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If you are day trading bitcoin, trying to make a quick hit, this article is not for you.
If you are day trading bitcoin, trying to make a quick hit, this article is not for you. If you think gold and silver are the only “real” commodities worth investing in, don’t let the door hit you on your way out. If you think the “strong” U.S. Dollar isn’t going anywhere as the “global reserve currency,” I hope you’re a strong swimmer.
That article is for the Bitcoin lifer. The full-timer. The person who gets paid in BTC, and knows where every Bitcoin ATM in the city, even the state, is. You are sharp enough to know how truly special it is.
You heard about Bitcoin at some point over the last two years and said “This is going to change everything!” You may own a Bitcoin business, or are building one. You see it as “The Future of Money.” You’re a little down because of the bitcoin price drop from well over US$1,100 back in late 2013, and eighteen months later you need a little pick-me-up! Well, welcome to your Bitcoin pep talk!
And it’s probably your last opportunity to score big with Bitcoin. Rich people see an investment’s perceived value drop, and they buy low, and then sell when it rebounds. Poor people buy high, panic, and sell low. That’s what keeps them poor. It’s the law of the West!
This is the most obvious reason. Buying something that was once almost US$1,200 for less than US$250 is a good thing. The only way this wouldn’t be a good thing is if you think Bitcoin is dead, and it is heading down to Ground Zero.
Bitcoin has had more dirt thrown on it, mostly from the mainstream media and private interests than a dinosaur’s fossils. When Chunky Soup goes on sale for 30% off this week, you don’t avoid Chunky Soup because it costs less. You see it as an opportunity to buy. Why avoid buying bitcoin when its price drops?
The rich buy the prices of an appreciating asset drop. They seize the moment. Fred Wilson of Union Square Ventures, the Fred Wilson who funded Twitter, Zynga, Tumblr and Bitcoin’s Coinbase when they were just concepts, told the Wall Street Journal that he always buys BTC when the price drops.
All he sees is the future of Bitcoin, the inherent value of it. So treat Bitcoin like a coupon at your favorite store. Or like an uber-successful venture capitalist, and stock up! If bitcoins were US$3,000 apiece, it would never have a chance to catch on with the mass market due to the price. Today, more and more people can buy it while it’s affordable, so take advantage.
The facts are that Bitcoin is doing everything right. It is getting more and more major merchants to accept it. It is securing a higher quality of mainstream press in general, and there’s no such thing as bad publicity. The customer base is getting broader, including other nations besides the U.S. and China. And better wallets, stronger exchanges, new debit cards, and innovative trading options are being added every day to the Bitcoin ecosystem. So what is the problem?
The U.S. Dollar is the problem. The story goes that the Dollar is rising in value, relative to other currencies. That sounds great, but just like with the U.S. Consumer Price Index, you might want to look that gift horse in the mouth.
The U.S. Dollar Index doesn’t compare it to the Chinese Yuan, which is up almost twice as much. Just because other currencies such as the Euro or the Ruble are dropping faster than the dollar doesn’t mean the dollar is actually strong. With that said, a stronger dollar buys more bitcoin units per dollar than a weaker dollar. But let’s look at the dollar’s track record since bitcoin hit the market in 2009. Maybe you will see something called an economic bubble? Or at least see an anomaly, if not a trend.
Any currency can have a good quarter, but if you listen to the U.S. Government (U.S. Department of Labor/Bureau of Labor) tell it, inflation was LESS than 2% from the beginning of 2012 to the end of 2013. Are you buying that?
The national price of gas was US$1.61 on January 3, 2009, the day Bitcoin was officially invented, and now its price is double that. U.S. ground beef prices are up 79% since Bitcoin. A lot of that has to do with actual cattle supplies being at an all-time low, but inflation is only 10% of that number? Eggs have also consistently risen in price much higher than 1-2%. If the Consumer Price Index is a very controversial way to measure inflation, it is the most popular and is government-controlled.
The problem with the index is the goods themselves change at their discretion, as will the quantity of a product. The rate of inflation is rigged just like the Comex markets, the LIBOR, and the stock market.
So why believe in the Dollar Index, also supplied by government forces? The fastest way to keep the dollar from falling like a rock is to convince Wall Street that the dollar is rising, and not manipulating the influential Dollar Index is too hard to resist. It is not wise to trust any government-supplied information. Why should you? Whatever they say, usually the opposite is true. If you live by that rule of thumb, you’ll do just fine, economically.
This is a double-edged sword that has a strong downside. In some ways, Bitcoin is a victim of its success. With all of the new merchants coming on-board when merchants take more Bitcoin, they are selling it for USD 95% of the time. The seller’s market is outnumbering the buyer’s market at this point, with the merchants almost exclusively selling bitcoin at the end of the night’s business, if not instantly. Bitcoin is attracting merchants that are in the business of selling bitcoin every day!
If merchants were taking bitcoin, and then paying employees in bitcoin, the ecosystem and price would strengthen, not weaken. That economic conversion of paying employees in BTC is still in Bitcoin’s future. Right now, that’s a rarity. The eagerness of merchants to accept bitcoin is another sign of its enduring strength and market demand. This is a very good thing, but paying employees in bitcoin would be a great thing.
Bitcoin has gone through the Mt. Gox Bot Bubble, the closure of Silk Road, the Chinese government/People’s Bank of China (Their Federal Reserve) regulation of the bitcoin exchange market in China, and Ben Lawsky’s draconian NY Bitcoin License fiasco over the last eighteen months. And bitcoin was still up almost 100% over the USD price at this time two years ago.
