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Bitcoin price too volatile, not suitable for risk-averse investors

Bitcoin ‘investing’ not for everyone

Time and again, we encounter how marvellous Bitcoin is and how it is the perfect counter to central bank reckless (QE, Abenomics). We even posted this easy Bitcoin guide as well as this video transcript that tells us why Bitcoin adoption in China of all places is taking off.

Unfortunately Bitcoin is not for me.

  1. At a total of 21 million BTCs that can be ever created, are there enough for everyone to use?
  2. Until Bitcoin is formally adopted by some nation, international organisation or other, who is to say that it will not be eclipsed by other crypto-currencies. In fact there is Namecoin, Peercoin aka PPCoin, Litecoin and maybe many others. Until there is only one, I stay by the sidelines.
  3. In an unlikely situation that fiat currencies fail entirely (and not one or two but all of them to fail because if I cannot use the US Dollar, I can still use maybe the Renminbi, Singapore Dollar or Hong Kong Dollar) so that Bitcoin is king, I still must hope fervently that there is no brownout so that I can use my Bitcoin.
  4. I know for certain that when faith in fiat currency fails, gold can fetch something but I wonder how Bitcoin will really fare.

 

This one Bitcoin price chart is all that matters to me

With the kind of volatility now, I don’t think that hedging or investing are words to describe Bitcoin ownership. Overnight drawdowns of 30 – 50% is a quick way to make one sleepless.

bitcoin volatility

6-hour chart of Bitcoin; sudden drawdowns like these do not benefit investors, hedgers

Chart from bitcoincharts.com
Creative Commons Attribution-ShareAlike 3.0 Unported License.

 

UPDATE 18 February 2014 – Shaking Bitcoin investors

Bitcoin’s future looks clouded at this moment. $1000 is now resistance so it is unlikely investors will see the heady prices it was exchanging last November.

Chart

Bitcoin upside capped at USD 1000

Besides price resistance, volatility there is this “Somebody Hacked Into Silk Road 2 and Stole All the Bitcoins“.

Bad news, you lovers of liberty and cryptocurrency. Somebody just hacked into the resurrected version of the Silk Road (a.k.a. Silk Road 2) and stole everybody’s money. And since that money was all in the form of Bitcoin, there’s no way to get it back.

 

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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