I Don’t Know When Bitcoin Will Crash, But I Know it Will

bitcoin will crash

Idk if you’ve been following the bitcoin market lately, but holy cow there’s a bubble going on there. I feel very confident in predicting it’s demise, unfortunately I just don’t know when that will occur. Here’s a few anecdotal experiences I’ve had in the past few weeks that make me almost positive Bitcoin’s days are numbered.

My First Introduction to Who is Holding Bitcoin

I went on a college reunion trip a few months back. We started talking about the latest trends in the economy and markets, and one of the guys mentioned his entire portfolio was in bitcoin.

Not like 10% play money, 100% going for broke. He’s extremely bright, but he’s a doctor. The sheer fact that he’s in medicine made me extremely wary of bitcoin after this exchange. Is my friend the next Michael Burry?

Or maybe he’s one in the next several thousand doctors who always seem to make a decent amount of money riding up a bubble and then by their presence in the market confirm that the value has lost touch with reality.

Doctors Love to Get Involved in Dangerous Frothy Markets

Physicians tend to have disposable income and have the intelligence to research whatever the latest fad is. When the internet stock craze happened, tons of doctors piled into the latest IPOs. One of my friends’ dads bought a ton of tech stock and would’ve lost everything if it hadn’t been for his wife pushing him to sell a lot of it.

Remember the housing bubble? Physicians had their hands all over it. Real estate, the only way to wealth right? Many people who tried to play the real estate game instead got saddled with enormous amounts of debt.

So to me, when I hear of a doctor friend who has made six figures trading bitcoin, I’m envious but also terrified. If doctors are making that much just buying something and holding it, this thing can’t be good.

Then Somebody Mentioned Wanting to Buy a Bitcoin ATM as an Investment

I was at a family event and someone mentioned that their friend’s dad wanted to buy a Bitcoin ATM because he was looking for a way to make money quick.

Whenever I hear the term “make money quick” it honestly scares the shit out of me. I instantly feel like whatever that person is trying to make money quick on must be some sort of fraud or scam.

Here’s the thing with Bitcoin ATM’s. I get the way someone might look at one and say “yeah let’s buy one.”

This site says a BitAccess machine costs about $7,000. Expected monthly volume is about $30,000 and the fees are over 5%. So say $1500 per month in fees. As long as you make it for 5 months you’re golden right?

The only reason those numbers look so good is because Bitcoin jumped from 1100 to over 2200 in a ridiculously short amount of time. If that price fell drastically, suddenly the ATM machine would just be a $7000 fixed cost flushed down the toilet.

Crypto-currency is a Great Idea, Until Governments Realize they’re Losing a Ton of Tax Revenue and Allowing Illegal Activity

I’ve heard of stories of people meeting in a starbucks to exchange bitcoins off the official exchange mechanisms because they hope to avoid taxes on the sale of their bitcoins.

Sites like Silk Road thrived on crypto-currency, and I’m sure countless drug and sex trafficking schemes have Bitcoin at the center of their model.

I view that it’s a matter of time before governments around the world look at bitcoin and realize that they aren’t getting a piece of the pie. They’re going to want to tax bitcoin and people hiding income through it to pay for social safety net and defense programs.

When and if that happens, I expect we’ll see a massive drop in Bitcoin. This thing is clearly a bubble with no connection to value in the US economy.

The problem with bubbles is that it’s almost impossible to tell when to get out. The Nasdaq bubble continued for years before it finally fell like a rock.

I do know that bitcoin at 2200 to 1 USD is not a responsible place to put money. Please please please take some off the table if you’ve already made a bunch of money.

20 thoughts on “I Don’t Know When Bitcoin Will Crash, But I Know it Will”

  1. Bit coin is just a currency, like any other form of payment. The problem is a currency has no underlying value other then that which society assigns it. In the case of the dollar that’s based on society’s perception of the “full faith of the US Government” that backs it. Nothing backs Bitcoin. If people choose to stop using it tomorrow it would be worthless. No way I’d invest in something with no inherent value.

    1. People keep comparing it to gold as a store of value and I’m luck “are you kidding me?” You’re comparing a physical asset that you can hold in your hand and society has deemed to have worth for thousands of years and comparing it to a soaring digital currency that’s been around for a couple years? I really think bitcoin is emblematic of the frothy tech market more generally

      1. Simply if you don’t like it , don’t buy it , or you are afraid that we ” bitcoin holder ” can lose our real money ???
        Note: I bought 500 bitcoin in 2012 when it was 13 USD , do you know how much those 150 bitcoin ??
        Enjoy, hate the bitcoin and let us enjoy our life !!

    2. Gold and silver standard (bi-metallic standard) is the best way to guarantee fiscal stability but these fraudulent governments won’t do it because their fraud would become exposed.

  2. Thanks for your perspective on Bitcoin. I too have a few friends who are eager about the opportunity. But it’s just too far out of my strike zone to rationalize “investing” in it. I prefer to stick to my circle of competence, although it’s still fun to spectate.

