos become useful. That's probably also wrong, but many cryptos are improving by the day and slowly we will see real utility. Just don't miss the boat, invest, and hodl.

If you want to trade based on the perception people have of cryptocurrencies, than do it, but you might as well be gambling. Maybe you believe it's a calculated risk, maybe you are good at it, and I hope that's true. But for most of us it's not about trading, it's about getting in early. I bought crypto a long time ago, but even those who bought on the recent highs, if they just hold they will make some awesome returns.

Well you should care if you genuinely think they are overvalued, because that means if you are genuinely investing for the long-term rather than trading, you should probably wait for better opportunities before buying more (unless you think the market will never realize the real value).

I have my doubts on how useful cryptocurrencies will ultimately become. It's likely they are niche in their use for a long time because of the many obstacles they face, ranging from awareness to understanding to the budgets that alternative solutions have available to them. Don't think the banks are sleeping on this, or any of the other large enterprises.

In other words, the real "utility" of cryptocurrencies, especially ones that aim to be just money, will likely be far lower than what people project for the foreseeable future of at least 10 - 20 years (although I hope to be wrong on that).

You ignore the fact that many cryptos are not aiming to be digital money but aiming to solve real world problems. Look at Medichain or use the use of Ethereum in Brazil to cut across ballot rigging.
Those who disparage cryptos ignore the fact that our current fiat money system is not exactly working very well is it? The last 10 years have seen a gigantic transfer of wealth to the 1%.
I don't want to spend my crypto. I want to use it for real world uses. I recently bought some gold with my crypto as a hedge against the dollar crashing and the possibility of hyper inflation thanks to the trillions printed by world central banks to pump up paper assets.
Most of the people commenting here lack a historical perspective and probably have never done any research on economics. Read Jim Rickards book, The Road To Ruin for a good overview of the giant ponzi scheme created by world central banks or the Bubble and Beyond by Professor Michael Hudson.

I don‘t think that crypto will ever replace fiat completly. Imho they will ecome an alternative to fiat. Especially in countries like Venezuela and Simbabwe, where the national fiat is more unstable like the cryptos.

I’ve been following BTC since 2010 with almost complete skepticism. Nonetheless, its value has obviously defied my beliefs. Luckily I invested in despite my reservations. It continues to surprise.

No, YOU invest in crypto because YOU believe that one day crypto will be useful. You cant toss this umbrella statement around when there are so many people who don't even know what a blockchain is coming into the market. What he says is perfectly valid as people are just in it for the money including CI and myself. People who believe that this will be a revolutionary technology is CURRENTLY in the minority.

I invest to try to make money. Is that wrong or does that make me a bad person?

All any country has to do now is fart at crypto and the market just comes crashing down! I can't wait to get past all this turbulence. Thanks for the info... Peace!

Don't panic, hodle your horses 🚀

👍

I've filled all my limit orders, so I'm sitting tight for now. Long term, I suspect big new players like Robinhood entering the casual retail market should bring a ton of new cash into the space. Short term, I think February will be tough, but eyeing a turnaround by Mid-March.

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Didn’t last long, at least 4 now.

As a recent investor (started October-November), I'll take this period as an incredible learning opportunity and a fantastic experience. I feel like I know more about how the market works every day, and I'm enjoying the ride. That being said, I'm still in the green, and I can't image how some who is 40-50% down must feel.

Keep up the good work!

I imagine that you feel exactly as I did when I made a very large investment into the stock market in 1Q 2008! I lost a lot of money and panic sold instead of holding. J was young and dumb at the time and have since learned to have patience. My new motto is: HODL

Thanks dargor - things become a lot more interesting when you're down though, so be careful!

What seems to work for me with less risk is to earn STEEM and SBD, then exchange for Ether. Ehter seems a little less volatile and the only risk on STEEMIT is the opportunity cost of my time.

