Bitcoin: Is it Not a Bubble?
For the first time in economic history, the “irrelevant” and not the “experts” were the first to benefit from cryptocurrencies.
Their critics, the possibility of proving a bubble, and how some investment legends have changed their attitude.
Cryptocurrencies have so far proved to be a class of assets, pointing to a black hole. It sucks more and more investment funds. No commodity or stock index attracts interest at the pace at which cryptos do. Those who have benefited from this development are those who realized in time Bitcoin and the ecosystem that has formed around it, as a subversive technology. For the first time in economic history, the “irrelevant” were the first to benefit, not the “experts”. The winners were not the strong, but the insightful.
Winners in the short term are those who bravely saw it as an opportunity for speculation. Although they have not dealt in depth either because they have not caught up or because they are not interested, the situation has favored them. Most have been left unattended to watch it wondering if it is gaining ground. Finally, there is the category of people who see it with envy. A recent example is 97-year-old Charlie Munger, vice president of Berkshire Hathaway, a partner of Warren Buffet, who said at the annual shareholders’ meeting the day before yesterday, “Of course I hate the success of Bitcoin.”
The reversal of Wall Street
Bitcoin owners used to experience insecurity. Others ate more and others ate less. How could they be right, at the same time that all successful investors and professional fund managers considered it worthless? Of course, it helped that their arguments showed prejudice, not objective information and calm treatment. They were perforated, they have been demolished for years. Like the recent Charlie Munger, who described Bitcoin as useful only for kidnappers and extortionists!
For months now, however, Bitcoiners have not been alone. Investment legends such as Stanley Druckenmiller, Paul Tudor Jones, Bill Miller, Scott Minerd, Rick Rieder, making a spectacular turnaround, began to coexist with them. What do they all have in common, other than being billionaires, famous and successful investors? That they started as critics of bitcoin. Why did they now recognize its value? Because the belief in technology and the concern for the macroeconomic environment met.
These people did not stand out by chance. Before investing their money, they go through a “sieve” of every choice. It is not due to their enthusiasm. It is a conscious choice. They studied it, compared it with other assets. Think how difficult it was for them to take a public stance in favor of bitcoin. To be considered irresponsible, to risk their good name. However, they realized that the biggest risk is that they do not have any bitcoin in their portfolio. Not its acquisition.
Who still sees it as a bubble? Those who can not understand its function and usefulness. They perceive it as an investment title that is not supported by anything. Of course, they mean nothing compared to what they knew until yesterday.
Bitcoin as technology
Bitcoin is a promising technology and should be treated as such. Only then can you realize it in its entirety. Otherwise, you will continue to observe with wonder the continuing rise in its value. As those who opposed the news sites wondered, considering that only from the newspapers you can learn the news because you can touch them.
At what stage did the internet become a bubble because so many people started using it? Judging afterward, never. And yet even in 2000, many saw it as something casual. Among the smart people, like Nobel laureates. They believed that the Internet should have no value because everything is virtual and not “real”. How will it not be long before the bubble meets its pin and bursts?
The people of Berkshire Hathaway bought Amazon shares when it was 100 times higher than the price they had initially rejected. As Buffett himself admitted, he could not understand her business model. Something similar happened with Apple. One of the things that the famous investor has been advocating for years is to stay in the center of your skills and abilities. It is obvious that he did not observe it. Throughout his investment career, the new technology industry has not been included in his capacity circle. He has not proven to be insightful at all.
The only technology company that has long owned shares was IBM. Their refusal to participate in businesses that were the cutting edge of technological development had its price. For a few years now, the world’s leading companies have been capitalizing on new technology, displacing traditional industrial giants such as automakers and oil multinationals.
Why did this happen? Definitely not a matter of intelligence or investment culture. When it comes to technology, there are better ones to listen to than 97-year-olds, even if they are Munger and Buffet. People who stood out by investing early in Alibaba, Twitter, Uber, Tesla, and other successful businesses.
As Paul Tudor Jones puts it: “A bet on Bitcoin is a bet on human intelligence.” Realizing his dynamics, he is heading for the best decade of his career. Unlike Berkshire Hathaway which in recent years has failed to even surpass the returns of the S&P 500. Exactly 5 years ago the shares of Berkshire Hathaway had $ 140. Today they have 275. Profit almost 100%. Not bad, though below S&P. But if we had invested in Bitcoin on the same date, we would have bought it at $ 670. Today it has 58,000. We would have multiplied our money 87 times if we had followed the opposite of the urges of Munger and Buffet.
Traditional gamers are annoyed by the presence of Bitcoin, in the same way, that dinosaurs were annoyed by the comet’s appearance. Bitcoin and this at some point became visible in the world of the financial system. The intelligent beings who inhabited it looked up and began to wonder what this glowing object is in the sky. Some were worried because they saw it growing. Others rejoiced because passed to sunset. Most of the carefree people continued to search for food.
Is it definitely not a bubble?
No one can rule out the possibility that Bitcoin will eventually prove to be a bubble. If this is the case and did not realize it in time, then it will be very bad for some people like me who have been exposed in public but also invest a significant portion of our economies. So it is obvious that I do not think it will happen, at least not soon. On the contrary, I believe that it has not yet developed its real potential.
The price increase was expected. What was surprising was the speed with which it was achieved. However, this was normal. All the data related to cryptocurrency markets and blockchain technology has been launched. The snowball has just started and is very far from the avalanche stage.
If they are right who claim that Bitcoin is an advanced technology that will continue to grow, will prevail for a more rational business environment. The prices of commodities, shares, bonds, real estate will depend on their own value, not on the dispositions of the Central Banks.
Governments will treat their citizens better, as will banks. It will have removed them to a significant degree the possibility for abuses. They will think twice before going to uncontrolled “printing” money, the constant devaluation of the national currency clipping purchasing power in spending billions to save the banking system is the default.
Citizens will be freer as they have an alternative, even if they are not interested in using it. In addition, it will serve those who need a reliable digital transaction method, because the banking system has left them on the sidelines. The world will become a better and fairer place.
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