Bitcoin was supposed to cost $ 100,000 by the end of 2021, but like most speculative things, the “experts” were wrong! Like Bloomberg points out, “Bitcoin fell below US $ 40,000 for the first time since September, setting it up for its worst start to the year since the early days of the digital alternative to money.”
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The current Australian price is $ 59,441, but it was close to $ 40,000 in July of last year, so there is good reason to believe it could hit $ 40,000 again, although it increased by 2% overnight.
This drop in prices is putting me under personal pressure, as I recently toyed with the idea of trying Bitcoin if the price drops back to $ 40,000, but that said, I’m sure I was thinking about Australian dollars, so I maybe still have time to take the punt.
Of course, in the heady world of stocks, currencies and higher risk investments, there is often a chorus of overinvested gamers who have a vested interest in talking about certain stocks or investor toys as it increases the value of their holdings. already purchased, when others become believers, risk their money and help drive up the price.
Don’t get me wrong, I don’t think Bitcoin is going to go extinct and that one day could hit US $ 100,000, but I can just be confident about what determines the price in the short to medium term and so I decided to jump. it and other cryptocurrencies, at least for now.
For those wondering why I would have the idea of investing / speculating in Bitcoin, here are a few reasons:
• It has gained nearly 500% since the end of 2019;
• The offer is limited;
• There is a group of enthusiasts – techies, high-risk investors and criminals – who believe; and
• Some very savvy investors say you should have 1% of your portfolio exposed to this new investment darling.
Not all investment giants like bitcoin, however. Here is the take from Warren Buffett’s partner and mentor Charlie Munger on bitcoin: “Bitcoin is just dementia. It’s like someone else is trading poop and you decide you can’t be left out. “
Here’s why you should be wary of bitcoin:
• Governments and central banks don’t like the tax evasion aspect of cryptocurrencies and one day there will be official digital currencies that could compete with existing and unregulated cryptocurrencies.
• Central banks will start raising interest rates and reducing liquidity as economies emerge from coronavirus problems, hurting risky assets like bitcoin.
• Bitcoin tends to follow tech stocks and they are no longer in fashion now.
• Fiona Cincotta, Senior Financial Markets Analyst at City Index: “There’s a lot going on. We know Bitcoin is volatile, but even for Bitcoin we are seeing some really big moves. “
• Like Bloomberg points out, “The Covid-19 pandemic has helped Bitcoin further penetrate the mainstream as institutions and retail investors move. However, as we move back to more normal life, some of this enthusiasm for risky investing might be less appealing.
To sum up, there are two credible views on Bitcoin and that’s why I can’t go crazy for being a buyer.
The first is very negative. “Cryptocurrencies are expected to remain under pressure as the Fed cuts its cash injections,” said Jay Hatfield, managing director of Infrastructure Capital Advisors. “Bitcoin could end 2022 below $ 20,000.” Wow!
But there is also a positive point of view. Mike McGlone of Bloomberg Intelligence says that “$ 40,000 is an important level of technical support. Cryptocurrencies are a good barometer of the current reduction in risk appetite ”.
He thinks the world is embracing digital currencies, Bitcoin will retain many fans. Meanwhile, Noelle Acheson, head of market analysis at Genesis Global Trading, believes the fall in Bitcoin can be blamed on short-term traders looking to make a profit and her research indicates that long-term holders are “buying the downside.” “.
Bitcoin reminds me of a hard-to-love modern art that no normal person would spend $ 200 on, but art lovers spend tens or hundreds of thousands of dollars, even millions!
I guess as long as there are believers paying these seemingly crazy prices, there will be an opportunity to make money. Having said that, I have invested most of my life according to the rule: “If I don’t understand it, I don’t invest in it!” And I don’t see why I should ditch this rule for Bitcoin, just yet, unless I want to call the money invested in the game rather than investing.
I don’t think Bitcoin is baked, but it could feel the heat of volatile markets this year.
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