Bitcoin Goes Boom, Will It Bounce?


Was it the Longfin (LFIN) situation where the company went public, used its cash to buy a cryptocurrency miner sending LFIN up a million percent or was it Long Island Ice Tea's (LTEA) decision and then apparent reversal to add the blockchain to its name which also then skyrocketed or maybe it was the cigar company that did something similar. Were any of these the proverbial ringing of the bell, ending the hysteria?

Side note, Long Island Ice Tea is a stock? What about Fuzzy Navel, is that a stock too?

I just wrote about bitcoin the other day and consistent with what I have been saying all along which is the path to <fill in any price target you want> will have plenty of scare the hell out of them declines. I don't know if anyone is actually scared or not but dropping by 1/3 in a day or two is big move.

If you look at the Yahoo Finance cryptocurrency screen, you will see a lot of red as big moves down certainly shake out weak holders and cause some to question their belief in the technology. Coinbase's many woes are certainly not helping either.

The really big ideas to the cryptocurrencies are better security and more efficient transactions. The various hacks that occur tell us that the space is not there yet in terms of security. A secondary appeal, but for some this is the best part, is that there is no government involved and so it can't be debased. One expert I met recently used the term fiat as in that bitcoin is not a fiat currency because it can't be debased. Many others compare bitcoin to gold. I'm not sold on that whole part of it but maybe it will turn out to be correct, who knows?

I quipped the other day that that the internet is alive and well without AOL and Netscape, so too can the whole cryptocurrency concept thrive without bitcoin. That is just as true today as it was three days ago at BTC $18000.

I mentioned a while back having rented the Bitcoin Trust (GBTC) back in November for about two and half weeks, I sold it early but made 44% on the trade (bought at $909, sold at $1309) and noted that I thought I would have a chance to get back in. I am not back in at this point, I would rather hold off until I perceive that bitcoin is a thing no one wants and I don't think that is where the market is right now.

On a related note I helped a local non-profit that is interested in investing some of it's money in an equity/fixed income portfolio (not bitcoin). I tend to be very conservative with this sort of thing and tried to convey why it might not be a very good idea, A few on their board however seem eager to invest so my final thought to them was that the time they should invest in stocks is when none of the want to do it, not now while they feel like they are missing out.

Comments (3)
No. 1-3

There sure are a lot of 'really stupid' investors out there then!


Here's a hot take from CNBC on the bitcoin craze