Bitcoin's Fumble And My Thoughts
By Jim Bauer
@porwest (78754)
United States
May 19, 2021 8:39am CST
Bitcoin and other cryptocurrencies are not something that I follow very closely as I feel that these types of investments, while gaining in popularity, especially among younger, less seasoned investors, are essentially long shots and a pure speculative gamble.
Partly because there is nothing solid really backing any of these assets up like stocks, precious metals, and even real estate.
But I do, nonetheless, own at least some cryptocurrency. Bitcoin, in fact. But to me, the money I have in it is not an investment. It's akin to buying a lottery ticket or walking into a casino.
Maybe I walk away with something in my hands, but more likely than not it's going to be a total loss.
I bring this up because some of you are interested in it, or even invested in it, and of course the last couple of days have not been kind to Bitcoin by any measure.
In fact, the entire crypto market has tanked.
My thoughts? It's a market, just like any other market, and there will be things that influence it up or down. The dynamics of what drives the movements among any asset class are different of course. But the fundamentals of the movements are essentially the same.
The big difference with cryptocurrency, while it has been around a while, is still a relatively new thing. And so it simply becomes more difficult to determine what is the next move, or the next direction. There is simply no real history to go on.
My guess? Bitcoin is in a moment of liquidation. Not total and complete liquidation. But I think many people have drawn the conclusion that perhaps these cryptocurrencies are not as stable and as valuable as people thought they might be. So, as a result, they are simply converting these currencies to real, cold hard cash. And this is causing the crypto markets to fumble and tumble. And I think the slide is not over yet.
Where will it go? I think we may see Bitcoin drop into the $20,000 range near term. Is that the bottom? Probably. What happens next? I think cryptocurrency takes on a more normalized path to real valuation.
In other words, at some point crypto will be more 'realistically' valued. The massive swings may come to an end.
This is a big maybe. It is crypto. And if we have learned one thing about crypto since it became a thing, it is that it is unpredictable. So, my evaluation is simply based on what other asset classes in the past have done when they come out of their wild territory.
We have seen this with gold. We certainly saw this with real estate after the crash of 2008. Incidentally, we are going to see this again with the current real estate market.
Things will slow down. Things will consolidate. That's what crypto is doing right now.
When might be a good point to get back in after the bottom? Probably $35,000 to $40,000.
I will still continue to watch it. But I think anyone in it right now should just sit tight and be patient and wait to see what happens next. Unlike other asset classes, this does not necessarily signal a buying opportunity.
Would I sell?
It depends. If you have enjoyed massive gains and want to take the short term gains? Yes. But if you are long term, and you have invested money you don't care if you lose it all?
I'd stay put, but I'd not be a buyer of any new holdings.
11 people like this
11 responses
@Curl2908 (45)
• New Zealand
19 May 21
Actually I feel the cryptocurrencies are going to overtake the value of dollar and show its dominance as a new currency since its digital age, for next two centuries as did the British pound in 17th, 18th centuries and US dollar in 19th, 20th centuries. I know it's in a lot of volatile state compare to other currencies, but I think this is going to change the financial sector fundamentally which we can't even grasp.
2 people like this
@porwest (78754)
• United States
20 May 21
I suppose it is possible. Stranger things have happened. The one thing right now that is showing signs of deterioration and push back are many countries who are either banning it or deeming to highly regulate it. One thing we know is that countries like to have control over their currencies and use many factors to value it. I am not so sure that many of these countries will so willingly give that up. Granted, ultimately the people who use and accept any currencies are the ones who will have the final say. But, as with any currency, how widely banks and other financial institutions accept them as well is key.
It is a wait and see game. Who knows what it will ultimately wind up being, or if 10 years from now it is even a thing.
@Curl2908 (45)
• New Zealand
20 May 21
@porwest I think since it is a digital era and AI, blockchain are the next highs in the technology, I feel it's going to grow exponential and then the banks and other institutions make its value so high that inequalities in economy would cause a great stress around the globe. Since times are changing exponentially and the countries banning the currency is all the big players in game to show that banks are under control, but I feel the banks may lose their grip as a fundamental financial institution, but we have to see how it goes.
