Admitting My Mistake: Reevaluating Bitcoin
I have to admit, I got it wrong about bitcoin. It’s time for us skeptics to swallow our pride because bitcoin has been crushing it lately. Since Donald Trump’s victory in the US election, bitcoin has surged over 40 percent, inching tantalizingly close to the $100,000 mark for the first time ever.
In the past few days, bitcoin has been creeping closer to that impressive milestone. With over $4 billion flowing into US-listed bitcoin ETFs post-election, it’s clear that bitcoin is the top-performing asset class this year, beating out gold and the US market.
Trading volume in MicroStrategy, a popular way to get leveraged exposure to bitcoin through the stock market, hit a record high last week at $136 billion, surpassing even GameStop’s previous record in 2021.
There’s been a whirlwind of positive news for crypto lately, driven by hopes of a more crypto-friendly administration that could establish a strategic bitcoin reserve and appoint a “crypto tsar” to the White House. Some see bitcoin as a digital version of gold, a hedge against a doomsday scenario where the US government defaults on its ballooning debt.
For those like me who once dismissed crypto as a joke or a Ponzi scheme, it’s a tough pill to swallow as we witness the price skyrocket week after week. It’s all about momentum, with buying and rising prices fueling more buying.
Bitcoin doesn’t pay dividends, offer a yield, or have intrinsic physical value. But does that really matter? It’s disrupted finance in the same way Trump shook up politics or social media transformed news. It’s a new vibe that, as old-timers, we might struggle to grasp.
While I’ve never personally held bitcoin, I can’t help but feel for those who sold too early. Even the CEO of Charles Schwab admitted to feeling silly for not jumping on the crypto train.
The chatter about bitcoin is everywhere, with people flaunting their profits like never before. El Salvador’s President Nayib Bukele, once criticized for adopting bitcoin as legal tender in his country, is now sitting on holdings worth over $550 million. And let’s not forget the recent Sotheby’s auction where a crypto entrepreneur dropped $6.2 million on a banana taped to a wall.
The mania surrounding bitcoin might feel familiar from pandemic times when digital tokens fetched millions and meme stocks reached billion-dollar valuations.
With FOMO ramping up to unbearable levels, I’m starting to wonder if it’s too late to join the “crypto bros” I once scoffed at. A pullback in bitcoin’s price might present a buying opportunity, but opinions on its future vary widely. While some predict a surge towards $110,000 in the short term, others foresee a potential rise to $130-150k.
It’s a wild ride in the crypto world, and even seasoned investors like Warren Buffett caution that bubbles eventually burst. With experts forecasting anything from $1.5 million to uncertain outcomes, it’s a rollercoaster that’s hard to predict.
In the end, the best advice is to approach any investment decision with caution, seek professional guidance, and consider your personal circumstances. Just remember, bubbles come and go, but smart investing is a long-term game.
