https://www.reddit.com/r/Bitcoin/comments/6jrl5o/unrealistic_volatility_expectations/
created by theymos on 27/06/2017 at 09:33 UTC*
441 upvotes, 34 top-level comments (showing 25)
Price/volatility expectations have gotten pretty far out of hand. Just a year ago, the price was around $650. $650! Now I'm seeing some people here who seem to be kind of freaking out because the price dropped somewhat from $3000. Look, the Bitcoin price is on an absolutely ridiculous upswing which is rather likely to be a bubble. If you're trying to get rich quick by dumping your retirement funds into BTC at $3000, then your "investment strategy" is not much better than someone betting everything on a game of roulette. High-risk-high-reward investing is not *necessarily* bad, but you have to seriously look at your thought process to make sure that you're not:
It is entirely possible that the massive price increase over the last few months is based on lasting fundamentals. In addition to the fairly recent subsidy halving, the world fiat-based economy is in many ways on very shaky ground, and getting worse all the time. There are many good reasons why BTC should have a larger market cap than every fiat currency combined (probably in the very-long-term, if it occurs). It's even possible that the price will increase further this year; even $5000 wouldn't surprise me too much. But for goodness sake, don't think that Bitcoin is the first-ever infinite-money generator that will continue to rise exponentially forever (in real terms). I can nearly guarantee that **there will be a large and long-lasting crash/downturn at some point**. Maybe it will be $3000 to $1000, maybe it will be $10000 to $5000, who knows. But if you're thinking for example that the current $1250+ price range is *absolutely secure* after only existing for a few months, then you're traveling blind through very dangerous territory.
I am **not** in this post attempting to:
If you are a Bitcoin true believer, then I think it's a good strategy to dollar-cost-average slowly and then avoid ever "cashing out" in any major way. Then you don't have to really worry about the price. The idea of course is that someday the idea of "cashing out" will become irrelevant[1].
1: http://i.imgur.com/gE8hDnY.jpg
If you are treating BTC more like an investment that you will eventually cash out from, then you should wipe the dollar signs from your eyes and think more like a boring investment advisor. It'd probably be a good idea to avoid buying more than a few percent of your net worth in BTC, periodically rebalance to avoid exceeding that percentage if the BTC price rises, maybe place stop-loss orders, etc.
Comment by [deleted] at 27/06/2017 at 10:01 UTC
65 upvotes, 1 direct replies
That's a damn good post and a welcome change from a flood of hodl-themed shitposts that have been flooding this sub for so many weeks.
Since we reached this ($2400) level I've left many comments warning people not to go nuts but the reality is those who simply "must" buy, will buy...
My BTC playfund is 100% cash. Do I want to hodl? Yes, but there's no need to rush - you can always buy BTC at a "fair" (market) price, even when/if the price goes to $100,000.
As the meme says, the key is to not *have to* exit from crypto once you buy in. Whether or not you make money in fiat terms is of less importance
Comment by kwhali at 27/06/2017 at 10:58 UTC
17 upvotes, 0 direct replies
Just a year ago, the price was around $650. $650!
I don't even remember how/why I came across bitcoin in 2010. I mined it with my AMD GPU for two weeks before it died from being worked 24/7. Back then the 34 coins I got were worth less than cent each... being a broke student and kinda needing that GPU to use my computer for doing work(3D graphics) I was super excited to see the price spring up to $20 per coin, afaik it had never gone above a dollar back then I think? I didn't know anything about trading and wanted that new GPU so I sold the bulk of the coins.
Then a year later or so value was around $100 each, and I think it was during 2013 it peaked up to a grand. Much regret ha, I did a bit more research and decided I'd just hold what little I had kept. It burst like all the others and fell to around 300-600 and stayed roughly like that for a few years until 2017 and this insane increase happened again :|
I'm at a point where BTC seems to be fine at continuing this trend of going up, the duration between bubbles might be longer but it seems pretty safe to expect the investment to pay off longterm? That said I've not put any money into BTC, never really been in a position to do so.
Comment by [deleted] at 27/06/2017 at 15:38 UTC
9 upvotes, 0 direct replies
The longer it took for this inevitable dip the worse it would have been for new investors. This is just bitcoins way of welcoming the newcomers and reminding people to be cautious because it can bite.
Comment by Maegfaer at 27/06/2017 at 10:27 UTC
20 upvotes, 2 direct replies
As a hodler, I agree hodling is terrible advice to give or to follow. You should only hodl if you reach that decision by yourself after extensively researching Bitcoin!
Comment by slbbb at 27/06/2017 at 10:19 UTC
14 upvotes, 2 direct replies
People are just cashing out ETH/alts via BTC.
Comment by Flameruk at 27/06/2017 at 17:25 UTC
3 upvotes, 0 direct replies
Nice read Sir, well put. I'm still hodling my $2 coins back from the day, I mine 24/7 and very occasionally take the wife and kids for a week away when the bubbles hit. In a few years time, IF the price is right I'm out of here and going to enjoy a long easy retirement drinking Sangria on the Costa Blanca, remembering the fun times of mining, the woes of breaking Antminer hash cards and plain shitting it EVERY time I upgraded my hardware the price tanked the day after, over loading circuits, heat, noise, firmware updates you know the score!