Hodling to that next pump like:
soon-my-precious-soon.jpg

Not related to your post but something you'll absolutely love to read. I have been banned from the VeChain telegram for saying that a 300$ mark EoY was unrealistic ("FUD" accusation etc...).
Growing less confident about a project because of the community's blatant stupidity is a funny feeling. Keep up the great work dude.

Not surprised, although I hardly think it is a characteristic unique to VeChain's telegram.

Staying frosty. Counting coins.

Hah.

You have a point

I continue to buy crypto aswell.. same bubble will happen within years again.. but then 4 times higher.. In my opinion. Not going for Bitcoin, I´d rather choose Ethereum. gonna check your video later this day!

In your video you mentioned Warren Buffett's comment, that crypto is doomed. I respect Warren Buffett's opinion , but I think that this idea is the next step after invention money, paper money, digital money and then crypto aka decentralized money. I don't think this idea will just die, doesn't mean we will not see big rises and crushes, but I see this invention will stay for long.

Appreciate the practical level-headed approach among the mob perpetuating lambo psychosis. Cheers

Cryptovestor:- last night in the U.K., Lloyds Bank put a stop on their customers from buying crypto currency with their credit cards. Their reason for this Is a fear their customers would get into too much debt. It’s a pity that they do not take such a caring attitude to all their customers hooked into on-line gambling websites.

Nearly all of my money is invested in stocks and shares primarily in European funds but with global exposure. A mix of index trackers and managed funds. A small amount is in P2P lending platforms and a tiny bit on crypto. I am biased to Ethereum and Bitcoin with small investment in Neo, Xlm, Xmr, Ben and heaven help me: XRP. For me crypto is high risk gambling and I am fine. Only invest that which you can lose comfortably. But I agree, learning to save is in itself of value.

  ·  7 years ago (edited)

I had my final limit orders fill this morning (BTC $7,610, ETH $760 and BCH $1,010). So it was a nice present to wake up to! Now I have 75% of my crypto money invested. I'm saving the last 25% for if Bitcoin goes to $5,000, which I believe is as low as it will go, unless it gets banned etc.

Now I'm just going to sit tight and wait for a rebound. But in order for that to happen, fear has to turn into FOMO again, which will require some reassurance that the bottom is in and a clear trend reversal. Interesting times!

And thanks @cryptovestor for all the time you spend on making videos and posts. I really appreciate it!

I don't understand what the big deal behind this crash is. We've literally had crashes that were worse than this. We had around 7+ decent sized crashes in 2017. People are so fucking emotional it kills me. INVEST WHAT YOU'RE WILLING TO LOSE.

I sold most everything before it came down, but held some NAV coin. What you think? I'm not tech savvy but their dev looks to be on a practical path and they also launched their new dapp platform, on top of being a privacy coin to start with.

I'm confident NAV has a good future. They have some great projects coming up and they have delivered on those they said they would do.

Is it possible that Bitcoin could actually be somewhat more resistant to traditional bubble behavior because of its absurd volatility?

I understand that sounds ridiculous, but there's a lot of opportunity to be had from volatility. I understand that a significant portion of Bitcoin's value is based on long term speculation and altcoin pairings, but how much of Bitcoin's value can be attributed to short term trading opportunities created by volatility?

Not sure what you mean by this - that volatility is the direct result of the bubble behavior in the first place. There are other factors as well (e.g: Bitcoin's size, market float, etc.), but the emotional market is a huge cause for this volatility.

Even if a significant portion of bitcoins value is based off of short term volatility, this behavior is actual unsustainable as it is too much like a ponzi scheme in which the scheme only works if people are continuously participating in this activity with new money. When major consecutive events happen (Korea FUDD, China banning bitcoin etc...) you have what happens here in which there is a huge shortage of people wanting to come into the market. The difference between this and the bubble popping phenomenon is that the bubble popping will be much worse.

Situations like these is why I go with an exchange that allows one to short. Ive actually made 2k from this so I would even encourage events like this to occur.

