I think most of us who own bitcoin are starting to feel like the Duke brothers (Randolph and Mortimer) in the move “Trading Places”. If you’re not familiar with the movie: First shame on you! Second, you should go watch it right now, after all it’s a Christmas movie. I haven’t seen it on regular TV or the movie channels this year but I believe it’s on Netflix. Back to my point: At the end of the movie (spoiler alert) based on a series of cloak and dagger events, they lost everything they owned when betting on orange futures, while Billy Ray Valentine (Eddie Murphy) & Louis Winthorpe III (Dan Aykroyd) made a killing.
The main take away here is, they lost everything in the matter of a few hours (or less). Since you can now bet on bitcoin futures, this seems like a good analogy. Almost everyone else was betting that the value of bitcoin was going to go up. Granted we saw a lot of news this last week where the bubble was going to pop but most of us just kept on buying. All the naysayers are saying “see, I told you so” and if any of those naysayers were actually betting against bitcoin, they are earning a lot of money right now.
Everyone else, not so much!
In the last week there were even news stories of people who refinanced their houses in order to purchase large sums of bitcoin. Most of them were getting in on the bitcoin frenzy and buying bitcoin directly (I doubt that may were playing in the futures market). For those who bought directly, I really hope their refi hasn’t gone through yet. If it hasn’t, they’re in a bit of luck that they can now buy at a much lower value (assuming they still want to do it) or they should simply payoff the refi and go back to their day jobs, dreaming of winning the lottery instead. However, if they are now stuck with a lower value of bitcoin to USD, their only hope is to hang on to the bitcoin they have and hope the market bounces back. It’s a bit like the housing market and everyone is underwater all over again. Personally, I think it will bounce back but at a slower pace.
With that in mind I plan to watch the market and buy a little more, hopefully at the correct time. Actually accomplishing that is tricky. Bitcoin moves at such a drastic rate based on so many factors that it’s enough to make your head spin. We all know you should never buy high and always buy low. But when it moves this fast, how can you? To make matters worse, the exchange sites are getting overloaded right now with buys and sells. To see how crazy the market is take a look at gdax.com, which gives a real-time feed of the bitcoin transactions and price changes. At the time of this writing it’s $11,600 USD. I use coinbase.com for my exchange and it appears to be having some serious problems right now, which I’m assuming is due overwhelming web traffic. So even if it bottoms out I may have trouble buying more..
To wrap this up on a positive note: I truly believe that cypto currencies are here to stay and they will (eventually) change the banking world as we know it, however to be fair the market needs to settle down before that happens.
My final words of wisdom are: “I’ll bet you one dollar…” (watch the movie and you’ll get it)!
Quick edit: In the last 30 minutes or so the price of bitcoin has gone from $11,600 to $13,207, who knows where it will be when you read this.