1 person likes this
@allen0187 (58444)
• Philippines
19 May 21
Needed to read this and see a different perspective into all of this. I'm fairly new in crypto but I have made some money buying the dips and holding on to it long term (HODL if crypto people want to be specific). I did watch some charts earlier on and did buy when I saw the prices that I liked in the coins that I wanted to get.
1 person likes this
@allen0187 (58444)
• Philippines
20 May 21
@porwest agree with your points here.
I don't fully understand crypto that it why I continue to read on it. Again, it is perspective and perceived value. What is happening is similar to the bull run last 2017 so when the prices dropped hard, I didn't budge. I mean I like the value of bitcoin at $42,000, what's not to like when it is at $30,000?
Cryptocurrency isn't for everyone. Same thing with all the different investment instruments out there.
1 person likes this
@porwest (78754)
• United States
19 May 21
Glad I was able to offer another perspective.
The thing with me is that I am one who understands economies, currencies, markets, commerce, and the flow of money and things that influence value. So, I come at it with that perspective. In order for something to have worth it has to be a value that is tangible. It has to be backed up by something.
Even with the U.S. currency. It's all faith based. You have to believe a dollar is worth a dollar in order for that dollar to have a dollar's worth of value. BUT, there is still GDP to back it up ultimately. Goods and services are the measure by which a dollar's value is ultimately determined (there are other factors of course).
Bitcoin is not tangible right now, and neither are any of the other cryptocurrencies. So what they are really worth over time is a huge question I think few people can answer at this very moment.
When you think of it another way, it's like the whole Pokemon card thing. They have value only because people believe they do. There may be a strong comparison between Pokemon card trading and Bitcoin trading, and any other cryptocurrency out there.
I could be wrong, but I think ultimately crypto is sort of a fool's game that some will profit on handsomely and others will lose their shirts from.
1 person likes this
@porwest (78754)
• United States
21 May 21
@allen0187 The only big difference for me between what happens in the stock market and what happens in the crypto market is that in the stock market, I can at least make a determination as to any particular stock's real value vs. trends in the market influencing the direction of any stock. Up or down. There are calculations, for example, that I can make that will tell me fairly accurately what any stock is generally worth at any given time, given a variety of factors that go into making that assessment.
Crypto has no such method of determining real value, and so it is more difficult to determine if a movement is representative of real value or perceived value. One cannot necessarily conclude that $63,000 is a real value and then assume that $30,000 is a better value or discount to value.
1 person likes this
@konvicted1911 (94)
•
10 Jun 21
I think at present scenario, bulls are still active in lower supports. And from now on, the market may start moving up. 40,000 will be the key resistance.
1 person likes this
@RebeccasFarm (87040)
• United States
19 May 21
I will never understand the draw of bitcoin.
1 person likes this
@porwest (78754)
• United States
19 May 21
Frankly, the whole thing is still a bit of a mystery to me, and I am pretty in-the-know when it comes to money and commerce and markets. I learn a bit here and a bit there, but my ultimate personal conclusion always goes back to "it concerns me."
Thing is, I think it is terribly difficult to place a real value on, it isn't backed by anything, there is no regulation, and it just seems like because of all of those things the bottom could drop out much like what happened back in the 90s when nothing Internet companies with no offices, no products, and no revenue suddenly became multi-billion dollar companies. Or like what happened with the housing market crash in 2008.
The sad and scary part is that this sort of thing attracts many unseasoned, young investors who don't know what they are doing and are naive to think this is their ticket to the good life. They just see the numbers go up and think it is easy money. Going back to the stock market in the 90s, this was a similar problem and a lot of people, especially young people lost a LOT of money.
1 person likes this
@RebeccasFarm (87040)
• United States
19 May 21
@porwest As long as it is not me being stupid and losing money, I really couldn't care less
1 person likes this
@porwest (78754)
• United States
20 May 21
@RebeccasFarm Right there with you. I am willing to gamble a few bucks. But certainly not my life savings.