This is unrelated to the video, but I heard in one of your videos at the end of the year that you were looking into hiring some help with your social media management or content creation. I was wondering when, and what kind of help you were looking for if any. I enjoy all your content an it's been extremely informative. Let me know if I can help in anyway. Thanks.

Well it touched 7500 on gdax and bounced back... Looking at the volumes really tells a tale. Looks like the whales are content with letting BTC do it's thing and they can pick it up on the cheap. It was a good call to buy between 7500 and 8000. I don't think the institutional investors will let it drop below 7500. It will be interesting to see what happens on the futures market over the next 7 days

Hi Crypto Investor....I 'm a big fan of your videos and your pragmatic approach. I am new to cryptos (fall of last year), but am long time investor. I 100% agree with your principle on a balanced portfolio. Having some risky 'investments' is a good thing as long as it plays well as a portion of your long-term strategy. I also agree with philosophy of buying on the decent. If you liked it at $15k, then you should love it at $9k!

My question is around how you establish your buying points and where you would be willing to get in again on BTC? You referenced $8.3k, what was magical about that number? As you acknowledged on a different video, there really are no fundamentals to serve as a basis for crypto investment decisions. Everything is based on trend analysis and emotion. Given those factors, how do you determine your jump in or jump out points? Thank you and I apologize in advance if you have already covered this point.

So BTC has retraced 61.8%. At what point do you consider a bubble to have popped? Blockchain will be the future, just like the internet was to be after the dot come bubble. Bitcoin will have every chance to be the biggest part of that due to the ingrained network effects of being first. The tech isn't there yet, and maybe lightening isn't the answer, but it is the first try.

I am personally laddering buys, trading on some volatility. I did not HODL BTC like many. Got stuck in many alts, but luckily most of those were projects I intend to long term hold anyway. Only a few short term trades have I gotten stuck in.

I watch my investments closely and saw an opportunity to sell a top with potential to buy back at the bottom. I am doing that now.

I am all-in on the tech, and social change potential in crypto. I am also very optimistic that BTC will be a huge part of that future.

  ·  7 years ago (edited)

When bubbles pop, you're looking at a 95%+ drop, obviously this is just a rough number. With highly volatile markets like this 61.8% is just one of those rainy days that come once in a while, it isn't anything to be really concerned about unless it drops even further.

Bitcoin will not have a future period. There are so many altcoins that have better capabilities than bitcoin that do the same thing and once objective reality hits, we will see a digression from bitcoin being in the spotlight. On an even broader note, there is absolutely no future for any coin (at the moment) which global governments will adopt as a system of exchange.

Firstly, there's very little wrong with current banking methods.

  1. Many coins (including bitcoin) are trying to fix a problem that doesn't exist, in a much poorer fashion. I would much rather use a centralized payment method like Paypal to avoid the high fees, time and frustration for the lack of customer support.

  2. The problems that currently exist for banks (I.e. transaction time for wire transfers) can be fixed by an internal solution as opposed to adopting something like Ripple. Banks rarely use third party creations as opposed to their own and I dont see why they cant and wont do something similar in the future.

Further, government regulations simply wont allow it. We have seen multiple governments trying to remove cryptocurrencies from main circulation in the economy. This won't change in the future.

What about Japan one of the largest economies in the world having accepted bitcoin as legal tender?
Smart forward looking governments are welcoming innovation in the crypto sphere see Switzerland, Belarus, Estonia.
You mention Paypal whose own founder says that it has not delivered on his original vision. Moving money around with Paypal is slow and costly.

One of the largest economies in the world is still quite an underrepresentation in a fully global contrxt for what adoption really should be right now to command the prices that it is even factoring in other aspects of the coin. Of course like everyone I cannot explicitly define an exact value but considering that many have tens of billions of dollars in valuation is quite ridiculous especially if you try to compare it to the value companies who have similar market caps bring to the world.

Unless America or larger economies in Europe start to welcome the idea, I remain fully committed to my stance.

I appreciate your thoughtful response. I will say that I will just agree to disagree with you on most of your points. I make it a rule not to attempt to debate people who are certain about anything, so I won't try now.

