You are still in time to change your opinion about bitcoin
Nick Maggiulli is an analyst at ofdollarsanddata.com. He was actually always against bitcoin, but now writes in a flaming argument why he changed his mind. There comes a time in every investor’s journey when they have to admit that they were wrong about something. I was wrong about Bitcoin‘.
Bitcoin is no longer a joke
Maggiulli quotes a quote from Coelho (from The Alchemist): ‚Everything that happens once, can never happen again. But anything that happens twice will happen a third time‘. With this he refers to achieving all time highs on the bitcoin course. Bitcoin Evolution is doing a spectacular bull-run again and that is also striking among investors. Now that bitcoin has survived the peak of 2017 (and continued to climb), many investors who used to consider bitcoin a joke now realise that it is not one. I am one of them.
I changed my mind about bitcoin, but not because of many of the arguments of Bitcoin bulls. For example, Bitcoin bulls claim that Bitcoin would be used as a currency, that the US dollar would fall in value and that the halving in May 2020 would increase the price of Bitcoin. They were wrong on all counts, but the price of Bitcoin has still risen‘.
What the Bitcoin bulls were right about was the increased acceptance and ability of many Bitcoin owners to hold on (‚HODL‘), even if prices rose dramatically. These two effects (more demand from buyers and less supply from sellers) contributed to raising Bitcoin’s price and making it a legitimate asset class within the investment community. As a result, Bitcoin has become a form of digital gold. You may not agree with this assessment, but if you still think that Bitcoin is „going to zero“, you should reconsider your assumptions‘.
Mental buying limits
The investor also responds to the ever shifting goals:
The problem with the argument that Bitcoin is „going to zero“ is that there are too many investors who want to buy it for a price well above zero. I remember talking to many non-crypto investors before the recent price increase who said they would not buy Bitcoin for USD 10 000, but only if bitcoin fell to USD 1 000 – 2 000 would they definitely jump in‘.
So what do you think? Now that the current price is higher than $30,000, some of those investors have probably raised the limit at which they would consider buying Bitcoin. Instead of buying for $1,000, these same investors would like to jump closer to $10,000. And every time the price goes up in the future, these „mental buying limits“ also go up, increasing Bitcoin’s chances of survival in the future.
Gold and bitcoin
Although gold has existed as a form of money for millennia, it was not until August 1974 in the US that it was an investment category. And in the six years following its reintroduction into the investment community (1974-1980), gold tripled in real value. Maggiulli says that since that tripling, gold has not performed so well: ‚Although bitcoin is unlikely to follow a similar path to gold, it is likely to exhibit similar behaviour. This means that bitcoin will continue to have huge price rises, followed by violent crashes. Crashes that could last for years (and possibly decades) in the future. We’ve seen this kind of bitcoin behaviour before and I’m pretty sure we’ll see it again‘.
The difference between Bitcoin and gold is that Bitcoin is still gaining popularity among investors.