The stock market is in the middle of the largest bubble in history. The Western economy is stagnant, at best, but the stock market is booming? Did you ever think to ask yourself why? It wouldn’t have anything to do with all the new phony Fed money that’s been created?
“Quantitative Easing” is a textbook way to create a market crash. Inflated stock value without any actual production supporting it? This is the “Bull Run” to end all “Bull Runs”. All “Bull runs” come to an end, and this one is running on fumes.
The average Wall Street Bull Run lasts 2.1 years. This one is at over six years. All good things come to an end. It’s just a matter of time. In other words, this bubble is 3X greater than the average market bubble. The market will correct itself, and you better not be near that mountain when the avalanche starts.
BTW, how many times over the last year have you heard someone on TV, online, or in an investment discussion say “Buy Gold & Silver!”? You hear it almost every day. So why aren’t gold and silver prices 2-3 times higher than they are, at a bare minimum? The answer is simple. These markets are rigged and manipulated, just like the Dollar Index and the Consumer Price Index. The banks control those markets, and they’re holding the prices down. Many financial experts believe the true price of gold and silver is as much as 5-10X what the listed price is, which is why they say buy now. They’re right.
If you believe everything you’re told about the value of the dollar, the amount of inflation, and the price of gold and silver, you are walking blind without a cane. I do have a financial investment background on Wall Street, and all I can say is gold won’t be under US$1,500 long-term, and is ready for unprecedented growth, only because the price you see is not real.
One day, you’ll wake up, and gold will be US$5-8k an ounce. Silver will be US$80-100, as severe hyperinflation and the dollar collapse will hit the United States like a freight train. The only question is: Do you see the shell game for what it is? And will you get out of the market in time, or collapse with it?
So what does that have to do with the price of tea in China? When these manipulated markets correct themselves over the next couple of years, Bitcoin, and its owners, will be there to reap the rewards. Smart people, rich in gold and silver, will sell when price seeks its true level, and will invest in something else like bitcoin, if they haven’t already. You have to be patient. Fools rush in, and out.
Don’t forget that next year, at right around this time, Bitcoin production is scheduled to drop from 25 BTC every 10 minutes to 12.5 BTC every ten minutes. You don’t have the be a Wall Street economist to know that half the supply of any salable commodity with at least the same demand leads to prices quickly doubling at the very minimum.
Demand and transaction volume has seen a steady increase throughout 2014, which was supposed to be such a bad of year for Bitcoin, to the present day. This has happened regardless of the BTC price, another indicator of market strength.
This means that prices should more than double after the halving takes effect on the market. Let’s face it, we are in the right place at the right time. Will you take advantage of the current buyer’s market is the only question.
No one said a revolutionary new technology like Bitcoin hitting the mainstream would be smooth or easy. Bitcoin is going through some growing pains, but I needn’t go through history to show you how so many of today’s staples have gone through bumps in the road only to come clean out on the other side, stronger than ever.
The cassette tape was invented almost 15 years before the Sony Walkman took it mainstream in the 80’s. With Bitcoin, there is simply too much money invested, too much technology available, and too much corporate and global interest to stop Bitcoin at this point.
The world’s brightest computer and business minds are brainstorming about how to take advantage and leverage this new, innovative technology. “The Network Effect” of Bitcoin cannot be ignored. Bitcoin must go through this awkward stage, like a pubescent teenager who has outgrown his clothes from last year, before it can mature and become what we expect it to be.
In 2013, it went from Kid Currency to a grown adult, married with children, with no stops in between. The market corrected it. It always does. Now, the Dollar is having its day in the sun, which is suppressing bitcoin’s value. This too shall pass.
Just like Bitcoin had to pay for being overvalued eighteen months ago, so will the dollar. Many with an economic education see the coming market correction as the final correction in the history of the dollar, and I agree. This has all the earmarks of an epic collapse of biblical proportions, and those who hold the bitcoins will be rewarded handsomely.
Bitcoin is much more than just a digital currency. It’s an invention that cannot be “uninvented.” Bitcoin will evolve, add new features, and it will change the world of technology. Digital currency is here to stay, mostly because it is much better than what is in place today, and the world badly needs a better currency system, with the superior digital protocols that come with it.
Bitcoin isn’t controlled by a single entity, which scares most centralized, controlled establishment forces, but the Internet was never centrally controlled, and it did just fine. You and I are doing just fine with the Internet. Better than fine. So good, in fact, that we have been given the birth of Bitcoin, money for the people, by the people.
Why not give yourself a round of applause? You are building and selling lifeboats in the middle of the Atlantic Ocean, with The Titanic that is the U.S. Dollar heading for an iceberg right before your very eyes. Bitcoin won’t save everyone, but Bitcoin does need an event to propel it into the mass market mainstream, and the collapse of the dollar is coming to solve that problem in due time.
Plenty of people will make you rich(er) by jumping on the Bitcoin lifeboat at the last second. Gold bars and ETFs won’t make good currency for food and water when the dollar faces its epic resolution by the market.
When the dollar-loving laggards are finally ready, even forced, to get on board with Bitcoin just to survive, be happy to lend them a hand. They’ll surely need it, much sooner than they think.
What event do you think will take Bitcoin “to the moon”? Share above and comment below.
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