Comment by Dotabjj at 27/06/2017 at 10:34 UTC
6 upvotes, 2 direct replies
thanks for this. it's unfortunate that I got in at this moment at what seems to be a peak of a bubble, but I gotta start somewhere, and sooner than later.
If the price pops to 1500, I'd be devastated, but I'd buy more. (provided it hasn't been hacked or permanently destroyed by successive hardforks).
Comment by dietrolldietroll at 27/06/2017 at 15:26 UTC*
3 upvotes, 0 direct replies
for emphasis:
If you are a Bitcoin true **believer**, then **I think** it's a good strategy to dollar-cost-average slowly and then avoid ever "cashing out" in any **major** way.
I do appreciate a post with responsibly qualified statements.
Comment by allyougottado at 27/06/2017 at 11:48 UTC
4 upvotes, 0 direct replies
So many noobs here, no one even knows who theymos is. Anyways good post.
TLDR.
If you are a Bitcoin true believer, then I think it's a good strategy to dollar-cost-average slowly and then avoid ever "cashing out" in any major way. Then you don't have to really worry about the price.
Comment by 3e486050b7c75b0a2275 at 27/06/2017 at 12:15 UTC
5 upvotes, 0 direct replies
You should have posted this when the price was bubbling up to 3k not now when it's down. That was when you warn people not the invest.
I agree about DCA. But I don't agree that you should never sell.
Comment by Effimov at 27/06/2017 at 12:49 UTC
5 upvotes, 0 direct replies
The crypto market has and still is getting flooded with money hungry investors. Not a single top 10 crypto coin represent its actual value. Too much hype, not even worth holding atm.
Comment by Kalips at 27/06/2017 at 11:08 UTC
2 upvotes, 0 direct replies
Comment by saviorjebus at 27/06/2017 at 17:49 UTC
2 upvotes, 1 direct replies
In regards to your comments about no proof that cryptographic technology is actually secure, this was very interesting. From what I read it is very secure, can you shed more light on this please? Great read!
Comment by [deleted] at 27/06/2017 at 19:16 UTC*
2 upvotes, 0 direct replies
TLDR; What goes up will come down.
Comment by n1nj4_v5_p1r4t3 at 28/06/2017 at 03:40 UTC
2 upvotes, 1 direct replies
If you're trying to get rich quick by dumping your retirement funds into BTC at $3000
Do you consider 2k, 2.5k and 3k to be the same thing?
Comment by cbKrypton at 16/07/2017 at 04:45 UTC
2 upvotes, 0 direct replies
The picture says it all. In the endgame, there is no realizing capital. There is only Bitcoin.
What good is a Bitcoin that is worth 1 bazillion Dollars if the dollar is worth nothing?
There is only Bitcoin.
Comment by Cobra-Bitcoin at 27/06/2017 at 11:44 UTC
2 upvotes, 1 direct replies
In my mind, anything more than $1000 a coin is still "expensive" and bubble territory. It's going to take a while for the new crazy prices to seem "normal" to me.
Comment by [deleted] at 27/06/2017 at 12:43 UTC*
5 upvotes, 1 direct replies
deleted ^^^^^^^^^^^^^^^^0.7303 ^^^What ^^^is ^^^this?
Comment by goodbtc at 27/06/2017 at 09:57 UTC
3 upvotes, 0 direct replies
HODL!
Comment by spendabit at 27/06/2017 at 17:01 UTC
2 upvotes, 0 direct replies
Ha. I just got done writing a blog post[1] on volatility. :-)
1: https://spendabit.co/blog/bitcoin-volatility-is-okay
Comment by anarcode at 27/06/2017 at 22:24 UTC*
2 upvotes, 1 direct replies
If everyone hedl, the value would disappear.
If everyone spent some of their BTC, the value would go to the moon!
Hodlers are ironically killing Bitcoin.
Comment by rbmichael at 27/06/2017 at 22:17 UTC
2 upvotes, 0 direct replies
Yes it's volatile but the reason why I don't agree that it's not a sound investment is because unlike a company, Bitcoin cannot "go bankrupt" or suffer from lack of profits. In the long term, Bitcoin will either maintain or grow its value. History has proven that if you wait long enough (granted, could even be a year) you will regain your invested value and likely with be worth more as it becomes more embedded in the businesses and financial systems of the world.
As for the algorithms, if a flaw is found, I think we would all be in a huge amount of trouble; not just Bitcoin. Banks, credit cards, and Https all depend on similar encryption technology on which Bitcoin is based.
Comment by [deleted] at 27/06/2017 at 15:00 UTC
1 upvotes, 0 direct replies
Great post! I just completed my second purchase working on Dollar Cost Averaging. Long term plan of 15-20 years investment with fortnightly purchases. BTC tho is only part of the overall investment plan tho.
Comment by awertheim at 27/06/2017 at 15:15 UTC
1 upvotes, 0 direct replies
True value falls on a distribution curve. Educated investing helps tighten the range of a standard deviation, which is good for everyone
Comment by [deleted] at 27/06/2017 at 15:59 UTC
1 upvotes, 1 direct replies
Getting wrapped up in "HODL" memes, reddit comments, and other groupthink, which is sometimes fun, but absolutely the last appropriate source of investment advice.
HODL STRONG!
(but good advice OP :) )