I was insinuating that this isn't actually a bubble by the way. I think when the market rebounds in short-order the proof will speak for itself.

Great video, I agree largely with your approach and thoughts on this topic however I would push back a bit on the idea that transactional data is the best indicator of bitcoin's adoption and value. It seems that is a point you are making.

If all Bitcoin ever was, was a thing people bought, and held, and if those buyers all agreed, as they do with physical gold, that the object is worth holding, then that attitude makes it worth those higher values.

And that is a real possibility, and I think this is at work already, to some extent.

But dips like this one, tell me that most people, or at least, many people do not really believe that Bitcoin has a value, they are really sincerely scared it will go to $0.00. But there are many people, who do not agree with that, and that is enough to ensure that it doesn't go to 0.00.

It could drop more, it might fall a lot before going up. But if you agree that it is secure, and it is transmittable, and that its trustless infrastructure is meaningful, then just hold, in fact, maybe buy.

Thanks for the quality content.

#notfinancialadvice

Finally we're seeing some signs of Bitcoin's dominance rising. It's been hovering around 33% for a while now, but is up to 35% as we speak. Ethereum, which has been outperforming Bitcoin for weeks now, was the last big one to 'fall' (down 10% against BTC today). Hopefully your prediction will come true and Bitcoin can come up to 40% or 50% market dominance again. What do you think?

Looking like it will take some time still - Altcoins fared very well this crash all things considered, especially as Bitcoin bounced back. It does illustrate that Bitcoin is safer though in the event of further falls.

Bitcoins dominance has been hovering between 33-39% the past few weeks with an emphasis towards the lower end of the range. I wouldn't call this "rise" a statistically significant value unless it really breaks upwards of 40%.

You're right. It needs to cross 40% to indicate a meaningful change of sentiment. I was just talking about the last couple of weeks, where it's been hovering around 33%-34%.

This is how i'm playing the market atm:
I'm changing from 1st generation coins to 2nd and third generation coins, so from BTC to ETH,EOS, NAS, for example.
I'm also buying coins that have actual companies behind them XLM, IOTA.
Bitcoin might be a bubble, still cryptotech is the future, we just need to pick the winner, and picking the winner is in our hands, the more developed and adopted coin will be the winner, with maybe some others in 2nd and 3rd place

Agreed. I've shifted all my BTC to alt. ETH, NAV, EOS, & a little side speculation on ELF.

The issues integral to exchange on the blockchain aren't just a BTC problem (but the negative press consumed by the masses always has it associated with the poster boy BTC ). IMO, the flip from 1 to 2 will be sooner rather than later.

I agree with both of your points. the 2nd or 3rd gen coin is going to be the overall winner. Probably the third gen. There are so many to assess, it is quite challenging to see who is going to succeed. BTC probably is not going away, and may be the reserve currency, but the 3rd gen winner is going to be the daily use. I have been looking at Stellar, Lisk, and Cardano to be the winner. Why NAV EOS, ELF or IOTA (I haven't had a chance to research these yet)?

I'm pretty sure CryptoInvestor suggested NAV a few months ago. I know he mentioned SALT, which, as of today, is back down to the price when he mentioned it. Until this video I was curious to see his feelings on the alts. But today's video says he is only here for the ride. I'm here for the long haul because one of these is going to create the architecture of the next iteration of internet commerce.

Got into NAV from CI's suggestion & a paid newsletter to which I subscribe also suggested it. So that is good enough for me. As for the others, I have the aforementioned newsletter do the research, (they help in the sorting), and then I will run them through my own set of metrics. It remains to be seen if the newsletter and the metrics actually last for the long term.

I do agree with your last sentence. But why restrict your choice to just one? For instance many pundits are saying that this year is the year of the platform. Maybe. But it's quite time consuming to do your own research. You have to be somewhat a geek and really understand the technology if you are to analyze below surface level.

So it's much easier to get a trusted source to do the analysis for you and run through a rough metric of your own.

