Thursday, November 21, 2013

A Penny Stock Trader on Bitcoin

Timothy Sykes writes:
Bitcoin did demonstrate the EXACT kind of pattern I teach and by which my students and I have gotten rich and while it did tank to 478 after its “first red day”, a solid 28% drop in one day thus validating my pattern’s effectiveness, it has now risen back to the 700s just a few days later.

The patterns that made me rich and so many of my students are different because of the investment vehicles which we trade, those being penny stocks, or scams or speculative companies.

I do not trade currencies even if they are speculative because the market has a totally different dynamic; there are no Bitcoin promoters getting paid by Bitcoin companies to hype up the price of their stocks in exchange for cash or shares and there are no solid fundamental Bitcoin companies reporting good earnings or winning contracts.

Bitcoin is nothing more than a virtual casino and perhaps the market dynamics of this fast-growing casino are saying that you should buy and hold Bitcoin, as the chart and price action suggests, but it is also the single most volatile and dangerous casino you’ll ever visit as any day the entire thing could collapse under regulations or hackers.

Obviously the same can be said about the stock market — ie those brief rules regarding short selling in some pathetic countries that banned it — but Bitcoin is so new, the danger is far greater than anything in the stock market.

So I can’t justify the risk of putting much of my money into Bitcoins or betting against Bitcoins, it’s all too unpredictable.

Given the wild price swings in Bitcoin, it is obvious that the market is very thin and relatively strong buying or selling will rock the price. You have been warned.


  1. Just under 8 hours this time Robert. You can do better than that.

  2. Someone should create a bitcoin to gold exchange. That is definitely not currency transactions, its selling a commodity for bitcoins.

  3. As I think about it, a bitcoin to gold store would be MtGox without the regulation, albeit with a little more volatility (depending on how long you have to hold the gold).

    They could accept physical (storefronts in financial centers), IAU, GLD, etc. and why not pay in a gold certificate accepted in the store next door (under common ownership) for cash.

  4. I am a strong proponent of Bitcoin and also of Robert's anti-bitcoin sentiment. Some healthy nay-saying is valuable to balance the hype that comes from people talking their book.

    I believe Bitcoin has a solid long term future as an international ledger of value exchanges. But in the near term, it is a thin market open to wild swings and market manipulation by savvy operators.

    If someone believes Bitcoin will still be used 10 years from now, then put in the money you might otherwise have put into a speculative IPO, backup your private key into secure cold storage, and don't look at the day to day price. It is either the next internet or the latest pump-and-dump scam. Wise people will do their research and decide, and your research should include listening to people like Robert.

  5. Fast forward to the future, every individual will be holding bitcoins and those who own some today will end up a millionaire 10 or 20 years from now. Can’t you see, the value is very good these days? And that would double or even triple in no time. I cannot imagine how central banks and governments can handle bitcoin invasion.

    Philip Jones