In Store of Manufacturers of why is Bitcoin dropping so much right now are confidential, carefree and danger-free Orders naturally. In this respect, may You safely with our tested and safe Sites work. If You the decision have taken, the means try, if there is still the matter the to buy Order quantity. In the event of a Selection a Stock pack. Dec 20, · Bitcoin bulls are also pretty convinced that the most popular digital currency is now a bona fide store of value: i.e., an asset, commodity, or currency that maintains its value. For Why is Bitcoin dropping so much right now, you don't have to understand computer programming to realize that banks, businesses, the bold, and the brash are cashing metal on cryptocurrencies. This templet will helper you to get started, but always call back that Bitcoin finance carries a high stage of speculative chance.
Why is bitcoin dropping so much right nowHere's Why I Won't Buy Bitcoin, and You Shouldn't, Either | The Motley Fool
On Wednesday, Dec. This jaw-dropping rally is rebuilding the euphoria that overtook the crypto community back in , and probably has folks believing cryptocurrency is a good investment.
But I am not part of that community, nor can I say I ever will be. The higher bitcoin goes, the more convinced I am that it's one of the most dangerous investments. Each of the major buy theses surrounding bitcoin can be easily debunked -- as follows. One predominant catalyst for bitcoin is the perception of scarcity. It currently has Over time, the remaining 2. With only so many tokens to go around fractions of a token can be bought and sold , the buy thesis suggests that this scarcity makes bitcoin an excellent investment.
The problem is that bitcoin lacks genuine scarcity. Its perceived cap of 21 million tokens exists because of computer code. Last I checked, code can always be erased and rewritten. While it's unlikely that a community consensus would be reached to increase the circulating supply of bitcoin, the possibility of this happening isn't zero.
By comparison, a precious metal like gold has a hard supply limit. We can't use alchemy to make more gold. The only gold that's available is what's been mined or is still underground. When the only parameter of scarcity is written computer code, that's not true scarcity.
Another buy thesis of bulls is that bitcoin's utility is growing by the day. More businesses are accepting digital tokens for payment, and a broader swath of people are buying bitcoin tokens for the first time. According to financial services company Fundera, around 2, U. More than a dozen multinational companies also accept bitcoin. Slam-dunk proof of increasing utility, right? Not so fast. There are not nearly enough tokens in existence to drive widespread adoption, based on these figures.
As one additional note, there are about Removing these nonemployer businesses leaves 7. Census Bureau in According to Fundera, just 2, of these businesses are accepting bitcoin. Bitcoin bulls are also pretty convinced that the most popular digital currency is now a bona fide store of value: i. When coupled with the central banks' pledge to keep its federal funds rate at or near record lows, it's pretty evident that the U.
Crypto investors believe that a ballooning money supply is a green flag for bitcoin to head significantly higher.
The issues I have with the store-of-value thesis are twofold. First, bitcoin isn't backed by any other asset or government. Therefore, it has no tie-ins or official relationship to the movements of the U. Implying that a ballooning money supply should push bitcoin higher is nothing more than a dart throw. Second, store-of-value assets are designed to maintain their value over time and protect investors from volatility. Yet in March, bitcoin nearly lost half of its value in a hour period.
Therefore, it has no tie-ins or official relationship to the movements of the U. Implying that a ballooning money supply should push bitcoin higher is nothing more than a dart throw. Second, store-of-value assets are designed to maintain their value over time and protect investors from volatility. Yet in March, bitcoin nearly lost half of its value in a hour period.
In , bitcoin lost about half its value in about six hours. This isn't how a store-of-value asset behaves. Bitcoin optimists will also crow about bitcoin leading the digital payments revolution.
Going cashless could resolve the issues created by certain regions of the world being underbanked. Additionally, the blockchain technology that underlies bitcoin could revolutionize the payment processing and settlement time frame, especially in cross-border transactions. While I don't disagree that a digital payments revolution is underway, or that blockchain could offer global financial and supply chain solutions, bitcoin isn't the vessel that's going to make this vision a reality.
The interesting thing about blockchain is that it can be tethered to multiple types of digital currency, be used in conjunction with fiat currency, or can operate independent of a tethered token. There's absolutely zero evidence that bitcoin is necessary to support a blockchain revolution.
To add, buying bitcoin tokens does not give an investor any ownership in the underlying blockchain. With no ownership in the solution that has the potential to actually drive this digital revolution, bitcoin investors are pinning their hopes on other investors being willing to pay more for a currency that exists only in computer code than they did. So, why is bitcoin rallying? I'd surmise it's a combination of short-term emotions, technical analysis i. After all, it's nowhere near as easy to bet against bitcoin as it is to bet against a publicly traded stock.
History has proved that sentiment can shift at the drop of a pin in the cryptocurrency space. I'd suggest investors keep their distance from bitcoin. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Dec 20, at AM.
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