A great time to buy BTC and get some Steem relatively cheap.

Hey man thanks for the vid! It really helps to hear your calm and objective pov during events like this. So I have some questions for you :

  1. You talk a lot about portfolio allocation and being diverse. Could you share a rule of thumb? How would you be positioned in the distinct cases a.cash-crypto and b.cash-crypto-stocks ?
  2. You also talk a lot about the 'valuation' (or lack thereof) of Bitcoin. I am wondering (disclosure: I am neither experienced nor do I have econ training) couldn't the total hashing power of the network provide an estimate for the 'actual' value of Bitcoin? I mean, shouldn't the price of Bitcoin reflect the costs of mining and related expenses?

Thanks a lot!

  ·  7 years ago (edited)

I am surprised to find the labor theory of value re the Bitcoin price actually making an appearance in the commentary of a crypto video. This was first made famous by Marx, and then allegedly, disproved by a few late 20th century marxists. I believe it does make sense, but it's a bit of a headache on how to make the calculations. But for sure, any value over and above the real value is a purely speculative value. And before anyone complains that speculation doesn't have a value, well, that can be gone into elsewhere.

Now to the issue of the portfolio. I have read some pundits who say you should only put 2% of your crypto investment pool into any one 'position'. This is investment talk for what I assume means 'coin' or similar. That made me laugh. So you end up with a portfolio of fifty coins? I don't want to fuss with that level of detail.

So my strategy is to choose four coins and risk them accordingly. Tier 1 is a real solid performer, and tier 4 is a bit of a speculative punt. From your crypto pool you then allocate 55%, 30%, 11%, and 4% respectively.

Note there are two, or more, pools. One of these is crypto. For me, I do 50/50 of my entire investment pool. This is a big exposure. But I have a big confidence in a crypto future.

Hope this helps.

Why would I have left the video any earlier?! 13:47

Someone has probably asked you this question a thousand times... (sry)

But are you investing in Steem? And if, are you thinking the price will go up or are you investing for the Steem Power and its benefits?

I think that it is a good opportunity to buy some of others cryptocurrencies like you said! If bitcoin is a bubble and it is going to pop it will not be the end of crypotcurrencies! A lot of people confuse Bitcoin with Cryptocurrencies but each coin differs from other .. may be is the time for another coin to lead the market rather then bitcoin :)

Will you ever do videos on trading other assets or stocks beyond crypto currencies?

If bitcoin pops and investment opportunities dry up I think people would still love to hear your commentary on other areas of investing - not that you need to wait for that to happen

I was thinking about doing this anyway - Will likely wait til the channel gets bigger than it is now even because YouTube likely won't promote those videos as it's different from my core subject, hence having a higher floor for audience (the people with notifications on and who watch most of my videos) would be ideal.

Where did you find this "less than 1%" information? I would like to see the metric used to calculate that.

Who doesn't love to see crashing the price of bitcoin

I have accumulated some fiat during last months and it's time to buy some cryptocurrency!
But not above 4000$ per BTC

there are few people in this space that I really listen to and pay attention to, you sir are one of them, erudite and on point, great work, keep it up

before I ask my question, just wanted to say thanks for all the videos that you've made thus far. i've been watching your video prior to the rise of bitcoin. and now the descent.

anyhow, my question is wouldn't the outcome of some of these other coins look different if their prices were not so dependent on bitcoin?

if i'm not mistaken, many of the exchange require bitcoins for their transaction. which is why i thought bitcoin had so much more transaction. and it has me wondering what would have happened or will happen if they were to take fiat instead. i heard bittrex will take usd now. we'll see what will happen to alt coins and bitcoins once that occurs.

any thoughts?

In my Eyes ,There's simply no point of cutting losses if you followed the Golden rule of only investing
What You can Afford to lose.HOLD!
( Follow : @thecryptobetter )

The main reason people are restless when it comes to these market dips is because they invested money they don't afford to lose.

#1 RULE: Do not invest money you can't lose by any form!!!

