InfleXion wrote:I'm not a crypto expert, but I have long anticipated no reason the marketshare can't be flooded with copycats, so choosing the right one could be a challenge. Though most tend to move with each other, they could dilute each other as well by dispersing demand. With BitCoin having a built in deflation algorithm due to periodic "halving" (reaping half what you sow in energy compared to pre-halving) there may come a day where miners jump ship to a more lucrative crypto, or maybe not. It may also be worth noting that even though BitCoin loses half or more of its value every so often, it tends to come back and break new highs eventually as well. One other thing I would keep in mind is that exchanges are the gatekeepers to get your funds out, so I wouldn't park too much that you might need to get out. Also many central banks are planning their own cryptos, as are cereal companies, hotels, you name it. To me the market seems to be getting oversaturated with competition, and there's only so many people/funds looking to get into it. In my opinion the good deals are long gone, but as long as you are only investing what you can afford to lose it'll be worth the cost of any lessons. If history is any indicator, buying on the way down has worked out pretty well.
Thanks for the insights. Let me address a few of these concerns as I'm sure you're not the only one who feels this way.
1) Market flooded with copycats; dilution & dispersion of demand.
Let's look at bitcoin dominance. Currently it stands at over 64%. In January 2017 it was around 85%, so it is obviously going down right? No. The bitcoin dominance low point was 32% in January 2018, which is precisely when bitcoin's price was at near all time highs. Bitcoin's price increase helps all of crypto, and even when the bitcoin dominance falls it isn't hurting price. Additionally, the security of bitcoin and the amount of effort to attempt a 51% attack against the network is the gold standard in all of crypto. Many of these altcoins can be 51% attacked with little effort. If/when major hedge funds move into crypto they aren't going to be buying into illiquid small time altcoins. They will be buying bitcoin/ethereum/ripple.
2) Exchanges are gatekeepers.
Agreed. Don't store your bitcoin on exchanges. Get a hardware wallet like a nano ledger or a trezor and hold your own crypto.
3) Companies and central banks planning their own cryptos. So what. This will not reduce the demand for bitcoin it will actually increase the demand. All of these companies and central banks will NOT be issuing decentralized, censorship resistant, immutable blockchains. They need to be "in control" and therefore none of them will actually compete with bitcoin's selling points. In the same way that my credit card miles don't detract from me wanting bitcoin (they serve different purposes), neither will Capital One's "crypto" detract from me wanting bitcoin.
4) Only so many people/funds looking to get in; good deals are gone.
There are 180 government currencies across the globe. The total global money supply in 2017 was over $127 trillion*. Bitcoin's market cap is under $250 billion. That is 0.196% of the global money supply. If bitcoin became any type of world reserve currency, it could easily go up 100x from current prices (nearly $1 million per bitcoin). Some would say this is an impossible outcome. But why? If there is even a 1% chance of this happening we'd be foolish not to try to obtain at least 1 bitcoin as a hedge against this tail risk. And even if it doesn't happen, it could still be wildly successful without hitting that mark. If one country announces it has stopped buying USD as a reserve currency and now will be holding bitcoin instead, how long would it take before another follows, and then another? This market is super young and has plenty of room for growth. How many people do you know in the real world who actually own bitcoin? Do you think the youth of today are going to flock to gold or bitcoin as they get older? When the boomers bequeath their wealth to their children and grandchildren, where will they park it? They watch as the US literally prints trillions to bail out banks. Bitcoin is the only digital monetary asset governments don't control. And bitcoin is truly global. If I live in Peru, how many people outside of Peru have a demand for the currency in Peru? Bitcoin is an alternative currency that hedges against inflation against ALL other world currencies (which are all fiat). It doesn't need to be a hedge only against the USD even though it works well for that too.
5) Buying on the way down.
Agreed. The smart money buys during accumulation phases and bear markets and sells during the market blow-off tops....to then buy back in during the next bear cycle. We've seen this happen repeatedly now, so I really don't know what is stopping people anymore other than fear or ignorance. Plan B author predicted a $55k bitcoin price during the next bull cycle. He has updated it based on the stock to flow of bitcoin, gold, and silver to $288k. See here: https://medium.com/@100trillionUSD/bitc ... d260feed12
Once bitcoin surpasses $30k/BTC it will have a greater market cap than silver. One day it will pass gold.