  3. I agree Bitcoin seems especially frothy after the recent run up in value. My question for potential Bitcoin investors is for what LEGAL transactions is Bitcoin easier than using dollars? The Bitconomy is based on speculation, novelty, tax evasion, and drugs.

  4. You’re right that Bitcoin will likely crash – it will many times (as it has before already on several occasions). But over the long term, you’d be a fool to not think that CryptoCurrency is the future of money.

    1. I always here this opinion from people loaded with crypto currencies that would benefit from the public adopting this viewpoint. Not saying they don’t genuinely believe it, but I’d be more convinced if an academic w no bitcoin holdings felt this way

      1. Well, I’m not an academic but I don’t own Crypto. & its just the natural evolution of technology my friend…there really isn’t any stopping it. The more technology connects us as individuals, the less need there will be for centralized authorities to play the almighty middleman. (& for governments – there’s no putting the cat back in the bag when it comes to the internet & blockchain)

        Like the site by the way…some good reads.

  5. Why would an academic who firmly believes in bitcoin not buy bitcoin?
    You base that crypto is in a bubble solely on that your doctor friend is invested in it? Maybe if you read the whitepaper of bitcoin and ethereum and try to dig into what it really means for society, you’d understand bitcoins inherent value. The FED was put together to stabilize the dollar in 1987 and it has since lost 98% of its value. They are doing a lousy job.
    Another point of yours that comes across weird is “This thing is clearly a bubble with no connection to value in the US economy.”

    Actually I don’t get what you are trying to say here. Bitcoin doesn’t have to and isn’t even meant to draw its value from the us economy. It is not based in the US. It is based nowhere. It is decentralised and draws its value from hedging against the greed of Wallstreet and idiocity of governments around the world. Why would it want to connect its value to an economy that is based on debt? The US economy is a wreck!

    However, I agree that bitcoin has shot up too much too fast and that a correction is due. But it will remain at that, a correction. The “correction” might even be a 80% drop, but it doesn’t matter. Bitcoin is a longterm play and as I stated earlier derives its value from hedging against this sick economy we have around the world (and especially the US). Bitcoin has a history of rebounding hard after crashes and it will continue to do so untill it becomes mainstream and your grandma uses it for her savings.

    Please educate yourself before posting bullshit.

    1. It’s lost about 60% of its value not 98%, http://www.in2013dollars.com/1987-dollars-in-2017?amount=100

      Folks who own a lot of it need the value to stay high, otherwise the crowd moves from greed to fear. It is based somewhere. It’s based on whoever made massive gains in the initial conceptualization and convinced others it was worth something. I dont think it’s a coincidence that no one knows who the real Satoshi Nakamoto is.

      Governments will not stand idly by as something they can’t control replaces them as the primary store of value. We’ve seen this before ala 2007 Florida housing and 1999 pets.com. Who’s going to provide FDIC insurance for when some random hacker breaks into an exchange and steals everything you have?

  6. BTC is now at a whopping $7000…. expected to hit $10K and some say it will go as much as insane $400,000 which looks way too exaggerated how can you say it will crash? and if it does how much?

    1. I think I mentioned this in the article, but I’d never run in front of a moving freight train. When bubbles become euphoric, nobody knows when it will end. Bitcoin is exactly that. Noting more nothing less. It’s the tulipmania of the decade. Just because more and more people are buying does not make it worth anything. I still think it goes back to $50 or less.

  7. I completely agree with you. In fact, the first person I knew to own bitcoin was a doctor as well, and he was all about buying tech stocks at all-time highs, not to mention bitcoin.

    I think that bitcoin will not only crash, but it may take the economy with it. I just wrote a post about how the popping of the bitcoin bubble could cause the next recession: http://wp.me/p9i2ua-aS

    Thanks for the post and I look forward to checking out the rest of your site!

  8. This article is irresponsible and very poorly researched. BTC is backed by mathematics, cool. USD is backed by the full faith and credit of the United States Government, run by Donald Trump. Which do you prefer? 2+2=4 or “grab her by the pussy”?
    Yes of course there’s a bubble somewhere, but your article was written when BTC was at 22 hundred. Today it’s almost 22 THOUSAND. But yeah, Doctors. That’s a great bellwether. LOLZ

  9. 60% is still a lousy job.
    Bitcoin doesn’t need to go up in value to be valuable.
    Just the fact that is imune to manipulation from banks and governments is good enough compared to any fiat currency.
    As a matter of fact, being deflationary is a guarantee to value itself over inflationary fiat currencies.
    I invite you to come to South America and learn what bad governments can do to fiat money. Many families in Venezuela found in bitcoin a safe heaven from an authoritarian government. It is possible to walk out of your country, by only wearing your clothes, and still keep all your wealth stored in your mind, as a bitcoin private key. How many refugees of war would benefit from that?
    We are witnessing the financial revolution of freedom for humanity and you decided to look at it as “something physicians are wasting money on”.
    Don’t be that person.
    Don’t buy bitcoin. But please, learn it.
    It’s free.

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