The fuck it is a bubble. I have see many posts from fear mongers about the graph of a bubble and how Bitcoin is currently in ‘Return to Normal’ or ‘Bear trap’ part of the bubble. First things first, Tulip mania wasn’t itself very well documented(as per Wiki). 2 days ago · Bitcoin is in its biggest bubble to date, which could lead to a prolonged bear market, similarly to , said former Merrill Lynch economist. Founder and chief economist at Rosenberg Research, David Rosenberg, has doubled-down on his narrative that bitcoin, similarly to the stock markets, is in a massive bubble. Oct 03, · Just like with the Tulip mania, Bitcoin’s price rose in a manic fashion (in alone it went from $ to over $19,) and many people lost capital because of the burst of the Bitcoin bubble.
Bitcoin feels like a bubbleBitcoin and its meteoric rise looks like a classic bubble
It must be as intuitive, as familiar. And Dash is the only cryptocurrency currently formulating such a product. One in which auto-payments are possible, joint accounts are common, and traces of scary-looking cryptography are wiped away. One in which — despite all this ease of use — the individual still holds her private key.
No need for trusted third parties. See a preview of it below. What do you think? Could Bitcoin and even other coins be in a speculative bubble?
Share below. Image via Pando. Could you be next big winner? I consent to my submitted data being collected and stored. Bitcoin dived by as much as Bitcoin saw some wild overnight volatility that came about after a flurry of selling activity liquidated long positions and sent its price reeling lower This selloff was quite intense Certainly no good for buying a coffee or even a tank of fuel.
So not a very practical currency then. Also the storing of all information within the algorithm seems to me to be a bit of a scammers dream. TI image those property details address, name, DoB, previous address, bank account etc. The Kitces article about the downside to early diversification reads like an excuse for financial advisors to get their clients into high-risk investments, likely with a hefty fee.
They can tell their clients that there is time for sensible investing later and now is the opportunity to strike it rich. Great for the financial advisor. Not so great for most clients who are gambling away money with little to show for it.
I usually find Kitces articles informative, but this one rubs me the wrong way. Interesting Sachs article. Correlation of equities and bonds and all that. I am thinking of taking on a bunch of mortgage debt on the future upsize if rates remain low as an inflation hedge. I see it as diversification. No assets are cheap anymore, debt is abundant, and inflation will be a tempting way to square the circle. Great article and timing, especially like the first chart. I see lot of ordinary people thinking about bitcoin like a lottery ticket hoping to get rich one day.
Also they are now being incorporated into hedge funds which drives the price up. If it was as easy to buy as click of a button on HL platform I would dip my fingers in this pie earlier this year through XBT tracker. Bitcoin is the antithesis for that. Bitcoin is a commodity with no carry costs. So its value is determined by the need to store the value which otherwise would be in something covered by national regulations and costs associated with it — currency, stocks, property, gold… With bitcoin, you create your identity like a number and buy bitcoins to be owned by this identity.
There is no super authority who can confiscate the value, or even know your real world identity.. There are risks though linked to tech advances: Forks, quantum computing advances breaking public key cryptography, constant increase of computational power, all of those makes bitcoins not a reliable store of value long term….
You have to do telephone order and they are euro denominated so expect to pay fees and charges. I lost most of my respect for monevator when the author announced he did not buy house for last two decaded because he thought they were over valued. Whatever was left is gone now with him calling bitcoin a probable bubble. If this is not bubble than nothing is. Thanks for the links this week.
TEA expertly delivering his stock delivery this week. All very nicely put. Must get round to that budget…. TI — Well it would be irresponsible to live through the lowest interest rates of all time and not take on some debt, now seems as good a time as any with valuations and inflation being a bit high.
So, how do I protect against inflation these days? Is the only way to borrow as much as I can? According to that Sachs article, neither shares nor bonds are likely to protect, so what options are there? Taking on debt — because rates are low — makes sense to me for acquiring real assets, the most obvious being a home to live in. Nothing has actually changed in that respect. Friends who do own cryptocurrency are affluent enough to be able to throw some play money at it and laugh about the daily movements — no one is taking it seriously.
Enjoyed the Reformed Broker take on it btw, thanks. And I again was afraid when just a couple of months ago, they again bought some Bitcoin. They are up percent today. Soon, they will be able to sell a single Bitcoin, making good on their entire investment. Everything after that is pure profit. Too late to enter — many people, including myself, have thought so at one time or another, yet the fact that Bitcoin is again setting net All Time Highs implies that everyone that thought so, at any time since , has been dead wrong.
Bubble, perhaps. But, Bitcoin has been through many bubbles, has been declared dead more often then I care to remember, yet has always recovered. It is possible that Bitcoin will be worth zero sooner or later. But it is also possible that Bitcoin will be worth 10x as much in In any case, what Bitcoin has thought me is not to panic in case of volatility in the market.
Just hodle, and chances are everything will be fine. At the very least, holding onto Bitcoin has helped me become immune to any volatility the regular stock market may be able to throw at me. Bitcoin made me a better investor. I understand that if expectations of higher future inflation are realised that will erodes the value of the debt, but if you believe that real estate prices are linked to mortgage affordability, increasing interest rates decreasing mortgage affordability are bearish for property prices.
