Bitcoin’s Recent Crash - Caleb Jones

Bitcoin, along with most other cryptocurrencies, has plummeted lately. It recently descended into the $3,000s after being over $18,000 just a year ago. Other cryptos have been even worse. Bitcoin Cash was over $3,000 a year ago, and now it’s at about $180. Ethereum was over $700 and is now around $120.

Needless to say, lots of cryptocurrency dudes have lost a massive amount of money. As usual with these kinds of things, tons of people were completely irrational about all of this, buying high and now selling low, which is the opposite of what you’re supposed to do. Everyone bought in last December or January when bitcoin was going crazy, and now they’re freaking out and selling.

Very dumb.

As I talked about last year, I already made my money in crypto in 2017. A lot. All of my remaining cryptocurrency investments are a percentage of the profit I already made last year. So this crash doesn’t bother me at all; even if all my cryptos go to zero, I’ve already made my money.

More importantly, because I’m not panicking, I’m not selling. Though I’m not a bitcoin maniac like many of my fellow libertarians, I’m quite confident that bitcoin will indeed grow in the future, likely to well past the $18,000 it hit last year. I have absolutely no idea when this might happen, nor does anyone else, but I’m reasonably confident it will. And I could be wrong too, which is fine.

Bitcoin still has wide and growing adoption, but the main reason I’m optimistic at the moment is because it was my assumption that some other crypto would come along, smash bitcoin, and replace it as the number one, the same way Facebook smashed MySpace. But this hasn’t happened yet, despite this crash. Therefore, I’m still optimistic on Bitcoin (and its related cryptos like Ethereum and Bitcoin Cash, which tend to follow bitcoin’s ups and downs).

Is it a good idea to buy Bitcoin right now at its new low? Only as a pure risky speculation, but as a pure risky speculation, the answer is yes.

It will be interesting to see what happens with bitcoin in the next 2-3 years.

12 Comments on “Bitcoin’s Recent Crash

  1. I missed the first wave when you would have made your money but am considering throwing in a little bit to the portfolio now that things have dropped.  I’m also in the camp that it will grow and expand years ahead and this correction was kind of inevitable given the mass hysteria around it when crypto first hit the scene.   It was overvalued at the time given the short time frame.

    I like to diversify away from typical equities so this seems like a decent addition if I keep it at a small percentage of my holdings.

  2. This is off-topic but can you write an update on China and its social credit score system? 2.5 years ago in another post titled “Moving Out Of The Country Part 2 – Where To Go” you wrote about China:

    It’s also getting more free and less totalitarian with every passing year, […]

    What’s your opinion on the events taking place right now in China? Do you still think that it’s a good idea to move there as a foreigner?

  3. I actually bought some BTC last year in April, primarily thanks to the blog post you put up around that time Caleb.  While in hindsight I wished I’d cashed out near the peak, I’m glad that this new buying opportunity is coming around.

    The underlying fundamentals of many cryptos continues to improve on a near daily basis, despite the negative price action. More and more institutional players seem to be gaining interest in these projects, so as you said, it will be interesting to see how this industry grows in the next few years and what impact it will have on the world.

  4. Is it a good idea to buy Bitcoin right now at its new low?

    Nope. Its gonna get lower.

    AND it will probably get swallowed by another currency and will just temporarily and artificially boost said currency’s purchasing power.

    Really sucks that I missed the bitcoin boat, I should have bought some in 2014 when I first heard about it 🙁

  5. Breaking down from 6 000 $ was a signal. Everyone had 5 whole days to sell above 5 000 $. Why so many people didn’t baffles me and makes me happy, because trading will keep making me money as long as humans are like that.

    Fundamentals keep getting better… Just like in 2014. You could have said the same when it broke down from 400 $ in that autumn but a few months later it hit 150 $. All the time huge news came that were great for Bitcoin. Still, after hitting 150 $. it stayed 8 freaking months at less than 250 $. If you’re thinking of buying now, consider the possibility that you could  make more money in other things while Bitcoin price will stay zombie in this range for quite a long time. A bear market doesn’t turn around in one day, nor one week, not even one month!

