Below is from my article “Bitcoin’s $20K Dilemma” To wit:
So why did I use the argument that Bitcoin now has a $20,000 problem, you may be asking? Fair question, and it is for this reason…
Unlike the general stock market of the last nine years or so, Bitcoin is not backstopped, or propped-up via any central bank largess. In other words: There is no central bank “put” to ensure “investments” aren’t subject to the true laws of supply, demand, and more importantly – emotional swings of the investing public. And Bitcoin (and all its ancillary brethren) are at the epicenter of a purely emotional investing public. Period.
Why? It’s all been about get-rich-quick. At least, that’s my opinion, over the last 6 to 12 months. So much so Unicorns are tearing, if not out right bawling, with envy.
People didn’t, haven’t, and still don’t care what Bitcoin or anything else did, or does, as far as a product is concerned. All they’ve cared about is what the stock price is currently – can they get in on it – and will it keep rising? That is all the “fundamental” analysis that has mattered.
And many a so-called “experts” has been more than willing to wrap more specious styled analysis around that fundamental to sound as if they “know” something others don’t, when in effect, they are nothing more than speculating themselves with more makeup and better cameras.
Now, Bitcoin™ (and all cryptos I’ll contend) have a much, much, much (did I say, much?) bigger problem: it’s now worth less than 1/2 of what it was at the height of euphoria, again!
And that dear reader – changes everything.
The reason $20K took on mythical proportions was for its big number psychological value, congruent with its rocket-ship trajectory in little but a few months.
This is where “gurus” and more pointed and theorized “If it can be here, it can be at $1Million in nearly no time flat.” “Retire with crypto’s” has been the clarion call. Retire early, retire wealthy, retire good-looking, retire _____ (fill in the blank.)
I think it was also said to cure cancer, but I may be mistaken on that point. It’s been hard to keep up.
Then the unfathomable happened in near the same amount of time that it took to go parabolic. e.g., It began to lose its orbital trajectory and has been tumbling back ever since.
Now – it’s in fear of crashing or flaming out in spectacular fashion with every passing headline. That’s not the
fairytale storyline this area of “investing” prowess was supposed to follow. According to the so-called “experts” that is. Nonetheless, the now entire debacle unfolding is being writ large in a way no one can miss. i.e., Bank balances. Both real and presumed.
Here’s the dirty little secret no one seems willing to say, so I’ll say it:
Unless you were one of the few (and that number is very, very, very few) that for whatever the reason speculated and got in on the crypto-bandwagon before the parabolic move of a few months ago – more than likely you are either sitting in a near break-even position if you’re lucky. Or – in a completely losing position at worse.
Welcome to when magical thinking – meets cold hard, brutal reality.
This is not the fabled path crypto’s were suppose to sojourn. It was supposed to revisit $20K well before it would ever see $10K again, if ever. The issue is now not only has it revisited $10, but it’s now hanging back with $9, looking like it’s lonley for something sporting an $8K.
Here’s something else that’s now, “different this time.”
If you are one of the few that were in before all of it.( i.e., When it took two Bitcoins to buy the equivalent of a pizza.) You now need to be looking at the current prices and contemplating (at least you should, in my opinion) at what level you should cash out – before it goes even lower. Rather than trying to stick to the foolish meme of stupidity investing being told and sold, aka HODL (hang on for dear life.)
For those thinking about, or looking for the “retirement lifestyle” that has been sold by many a “Bitcoin guru” of late. Just remember this:
Hanging on doesn’t pay the bills if you’re now living on what was presumed a “Bitcoin millionaire” lifestyle paid with present or future coins. Especially if they’re now trading at over a 50% discount in just under 6 weeks. Hint: The lease payments for the Bentley® won’t change for years. Think about it.
However, there’s now another aspect of all this that needs to be articulated, because none of the “gurus” will. And for those who may need the warning, here it is – Alert: Trigger warning!
If you invest in Bitcoin today; and it goes back to $20K; the best you’ll do is double you money. And, unless that is to happen in the very short future of let’s say a few months, tops? (and I’ll argue the odds are slim to none, emphasis on none) You can probably assume further reduced values ahead are going to be norm – rather than higher. Best case scenario? Opinion of course: Vacillates, and it all becomes dead money for the foreseeable future.
If you think that’s a retirement vehicle or strategy you can bank on? May I interest you in some ocean-front property I have in Kentucky that I’ll let you have, cheap? (Sorry, but cash only.)
Now that Bitcoin has revisited prices beginning with $9, rather than $20? Look for prices in the 8,7,6,5,4,3,2,1,_? coming sooner, rather than later, in the very near future.
And for those who need to be reminded of what “paper wealth” looks like when it’s losing value faster than the digital paper it’s written on. Here’s a picture that tells it all in less than 10 thousand words, or should I say “bits?” To wit:
© 2018 Mark St.Cyr