My portofolio was down up to 40% but I still sleep well and have no problems with that. Invest in long-term projects that YOU believe in

We need a video on which Credit Card companies are not trying to control our purchasing habits. In light of the recent Chase ban on purchasing crypto.. I am ready to move on.

Would you ever share what your overall portfolio looks like?

The top two things to do in a cyrpto-market crash!!!

@cryptovestor Are you still bullish on ETH? Why/Why not?

I totally agree with you on this one. Especially with AltCoins. So many opportunities to buy. The more research that is done the less you will be "gambling".

Always helpful accurate information. Thanks

I buy more LTC during this crash in preparation of litecoin integration to facebook payment. Store was introduced lately next it's payment.

Thanks for the great insights. I agree with you on it being a bubble. It has very little transactional value for the time being. It's a pump and dump ground for the money hungry investors.

Something different: I wanted to ask you about your top trading recommendation outside the crypto world. What type of trading could I do with a $20k - $50k budget? I'm looking to earn $5k - $10k a month (if that's realistic for my budget).

Thanks!

Casino

Does the price of altcoins rise and fall with bitcoin?

It depends on the situation. In this case, it seems that people are exiting the market for fiat. Because of this almost everything is pretty much falling.

This looks a lot like 2013 again, and having gone through that before it's a lot more easy to stay calm this time. The question is whether we will recover quickly or whether we will see another mid-long term bear market. I wouldn't be surprised if it's the latter, because it will take investors a long time to get their confidence back, and in the case of BTC especially there are still major doubts about capability and transaction fees. For sure this is a better time to buy in than a month or two ago, personally I wouldn't be surprised to see $5000 tested. Anything below that will be a big opportunity.

thanks @cryptovestor, has shared a very interesting post, and I want to know why bitcoin prices have started to weaken.

thanks @cryptovestor, has shared a very interesting post, and I want to know why bitcoin prices have started to weaken.

Many consecutive news event from Asia (Korea presumably "banning" bitcoin, Binance not allowing Chinese users on it, etc) caused people to panic and when panic is in that great of a magnitude, the panic starts reinforcing itself causing events like this to occur.

Hey man, thanks for sharing your thoughts regarding this.
Can you explain why this trading chart shows such low trading volume during 2017 compared to 2016? Surely more people were trading BTC during 2017 as the price reached all time highs... or is this a result of a massive whale splash in the crypto economy? ... Or is this just a pile of garbage (ref: https://data.bitcoinity.org/markets/volume/all?c=e&t=b)

Appreciate any insight, thanks. Dean

I was really surprised you actually followed through with your plan to purchase in the 8k area knowing full well Tether could blow up any time and the impact it could cause. If you know the 50:1 ratio relative to the total market cap of actual dollars invested vs Tether which is 1:1 with USD, you would know Tether represents about 20% of the actual total crypto market cap. At this point, it has nothing to do with whether being in a bubble or not. The issue is if fraud has taken place in regards to wash trading, the market being in a bubble or not would not matter at that point. Everything will tank and cascade to the exchanges which are the funnels of how money goes in and out in the crypto market. Anyway I'm not here to judge you on your decision and do wish you all the best but again just really surprised you would still open another position despite the ticking Tether that could implode either by sudden exit or by government crackdown.

In my case, I'm just waiting for the value of Steem Dollar to surpass Steem value so I can power up!

  1. You can't just trade crypto and talk about it on youtube and steemit if there isn't some interesting contradiction, because everybody else is already doing that ?
  2. Humanity and all its "economy" is a bubble that will soon pop, but nobody will listen to that as it sort of goes beyond their bio-scope, which is why it will happen, so goto 1)

i was subscribed on your channel on youtube, Youtube shadow unsubscribed me from your channel.
Just to let you know. Hopefully I had your steemit handle.

Hey man, wanted to ask a question from another field. What is your take on Cannabis stocks? Are you investing in any of it? Do you think investing in a basket of this kind of stock is a smart idea?