I would think it would be better to buy when rates are higher but prices lower, rather than paying a lower interest rate on a bigger chunk of debt linked to a purchase made when mortgage affordability and prices were close to all time highs. Even more so for a buyer who has enough wealth in other assets not to be dependent on a high LTV mortgage to purchase a property. Anything in the digital world can be copied.
Bitcoins electricity consumption is going exponential and it currently has no function other than to sell it to someone else for a higher price I. Maybe its time to go back into dividend stocks? Ill be trying to buy property in the next yrs need a bit more saving first. The Rhino — genuine. The overall gain is now percent, and may or may not be higher or lower in an hour, or a week, or a year. Volatility and risk is extreme.
The trend is up for the moment, and tomorrow Bitcoin could be down 30 percent. Any investment that will carry you through the decades comes with risk. We need to diversify and spread our risk, this is just common sense. I am convinced that Bitcoin has become a new type of asset class and deserves a place in my portfolio going forward.
High risk, yes, high potential, you bet. Thinking that Bitcoin will go away and we can all just carry on and forget about it is just wishful thinking at this stage. According to Bitstamp, week from Nov 28, value was 2. Today, about That is a gain of about percent, or x4, each year. Every year. Since Nov AI — yes, no ones got rich with bitcoin compared to say how everyone got rich with residential property. I remember the Mt Gox incident.
Definitely falls into the category of something you can talk about rather than something you can invest in invest is the wrong word here.
I am in the same boat. Any suggestions gratefully received. Good luck! Had an encounter with one of the True Believers recently. Enron tipped as often as Amazon and both thoroughly outnumbered by swathes of long gone and forgotten other companies.
First, I get that the value of debt is eroded in real terms by inflation, but the nominal amount plus interest still needs to be repaid. Second, I also get that interest rates are still low and albeit lately rising, likely to stay relatively low for some time yet. Third, I also get that, in the past, the growth of the assets financed with debt and, if necessary, the income used to repay debt has often outstripped both inflation and the cost of interest.
But the protection from inflation arises not from the debt but from the asset it finances. In other words, the third point is everything and the first two points irrelevant, and debt provides no protection from inflation other than by facilitating the purchase of more of an asset that does successfully protect from inflation. So, if you are using debt to buy property or equities, or bitcoin, or whatever , what you are saying is that you think property not debt will protect against inflation.
John — TEA has a lovely definition of debt as borrowing from your future self. In times of high inflation, the cost of the debt to your future self is lower than the utility to your present self. Nominal rates are real rates plus inflation. If you think that inflation is to rise, driving up nominal rates, then fix in some debt and make money from your apparent ability to predict the future. Your implicit assumption that current nominal interest rates represent the underlying discount rate for the valuation of equities is up for debate.
Debt obviously serves a second purpose of making investments more highly leveraged — so the return on capital — whether positive or negative — is many time greater than it would be in an unleveraged investment. Although that is independent of the inflationary shield. How do you make money from this though, other than by using the debt to hold an asset that provides a higher return than the cost of the debt irrespective of whatever inflation does?
Perhaps a worked example might help me out here, where you are not reliant on the asset as the inflationary shield to come out ahead financially. I understand the concept of borrowing from your future self for consumption smoothing, and that personal circumstances e. The inflationary protection potentially provided by investing in property or equities and the extent to which low interest rates are baked into current valuations is a separate discussion altogether, and not really my point of contention.
John — I join you in not understanding the logic of all this; beyond — — if my earnings rise faster than inflation I will find it easier to pay down the debt and I will be better off, but not because I have taken on the debt, that I can see anyway. Smart investors talk about ranges of possibilities and assign probabilities.
The more somebody talks in certainties about anything to do with the future — and often in assessing the present — the less likely I am to believe they are worth listening to. A range of possibilities implies many of the scenarios you try to assign a probability to do not come true.
It may mean you got and priced your estimates wrong! Bitcoin is interesting and difficult because of the easy availability of similar-seeming examples South Sea Island, Tulips, Pets. People made considerable sums in those first months of tulip mania. The tulip boom lasted long enough to generate new jobs around the industry, change the wealth of former paupers, and give rise to a new set of codes and laws for the tulip trade.
However, once the entire enterprise became about speculation buying and selling for a quick profit , Mackay wrote, the confidence in the Tulip market faltered, which resulted in a sudden drop in tulip value. People who grew tulips with a promise of a certain price at sale found that suddenly no one wanted to pay that price, since the value of these flowers changed from the time they started growing the colorful flowers.
Ultimately, the tulip bubble burst and many of those who were made rich by the enterprise lost it all. In more recent years, regular people have lost their minds over seemingly valueless objects, like Beanie Babies. Writing in Slate in , Mark Joseph Stern, described the mids rise and catastrophic collapse of these plush toys:. For those like Stern who have a closet full of nearly worthless stuffed animals, that speculation did not pan out.
People are putting in more money per Bitcoin, especially as the value rises, and the system is more programmatically controlled. On the other hand, what is that demand based on?
The world of retail and trade has yet to catch up with Bitcoin to let you use it in all the places you can spend hard cash. As a result, Bitcoin is currently a place you park your money and hope for it to accrue disproportionate value, which does sound a little more like Beanie Babies.
The dot-com bubble, which happened to coincide with Beanie Baby mania, has more in common with Bitcoin.