Is it too late to invest in bitcoin? Is it a bubble?
This question originally appeared on Quora, the knowledge sharing network where compelling questions are answered by people with unique insights.
Answers below are by Manish Bhattacharya, Devin Milsom and Charles Marino.
Answered December 11th, 2017
The whole purpose of the invention of Bitcoin was to have a currency free from the government and banks. Do you know what was the reason of the 2008 market crash? Irregularities and corruptions in the banking system. Banks had given a loan to everyone without checking their credit history and failed to recover even the original amount. The global market crash started on September 29, 2008 and the initial Bitcoin paper was proposed on 31st October 2008. Can you see the pattern here? And I repeat again, “Initial Purpose of Bitcoin was to have a currency free from banks and governments” Now suppose we are sitting in a class, right next to each other.I have a pen and I gave it to you. Do we need a third person to help us make this transfer? Will you ask the teacher to take the pen from me and give it to you? Maybe, we’ll need someone to keep the track of “who is the owner of the pen now?” but we don’t need anyone to make the transfer. We don’t need banks to transfer our wealth(Now you know why banks and financial gurus hate Bitcoin). Pretty much that’s the concept of Bitcoin in layman’s terms. We can have at most 21 Million Bitcoins in the world, we can’t produce more than that. Also, Bitcoin mining becomes hard with the production of every new Bitcoin, hence we can’t mine all the Bitcoin at once, which means Bitcoin’s supply is limited and production is regulated. With more people getting exposed to Bitcoin and its whopping return, demand is increasing. “High demand and low supply” will obviously increase the price. Just like, prices of gold and land have increased over the time. You can’t buy or invest in land or gold with as little as $10 but you can get started with Bitcoin with as little as $1- $5. Bitcoin is easily accessible hence more people are getting into it, increasing the demand and hence price is touching all-time high every next day. The problem with Bitcoin is, it doesn’t have any intrinsic value. When you buy stocks, you get shares in the company. when you buy gold, you get the real physical gold that you can touch and same with other investments. But Bitcoin is all computer code (virtual currency). Now to answer your question… Is Bitcoin a bubble? I don’t care, I’ve used it as a currency to buy domains and servers from NameCheap, I have converted it into cash and I have used it as an investment.I didn’t invest my whole fortune on it, as long as I can make even $1 more on my original investment from Bitcoin, I’m in profit!Be it a bubble or not, it is making money for me and lots of people who took the risk(high risk, high reward is probably the first rule of any investment). Mostly, people who missed the opportunity and financial experts are calling it a bubble.I’m not an expert but I’m a computer engineer and I can also read balance sheets, calculate P/E ratios, compare book value to market value and all sorts of technical and value analysis, I know what I’m doing. I will definitely invest in Bitcoin today, do not let the current price of Bitcoin bother you, check out the yearly return. It is 2081%, at the time of writing this answer. Is it too late to invest in bitcoin?You don’t have to buy 1 BTC or invest $16k to get started, you can start with the amount you can afford to lose.Say, you invest $100 and if Bitcoin repeats its yearly return you’ll have 2081% ROI(most probably it will exceed this figure).Also, can you see any big crash in the above graph? It is the trader who loses money, they want to get rich by next week.No body has ever lost money by holding Bitcoins 🙂 Again, Invest the amount you can afford to lose.If you want to learn more about “where to buy Bitcoin?”, “How to choose a wallet?” check my blog post on the same Let’s talk about Bitcoin by Manish Bhattacharya on !deapad .
Edit 1: If you want to play it safe, invest $100 and wait till your investment surpass $100 (ideally double) take out the original $100 and you’ll have Bitcoin for free 🙂 How cool is that?
Answered December 3rd, 2017
Cryptocurrencies have had a wild ride this year, the Market Cap went from just over 18 Billion USD to just shy of 300 billion, increasing over 15x this year alone. Although the year is not over I wanted to provide my opinion on where I think the markets will go next year. This is just the beginning
In my article called ‘The Bitcoin Bubble Explained’ I placed bitcoin on the border of the Awareness Phase and the Mania Phase. After two months of careful consideration and thorough research, I have decided to move where I think cryptocurrencies are, and I’ve also included a time scale.
2016 ——————————————————————————————2020
Before I justify why I placed Bitcoin where it is, it is important to know that cryptocurrencies are not in a traditional bubble. This is the first time in over 100 years since a new asset class has been introduced to society, Bitcoin shows signs of both the Awareness Phase and the Mania Phase, and the truth is that it slots somewhere in between.
The first reason why I have placed Bitcoin just before the mania phase is because Institutional Investors are only now considering investing in cryptocurrencies. Some of the largest futures exchanges such as the CME group have decided to launch ‘Bitcoin Futures’, CME group have confirmed this will launch on the 18th December 2017. Nasdaq plans to launch bitcoin futures as early as the second quarter of 2018, and the whole of the derivatives marketplace will follow suit in 2018.
The second reason why I believe that Bitcoin belongs in the awareness phase is that of the barriers of entry to the cryptocurrency market. Although there has been a large amount of media in relation to the price of Bitcoin, many people purely see Bitcoin – and other cryptocurrencies – as a speculative bubble which is going to burst. People do not understand the power of blockchain technology and simply choose to ignore it. Those who are interested are often turned away at the complexity of investing in cryptocurrencies. Lots of the exchanges are unheard of, and therefore not trusted, particularly as many have been hacked before.I believe once the barriers of entry have been addressed and general knowledge of blockchain technology increases, then we will see the mass public rushing in. As you can see in the above chart, I predict that early in 2019 the bubble will burst. I get asked what my predictions are for next year for the price of Bitcoin and cryptocurrencies, and here is my prediction for the end of 2018: Bitcoin will reach over $70,000 and the market cap will be over 3 trillion.
Thanks for reading,
Devin
If you want to learn more about cryptocurrencies check out my blog: www.cryptoinvestorsclub.co.uk
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Answered December 6th, 2017
Today is December 6, 2017. In the past week, Bitcoin has increased 53% from $9,386 to $14,364 arriving at a WHOPPING 244 billion dollar market cap. The increase is absurd and is due to the news that the CBOE, CME and Nadsaq are all preparing bitcoin futures trading. There is also speculation that regulated futures will lead to ETFs. All of this means that institutional money will now be able to get a piece of the pie. *everyone looks at Jamie Dimon*
What happens after futures trading begins?
I believe that a lot more volatility will be introduced since u.s. investors will now be able to securely short on margin. I do not believe that “Wall Street” will short and then manipulate bitcoin to crash. Why? incentivisation. Institutional investors have a great opportunity to make money which I believe they will take full advantage of. This means lots of volatility and a future even more absurd market cap. I’m a firm believer of diversification and will consider realizing profits along the way but will be bullish for at least 2–4 months. I also believe that cryptocurrencies will break a trillion dollar market cap and bitcoin will reach 50k next year.
Strategies for buying bitcoin today:
1. Put 50% into btc and leave 50% as USD buy limit orders right above support levels so you take advantage of dips. My favorite option. I would actually be riskier and do 60/40.
2.Dollar cost averaging, buy a certain amount daily or weekly. This protects you from only buying at highs.
3. Go all in on BTC today. Kinda risky but has worked out for many in the past, especially with the long hold mentality.
3. Wait for a dip and buy. This may not work if you are too aggressive with your definition of a dip or if a dip never happens.
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