1630s Holland, investors began to madly purchase tulips, pushing their prices to unprecedented highs. The average price of a single flower exceeded the annual income of a skilled worker. Tulips sold for over 4000 florins, the currency of the Netherlands at the time. As prices drastically collapsed over the course of a week, many tulip holders instantly went bankrupt.
This was called Tulipmania …
… maybe it will drop from $11k to $3k, maybe next year it will be from $50k to $20k who knows… but if you think that price of BTC will increase forever you’re wrong!
There will be a large long-lasting crash at some point!
I’m not here to talk about market fundamentals, BTC real value or BTC underlying but I hope you will agree with me that nothing rises in real to an infinite value. If you are a “Bitcoin user” you’re probably between 25–45 years old and BTC could also be your first investment/trading experience. High-risk investments are not necessarily bad but if you’re trying to get rich by dumping all your money into BTC at 11k€ then you should rename your “investment strategy” into “russian roulette”.
You will hear a lot of: “this is not a bubble”and “hodl” and on the other side: “BTC is Evil”, “cryptocurrencies are for money laundering and drug dealing”, “this will end really bad” but I’m a “critical thinker” and I don’t really like scenarios based on opinions. So if the question is: “Is it possible that prices of BTC could go to $0.00 from one day to the other?” the answer is: yes, there is no mathematical proof that the cryptographic algorithm used for bitcoin is actually secure so yes, Bitcoin prices at $0.00 should be considered as a possibility.
If you are a conspiracy theorist then is a lot easier: the algorithm used by Bitcoin is part of a set of cryptographic hash functions designed by the United States National Security Agency …draw your own conclusions :-)
So before you invest in BTC or Crycryptocurrencies, in general, I think you should ask your self a couple of questions:
Could you survive the “Tulipmania 2.0”?
FlashBack: End of November 2013 BTC hit ATH of $1163… a year later the price hit the low of $152 with a drop of ~87%.
Suppose it happen again (I’m not saying this is going to happen!). Tomorrow BTC price drops to around $2k and then over the course of a year just continuously decreases down to a low of $1k with an 87% reduction from today’s price, will you survive? well, you should have a clear answer to this question before starting any investment in cryptocurrencies!
Do you believe in BTC? and what exactly do you believe?
If you browse around you’ll find thousands of links where people debate about the nature of BTC: is a currency, an asset, a crazy bubble, the new Gold, a “Religion”[you should read this]. Some people just love the blockchain and hate the currency defending concept and ideas with emotional and personal motivation.
I’m not here to tell you what to believe but is important that you have your own answer to the question: what are you dealing with? Your vision about BTC and the crypto market is really important, you’ll need it to drive your investment strategy, especially when the market will push you towards the panic buys and panic sells.
“ I’m sure that in 20 years there will either be very large transaction volume or no volume.”[Satoshi]
These aren’t financial advice but I wanted to share with you my thoughts about the traditional finance disruption that is already ongoing. We will have to deal with new market rules and regulations and probably we will change the way we use/think/save money. After diving deeply in the cryptocurrency world I don’t believe in the BTC=EVIL definition, in this historical moment we should be aware of the great risk and opportunity that this new paradigm has already introduced in our society.
Maybe in the future Bitcoin and blockchain will only be studied in books but they will shape world we know in a different way. Walk down the street, ask yourself how many of the people around you are aware of what blockchain and cryptocurrency really is? So my advice here is: build your awareness, concept and ideas underlying the cryptoworld are one of the biggest (if not the biggest) social experiment that could really reshape how we take decision as humanity, share your thoughts, debate with people, be part of it.