As I wrote earlier this year, there is no surprise there. By the time you read this, Bitcoin could have recovered, shot higher or crashed some more.
This is the volatility you’d expect from a revolution, the kind of volatility that has been missing from equities for years.
I’ve never laughed at a crash before, especially one I have a fair chunk of long exposure to. Normally in a crash, I’d be grim, likely in cash and poised waiting to buy the bottom. You can actually read me doing this during the ‘credit crunch crash’ on Forbes, where I called the crash on this site, pre-crash, and bought the bottom, post.
If I was long during a crash, as I was with my corporate holdings during the dotcom crash, I’d just be grim. It can be hard to watch million evaporate.
But not this time. I am highly amused by this crash.
These current short term moves are immaterial. Blockchain and Cryptocurrency are going to be my benefactors for the rest of my life. It is like holding Apple at $3 and watching it go under two.
…and yes I have been drinking the Kool-aid.
I’ve a Cryptocurrency book coming out on Amazon this week called: XXXXXXXX
I’ve been using the techniques in it to make ridiculous killings in Crypto, so many times I’ve forgotten most of them. One coin for example gave me a 1300% profit, but what follows is my favourite.
There is a coin called SH*T
Yes and it doesn’t have an asterix in the name.
It really is called ‘poop.’ It’s not a ‘poop coin’ it’s THE poop coin.
Low quality altcoins are generically called ‘sh*tcoins’ because they aren’t exactly quality. So someone went out and made one called ‘sh*tcoin’ for the hell of it.
So I bought 1,000,000 for $76 in late July and sold them on Friday 11/10/17 for $582. If I’d looked on Wednesday I might have got double that.
Now from one point of view this is just an example of the hilarious madness of Bitcoin but from another it’s a demonstration of the power of the technology.
Although you can tell I didn’t exactly go all in on investing in it, I didn’t spend $76 on ticker:SH*T by accident, it fitted my investment criteria exactly and you can read all about it.
Now consider this as the reason Cryptocurrencies like this are powerful:
Forgetting the investment criteria for a minute.
This viable financial instrument was created for nothing.
It was listed for trading for nothing
At no point tried to suggest it was anything but a financial instrument of extremely low quality, have or need any implied endorsement by bank, broker or regulator.
It traded as a cryptocurrency capable of utility comparable to the $100 billion bluechip bitcoin.
I needed no permission to be traded, no gas bills to a broker for kyc, no real time price feed charges, compliance fees, levies etc
Was able to bought in tiny quantity without getting costs eating me alive
Sold instantly for Bitcoin which was transferred to another account entirely in a couple of minutes without masses of form filling.
The participant actually came away with a profit, a 700% on too boot!
Does that sound like stocks to you? In stocks you get eaten alive at every turn. A company trying to list its equity gets eaten alive at every turn. The investor risks getting eaten alive by the market makers and numerous other market insiders.
This stock market gauntlet which guts so many people is why equities are slowly but surely dying on ‘Mainstreet’ and the converse is why cryptocurrency is grasping the imagination of millions.
But there is one more thing.
As a round number $100 billion dollars of wealth has been created by the rise of Bitcoin in the last 12 months. Much of that commodity was mined in China and much exported to the rest of the world. If the UK, for example, had mined that Bitcoin it would have pretty much covered the UK’s balance of payments deficit.
I could state ‘luddites’ go hungry and have to wear sack cloth through lack of choice. Instead everyone has to make one call:
You can take the Dimon tack and call the whole thing garbage
or
You can cry ‘holy cow’ and see that this is the next big thing, something bigger than the internet boom and its prodigies Google, Amazon, Apple etc.
If you’ve had the epiphany, crashes are just a bit of fun and a buy the dip opportunity.
If it’s a fraud, get the popcorn and pull up a seat. You can gloat later and at leisure. (Side note: When did that ever pan out?)
You can guess which side I’m on and I’ll be following my profitable trading schemes… to the moon.
(P.S. This time is NOT different. This time is just like many other boom, bubble and busts. The key to investing in the cycle are: the winners post-crash will be gigantic and knowing where you are in the cycle is crucial. I posit the sum total of the cryptocurrency market cap at $200 billion does not make a bubble. At $2 trillion you can start to sweat.)