The Impending Bitcoin Correction
About four years ago now, a friend of mine in Australia was obsessed with bitcoin. I have to give him props for being way ahead of the game there. He would rant and rave about how cryptocurrency is the future. I lent him some money at one point and he ended up owing me $40. We were still very much backpacking at the time and money was tight, so he asked if it was alright to transfer me the funds to bitcoin. I had no idea how to use this money or what to do with it, but it was only $40 so I thought, "fuck it I’ll just see where this goes". Three years later it was down to about $28. Six months after that it went to $200. It kept going and I took it out at $400. If I held, that $40 would be have been worth $980 at its peak.
I’ve studied bubbles before, and I know that when it gets too good to be true, something bad is almost certainly about to happen.
My uneducated guess would say that 90% if the bitcoin owning population doesn’t actually understand what it is, what is causing the growth, or even the risks of it going south.
There is too much digital money accumulated at this point and if everyone cashed out, where does the money come from? It’s not backed at all! That, plus how long are countries going to allow people to gain 300k in a year tax-free, then withdraw it tax-free? The speculation has run rampant!
In my opinion, there was probably a good chance of bitcoin one day reaching 100k, but the hype may have spoiled that. When too many people start investing in things that they don't understand, that is when the market will slap everyone on the wrist and "correct" itself.
Even though it’s all digital, you’re still buying something. You’re investing into something. Stay conscious of that.