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.