  6. When a major fiat currency crush occurs or stock market crash I expect cryptos to go to the moon. Bitcoin could then be worth as much as a million.

    However, it might not necessarily be bitcoin but something else. That is why its always important to diversify and also to diversify within cryptos.

  7. When a major fiat currency crush occurs or stock market crash I expect cryptos to go to the moon.

    OK, so something big crashes, economy takes a hit, significant numbers of workers are laid off etc. What makes you think people are going to invest into cryptocurrency en masse driving its price up?

  8. OK, so something big crashes, economy takes a hit, significant numbers of workers are laid off etc. What makes you think people are going to invest into cryptocurrency en masse driving its price up?

    It depends on what crashes and how. If your currency hyper inflates or people simple lose infidence in it they will look for alternatives. Those are some examples where that might happen. Of course the first obvious choice would be gold instead but that is harder to trade with. What if I want to pay with a credit card or buy something online?

  9. To be honest the severity of this decline, has caught me by surprise.

    But there is more and more evidence,

    that the blowoff, top in Dec;Jan

    was artficial in nature. And this years suppression was also, not natural.

    This is encouraging. If it was just nerd money of no future significance, then we would have just been left to our own devices.

    It is also encouraging, that given $20 Billion was crowdfunded. There was not a whole lot of scams, everywhere.

    I can only think of a handful, where the outright intention was to cheat people of money. Yes, there are number of dead projects, to be expected. But the majority, of companies seem to busy developing their products and infrastructure. Which only re-inforces the nature of IT engineers, tend to have more altruistic behavior patterns. And the next bull run, will be a more sustained, consistent growth of value.

  10. If your currency hyper inflates or people simple lose infidence in it they will look for alternatives.

    If my currency hyperinflates, I’ll buy US dollars. If the US dollar itself is at risk, I’ll convert my cash into a bunch of different currencies. If the crisis is so severe that no fiat currencies are safe enough, the last thing on anyone’s mind will be cryptocurrencies.

    For a (crypto)currency to spike in value, people have to flock to it, and in times of crisis people just don’t rush to buy such a volatile and untested thing. For all they know, Satoshi Nakamoto might at any moment dump his giant reserves and crash the price of bitcoin.

    Now there might be recovery attempts by some authorities involving cryptocurrency, such as the petro idea in Venezuela, but those will surely be based on some new cryptocurrency and not an existing one.

    I’m just not seeing how a crisis can cause a cryptocurrency to gain value. On the contrary, many of its holders will have to liquidate it to solve their financial problems, possibly saturating the market and bringing the price down.

  11. If the crisis is so severe that no fiat currencies are safe enough, the last thing on anyone’s mind will be cryptocurrencies.

    Your comment makes no sense. What will you use to pay / trade then? What will you go to in order to save your savings? Gold again obvious choice but how will you pay with gold online or fractional amounts especially when in such a situation one ozt of gold could easily cost 20000 dollars or more…

    Now there might be recovery attempts by some authorities involving cryptocurrency, such as the petro idea in Venezuela, but those will surely be based on some new cryptocurrency and not an existing one.

    You are talking about national cryptos which were a scam/attempt to save the local currency. It was not a crypto actually just a digital fiat thats why it failed. However in such countries people are using bitcoin on the black market. If you buy bitcoin here and then sell it in Iran right now and manage to get it there without getting caught you can make 20x returns easily. Its already happening, just on local small scales.

  12. As I have said elsewhwere:

    The central mistake is the idea that BitCoin is a hard currency because the number of bitcoins is mathematically limited. The problem is: while it is true that the number of BitCoins is strictly limited, the number of possible cryptocurrencies isn’t. Each bitcoin is having its value inflation eroded not by other bitcoins, but by Etherium coins and Dogecoin coins.

     

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