It’s hard to say this when the current evidence is thst “everyone is making money” but I really do think crypto as an asset class is utterly pointless and nobody has yet been able to give me a reason for it to exist.
That said, in a bubbly market environment like we are in at present there’s minimal harm in apportioning a small part of one’s portfolio to pyramid schemes (sorry, crypto) and other bizarre schemes. If nothing else this provides a bit of an option on participating in the bubble and helps reduce FOMO.
But to invest more than 1% or so into these things is crazy and will likely end in tears. It has all the hallmarks of a classic investment bubble.
Disclosure: I have followed this advice (but much more conservatively than 1% of my portfolio!) and bet (note: not invested) a TINY (sub-£1k) position in Monero, which seems to have about the only use I can find - being private enough that nobody (read: tax and drug authorities) can see who holds what. Unlike BTC which people believe is private but isn’t.
I thus believe it’s the closest to useful of any coin, yet has a smaller market cap than DOGE coin, which, as the inventor has repeatedly said, is literally a joke/meme coin he set up (DOGE = Doggy) and not a real currency. But in this market nobody listens.
An interesting read...
An article from someone I read on a daily basis...this one on bitcoin, of which he is definitely an expert: "Bitcoin’s price explosion has the industry asking key questions…
"Bitcoin’s price has exploded over 400% since early October – quintupling in less than five months. As a result, its market capitalization (market cap) has eclipsed $1 trillion for the first time ever.
Market cap refers to the total dollar market value of an asset. In bitcoin’s case, we can roughly think of it as how many dollars are “parked” in bitcoin at any given time.
To put this in perspective, bitcoin’s market cap was just below $200 billion early in October. Yet Visa, MasterCard, JPMorgan Chase, PayPal, and Bank of America had market caps of $430 billion, $343 billion, $304 billion, $228 billion, and $216 billion, respectively, at that time.
In other words, bitcoin was still considerably less valuable than America’s top banks and credit card companies.
Fast forward to today, and it is a completely different story. Bitcoin is more than twice as valuable as each of these companies.
The blockchain community has long anticipated the $1 trillion market cap benchmark as a major milestone for bitcoin. That’s the level at which the community believed institutional adoption would occur.
Silicon Valley insider Jeff Brown says… “If I had to bet my life on one tech investment, this would be it…”
And that’s exactly what has happened.
As we have discussed several times recently, traditional firms are now allocating a portion of their treasury to bitcoin. And the legacy credit card companies are enabling merchants to accept the digital asset as payment.
That said, most in the industry didn’t expect bitcoin to move this far so fast. That’s got the blockchain community buzzing. People are trying to explain what’s going on right now… and they’re forecasting whether or not it will continue.
Some say that this is just a speculative mania. They say that low interest rates are forcing the big firms to “reach for yield” with more speculative assets because they can’t get a meaningful return on conservative assets like bonds.
Others say that the institutions are adopting bitcoin as a store of value and a defense against inflation. They liken it to digital gold because its supply is mathematically limited. Only 21 million bitcoins will ever exist.
I think what happens in the coming months will answer these questions. And I’m watching two specific items closely…
First, I want to see if governments around the world increase their efforts to inhibit or ban bitcoin and cryptocurrencies. It’s no secret that some governments see bitcoin as a direct threat to their own currencies. Will they act on this? And if so, will they be effective?
I am also very interested to see what happens with bitcoin when inflation increases. And make no mistake about it – inflation is going to surge.
The U.S. government has been furiously printing money since February of last year.
According to the Federal Reserve’s own data, $3.4 trillion have been generated from thin air since February 26. That’s largely in response to the economic lockdowns and other foolish policies enacted in response to COVID-19.
And now we are talking about another $1.9 trillion stimulus package to boot. (I recently put together a presentation about the financial “great reset” I see coming as a result of these events. Go right here to learn more.)
Any time we see trillions of dollars being created from nothing at all, we are going to see inflation. It may take longer than we expect for it to show up in our daily cost of living, but there’s no doubt inflation is coming.
How will bitcoin behave when that happens? Will investors and institutions flock to it as a safe haven? Or will they flee it for what they consider more conservative assets? That will be telling.
As for me, I remain long-term bullish on bitcoin. But I think it is overdue for a correction in the short term. What we are seeing right now is pure speculation, and it won’t end well for some."