If you invested in Bitcoin in Jul 2017, and held on for the ride later that year, one couldn’t blame you if you were giddy from euphoria. In six short months, the value of a Bitcoin skyrocket from $1,929.82 (Jul 16th 2017) to $19,140.80 (Dec 17th, 2017). That’s a nearly 900% return on investment!
End of the road
But then, a few short months later, the party was over and Bitcoin came crashing down. By Feb 2018 it was trading in the mid-6,000s, and today, the value is less than half that. The hype over, investors are now realizing that perhaps they were taken in by scheming “entrepreneurs” who promised them a pot of gold at the end of the road – but delivered lumps of coal instead!
Data extracted from PureGreenLiving, and plotted in a graph above, shows the wild gyrations that the crypto currency has been subject to over the past 5-years or so. Bitcoin has swung from its lowest ($68.43) on July 5th 2013, to its highest ever valuation ($19,497.40) on Dec 16th 2017. As we speak, the value of a bit coin is trading at $3,614.16 USD (intra-day).
According to the website, the maximum supply of Bitcoin is restricted to 21,000,000 BTC. Currently, there are approximately 17,495,562 (fluctuating based on trading volume) units in circulation. Based on the currency’s intra-day price ($3,614.16), that puts the crypto currencies market cap at $63,231,760,358 USD – that’s over 63 billion! So, let’s put that into real-world context.
As of Jan 22, 2019 (intra-day), the market cap for:
- eBay Inc was $31.58 billion USD
- Tesla Inc was $51.25 billion USD
- Bayerische Motoren Werke AG (BMW) is 53.76B USD
All of these entities above deliver real products and real services to their customers including those using Harga bitcoin. They have management teams and boards of directors to ensure they meet their targets. And they have regulators to watch over them. They are real businesses – and yet their market cap is lower than the vaporware crypto that isn’t even widely accepted!
So, what’s wrong with this picture?
Bitcoin has bit the dust
Well, “real” investments like eBay, Tesla or BMW have lots going for them. But if you value your money, you’ll think twice before investing even a dollar in Bitcoin. Here’s why:
1) Lack of credibility: There have been a rash of scandals surrounding Bitcoin. Millions of dollars in the crypto currency have mysteriously “vanished” overnight, leaving Bitcoin owners holding the bag. In fact, the “scam” was so prominent and transparent by Sept 2017 that Jamie Diamond, CEO of JP Morgan Chase, threatened to fire any of his traders who invested in Bitcoin. The value of Bitcoin plummeted over 4% over the next few days on the back of those comments. If that’s not lack of credibility for an “investment” – then tell me what is?
2) Lack of trust: Simply put, central bankers and financial regulators don’t trust Bitcoin – not one bit! Some say that’s because they fear that Bitcoin will help loosen the tight influence of lawmakers and central banks over monetary policy. But the truth is that Bitcoin has not earned the kind of trust that fiat currencies (like the U.S, dollar or the British pound) have earned over decades.
And if the government doesn’t have trust in an “investment”, then why should ordinary investors trust Bitcoin with their money? It’s a recipe for disaster. Depending on where the wind is blowing, regulators can move swiftly to curtail whatever little inroads Bitcoin has made. If (when?) that happens, your Bitcoin will be worth less than zero!
3) Lack of security: Where do you store your Bitcoins once you’ve purchased them? Crypto exchanges, where Bitcoins trade like the spot market, have inadequate security. And even if there are exchanges that are well protected, the fact that you can’t securely move funds around beyond that one (or a handful of) exchange is a problem.
For an investment to add value to a portfolio, you need bank-level security backing it. And Bitcoin’s security hasn’t lived up to that level yet. Just for that reason alone, anyone holding Bitcoins should seriously consider dumping them – now!
There are reports that Bitcoin may gain “mainstream” status with the launching of futures trading on Nasdaq shortly. But most industry analysts believe that Bitcoin is a bubble waiting to burst. Even former Bitcoin millionaires, who have made a fortune in the crypto, are strongly advising anyone who listens not to invest in it. So, if people that are in the know think Bitcoin is about to bite the dust, why would any sane person gamble on it?
Sure, if you are a speculator and have some “beer money” stashed away, then by all means take a small stake in Bitcoin. But if you are thinking of building a Bitcoin-centric retirement portfolio – think carefully. It may be the worst mistake of your life!