1 person likes this
@dgobucks226 (34580)
•
21 May 21
Bitcoin is not for the faint of heart. That stock is a wild ride and I'm not talking Tesla, lol. But the ones who had the foresight to invest early are sitting pretty especially if they sold their shares. Hats off to them!
Guess I'll just have to be satisfied with having some shares in a Gold ETF. I'm not rich but profitable with this holding so far 
1 person likes this
@dgobucks226 (34580)
•
21 Jul 22
@porwest Well, hopefully what goes down comes up again. My Gold investment has taken a dive for the moment, which allows me to purchase more at a lower price. With the idiot economists currently running the country, it will only be a matter of time before they ruin the U.S. dollar causing investors to run back to the safety of gold.
1 person likes this
@porwest (78754)
• United States
22 Jul 22
@dgobucks226 I can apply regular theory to most other assets. Like as I have always said about the stock market. It has one direction ultimately. Up. Crypto is something too new to make that same assessment with, and is one asset that really doesn't have anything behind it like pretty much any other asset you can invest in.
So, for me it's a big guess.
As for the Fed, we need to crush the economy unfortunately. I think it is the only way out of this inflation. I was happy that they decided to go with a slightly higher rate increase, but still don't think it was enough. We need to be at least to about 2 whole points right now.
1 person likes this
@Butterfingers (66585)
• India
19 May 21
It's a riskier investment so I better not put my money in it
1 person likes this
@porwest (78754)
• United States
19 May 21
It is EXTREMELY risky. Part of the issue is, regardless of what some of the 'experts' on the subject may say, there is really no real way to place a value on the currency other than how it moves in the marketplace and at what volume buying or selling happens. But there is nothing truly behind it which is the problem, and so far it's not a common accepted currency for most transactions. So it is not even a commodity of sorts at this point.
Until it has real tangible value, and is easily transferred in commerce, it will always be difficult to know exactly what a Bitcoin should be worth on an individual basis.
You take any other form of accepted currency, you know exactly what it is worth at the point of any transaction made with it at the point of sale or transfer. Bitcoin is not like that at all, and some may even accept the currency based on future anticipated value than true current value...
So, it's all a crap shoot.
2 people like this
@porwest (78754)
• United States
20 May 21
@Butterfingers No doubt about that. Despite what some are suggesting who are "in-the-know" about cryptocurrency, I honestly am not sure I am convinced crypto will even be a thing long term. But I guess we will just have to wait and see.
1 person likes this
@porwest (78754)
• United States
21 May 21
You are not alone. There's not much to understand about it, really. It is, to me, entirely a speculative gamble. The thing that worries me is that too many young, unseasoned investors only see the potential for easy money, and may pour their life savings into it, only to wind up broke in the future.
1 person likes this
@porwest (78754)
• United States
20 May 21
I usually check it daily, just because that is what I do with pretty much any investment I have. BUT, that being said, I do not consider my Bitcoin holdings as an investment, per se. It's money I am okay with losing every penny of. It is certainly not a significant part of my total portfolio. In fact, it is very small compared.
This is as much a gamble as anything I can think of.
1 person likes this
@LindaOHio (160138)
• United States
20 May 21
I considered investing a small amount in BitCoin; but I'm glad I held off. This is not the type of investment I'd feel comfortable in at the present time.
1 person likes this
@porwest (78754)
• United States
20 May 21
It is definitely not something anyone should be putting money into they actually want to keep. This is purely speculative for sure. Any money I have "invested" here is money I'd have just as soon walked into a casino with, with exactly the same expected outcome. lol
1 person likes this
@erictsuma (9726)
• Mombasa, Kenya
19 May 21
I really don't understand about these crypto currencies.
1 person likes this
@porwest (78754)
• United States
19 May 21
Honestly, I think there are very few people who do, myself included. I understand them more than I did before. But the one thing that is the huge question mark remains. What is their true value and how are they actually valued?
Crypto reminds me a LOT of the Internet boom of the 90s when companies with no products, no offices, and no revenues were suddenly multi-billion dollar companies. Eventually reality struck and they all, but for a few, went bankrupt and TONS of people lost a lot of money.
