close up of coins

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Today, a friend brought to my attention my calls on bitcoin.

To be fair, I didn’t call anything. It’s not like I had a price target on bitcoin or a specified timeframe for the collapse in prices but I did say that it was a mania and the whole damn thing was overhyped as an asset class.

When I began writing about bitcoin (see here and here) in November of last year, bitcoin was approximately US$7000. As of today, bitcoin is roughly US$6,400. In the span of just a few months, Bitcoin has reached a high of US$20,000 and fallen back to slightly less than when I started writing about it.

I don’t know if bitcoin and other cryptos will continue to fall but I’m pretty sure the naive, retail investors aren’t really in the thing any longer. The good news is that unlike the US housing market, I don’t think the institutions are levered up to their eyeballs with derivatives related to crypto. It’s too soon for another financial crisis and crypto seems unlikely to be the kind of asset class that would lead us to one.

I wrote a whole bunch of stuff on crypto which you can read as well.

If the value of a thing can vary so widely in just a few months, can you really use it as money? Can it hold value? Was the fervour speculative?

I think the answer to those questions is pretty obvious.

I’m pretty sure all the students and common folk in South Korea who put their life savings in crypto are regretting it now. They regret their folly which was fueled by greed.

It’s sad that people who obviously don’t know what they’re getting into, lose money on things like this. It’s not much different from those ‘investors’ who bought into structured products during the GFC.

Unfortunately, these things are as old as the hills. We would be wise to know the difference between investing and speculation.