These days I should be happy. For a long time, I have said that cryptocurrencies are a fashion fad where the speculators eventually break their teeth.
My arguments were always as follows:
- When something was very popular in the past, it didn’t usually end well. In history, we have witnessed a constantly repeating “boom and bust” pattern.
- Many think they will sell on time. But historical bubbles show us that this is just wishful thinking. Investors and speculators are once again surprised by the speed of events. Stock market crash in October 1987, the burst of dot.com bubble in 2000, the bursting of the real estate bubble after 2007. These are just a few examples.
- We don’t know what Bitcoin value is. Is it $ 10,000 or just $ 10? Likewise, the other cryptocurrencies. Perhaps we can estimate the value of shares: companies have profits, dividends, cash flow. But how do you want to estimate the cryptocurrency value? Can’t.
- Cryptocurrencies are an unregulated market. And there are ugly things going on in the unregulated market, from price manipulation to Ponzi schemes. Fraudsters have free hands.
- The cryptocurrencies are reportedly attractive because of their limited amount. But this claim has a big hitch. The cryptocurrencies themselves are unlimited. Just look at their list. Yes, there are almost two thousand of them. This is called inflation.
Many did not take these arguments seriously. For example, one client called me a dinosaur (maybe he was right). The second failed to understand why I was dropping into the stock market, where I have to wait for years to come. After all, when high yields are so easy to reach, and to everyone.
Although the crash has actually come, I have no reason to celebrate. To read all those horrible stories, financial tragedies, I am not happy. For example, Sean Russell, who has lost almost all his life savings. In November 2017, he cast $ 120,000 in Bitcoin. Status after one month? $ 500,000. Sean was in heaven then. In his words, “I thought, wow, it would pay a mortgage, and all the holidays I always dreamed of.” Soon, however, a harsh reality came forward. Bitcoin went south and Sean tried to ease the losses by buying other cryptocurrencies. Finally, he lost 96% of the capital. You can find the whole story on this link in English.
Below is a graph of Bitcon development on the stock exchange.
Sean is far from alone. You may have heard Einstein’s definition of madness somewhere: “Doing the same thing over and over again and expecting other results.” Of course, Einstein was right; Again and again, they are throwing themselves on “hot things” and the various “companies and sectors of the future” in pursuit of a quick and unprofitable profit. Currently, electromobility or “Tilray”, a Canadian medical marijuana grower (see the chart below), is “snorting”.
So quickly buy and ride another mania. Maybe this time it will come out, just sell it in time. He wasn’t Einstein’s genius, either.