Bitcoin: A Bad Roulette Game
I know I said I was going to have my predictions for 2018 today, but my topic got preempted. You'll get Predictions 2018 on Wednesday.
By this point, I’m sure you’re pretty tired of us filling up your inbox with all things Bitcoin.
Trust me, I get it. I really do.
If I’m honest, I was actually struggling to find a topic to talk with you about that you haven’t already heard a hundred times over. All this repetition and reiteration about Bitcoin is getting pretty boring.
Like I said, I totally get it.
But don’t pull out your hair in exasperation yet. I’ve discovered something that you just might find interesting... I know I sure I did.
It shed some much-needed light on this entire Bitcoin craze that I think you really need to hear.
It’s not the typical browbeating facts that we’re slamming into your inbox. This is coming from an entirely different perspective... from behind enemy lines, if you will.
I was going to some pretty extreme lengths to find something relatively new and somewhat interesting, and I stumbled across this article written by a CNBC contributor, of all places.
His experiences were quite illuminating.
Todd Haselton purchased a few hundred dollars' worth of Bitcoin on Friday, December 8, for a story he was writing on “how to give the gift of Bitcoin” for the upcoming holiday season.
He held onto it for an entire weekend to see just what owning Bitcoin was like… and this is what he learned.
For one, it’s crazy volatile. No surprise there.
But from an owner's perspective, it’s pretty scary, especially since its value is apt to skyrocket and then tank at any moment.
Minutes after buying his Bitcoin through the app Coinbase, its value immediately sunk 5%. It continued to fall over the course of the weekend before spiking back up to its original value on Monday. He didn’t make a single penny on this exploratory investment.
His bank even thought the Bitcoin transaction was fraudulent activity and froze all of his accounts. That itself is a nightmare, having to call around to confirm the transaction — what a headache. No thank you.
There have also been reports that there are times when Coinbase systems are so overloaded that it prevents people from buying it at a lower price. Coinbase says they have addressed this issue, but it still seems a little fishy to me.
The entire experience seems more like a roulette table than a regular investment.
Just by switching on the news, you can easily figure out which company’s stock or global currency is up or down. Maybe there’s a new CEO, war, government problems, a scandal, a positive or negative earnings report, or a new competitor. From there, you can start to figure out why a stock might react the way it does.
None of that applies to Bitcoin. According to Haselton, it’s like standing at a roulette table; it seems to spike or sink purely based on the momentum of other people buying and selling.
I’m sure there are people out there who understand the mechanics and nature of Bitcoin better, but I have a gut feeling that most folks are just as clueless and are simply buying it to “get rich quick.”
And why wouldn’t you? Someone who purchased Bitcoin when it crossed $3,000 back in June has already increased their investment more than five times over at today’s price.
Like Haselton, I’m also suspicious that some people are talking up Bitcoin because they own a good bit of it. They most likely bought it when it was much, much cheaper, and now they simply want the price to continue to skyrocket.
Haselton says he’ll never buy Bitcoin again after this, and I, for one, won’t own it ever.
Sure, it probably provides the same rush of adrenaline that a craps table in Vegas might provide, but it’s far too risky for me.
I prefer the practiced application of “traditional” investments to this oil-and-water mixture of investing that is Bitcoin. The science of the old school has been tried and proven for generations.
When I need that adrenaline rush from gambling, I’ll stick to blackjack.
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I like to make money, or at least break even, when it comes to both investing and gambling.
That’s what I’m here for... to help you do the same.
And besides, if you have your heart set on investing in digital currencies, there are much better options out there than Bitcoin.
No, really. From an investment standpoint, it’s time to forget about it once and for all.
I know it’s hard to avoid getting caught up in the frenzy of it all. With all the press coverage, it’s intoxicating. Especially for those of us who missed out.
But like a game of roulette, Bitcoin is just too volatile to consider it a serious investment.
Just this past Thursday, the cryptocurrency clocked a fresh record valuation well above $17,800. That’s two new record highs and a significant price dip of over $1,000 just within a week! All of this volatility is dependent on the momentum of other people buying and selling.
The first weekly record came December 12 when the price broke past $17,300. For the rest of the week, it hovered around $16,000 before skyrocketing back up on Thursday.
However, there are blackjack cryptos out there worth looking into, where the odds are definitely more in your favor.
Hundreds of cryptocurrencies have emerged from Bitcoin’s shadow showing stronger potential than their overrated predecessor.
My colleague Alex Koyfman has been following these smaller cryptocurrencies for months, looking for those that hold the same qualities Bitcoin did when it first started out, but without the built-in problems.
He’s identified two early-stage cryptocurrencies that are already growing faster than Bitcoin.
Last year, we told you what was going to be big in 2017. Now, it’s time to listen up for what’s going to be hot in 2018.
And this is it.
Take advantage of this information we’re sharing with you while it lasts, because I’m afraid it won’t be available forever.
Until next time,
An 18-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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