Saturday, December 7, 2013

This Is Why Bitcoin Holders Will Never Get Out of Bitcoins Before the Final Crash

Because the final crash, at the start, won't look any different from interim crashes and rebounds.

This is what I wrote in the EPJ Daily Alert a week ago:

WHY MOST PEOPLE WILL NEVER GET OUT OF BITCOIN WITHOUT MAJOR LOSSES
There may be some Bitcoin traders who think they will be able to pick the top in the Bitcoin market and then get out. It will never happen that way.Here's why: The market will "train" such traders to stay in the market. Over the weekend, Bitcoin plunged by more than $300. It is now climbing back up. This is not the first huge plunge from which Bitcoin has recovered. There have been several others and it is typical of speculative stocks/investments. I have seen this pattern occur many,many times. Without getting into the long technical explanation as to why these plunges occur during an ongoing bull market, suffice to say that it trains traders to hold on during dips and buy even more. The problem with this is that it will be impossible for traders to differentiate between the final real plunge that starts the bear market and a short-term bull market plunge. The trader will end up being in at the top. He will wait for the price to climb back so that he is "even" but it never will.
On cue, we have Bitcoin junkies proving my point. Honey Badger comments at my post, Bitcoin Crash on News Major Chinese Web Site Has Stopped Accepting Bitcoin :
Yes, we go through one of these "crashes" every few months or so only to rise to a higher level soon after. I've been through a half-dozen of these already. What's nice is I get to pick up cheap coins on the pullbacks.
And Mises-hater Max Keiser leads his merry band of groupies over the cliff:





13 comments:

  1. This is also why Robert Wenzel will never get into Bitcoin until after the dollar crashes. Don't worry though, your gold will still hold its value pretty well.

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  2. I've never trusted Keiser. Some time he was on the AGW bandwagon and was an asshole to any who dared disagree.

    Doesn't seem to understand when it's appropriate to joke around and be serious either, I saw him on a news segment with Hugo Salinas-Price and he acted like a clown.

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  3. Gary North is seventy two years old. I'm sure this has nothing to do with his inability to understand Bitcoin, but the fact of the matter is that today's technology is very hard to understand, even for the young, so we should cut him some slack when he gets it so wrong on the subject of Bitcoin.

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    1. Yes, maybe we can set up a charity fund and toss him a few bitcoins after he loses his credibility and readership.

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    2. He already takes Bitcoin for his books at Mises, so instead of tossing him some Bitcoin for nothing, why not buy his books with Bitcoin instead, and show him that Bitcoin is indeed good for something. There is nothing like first hand experience to fire the imagination.

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    3. But the thing is, Gary North is not criticizing the technology so implying that he doesn't understand that doesn't lay a glove on his argument. He is criticizing you for not understanding what it takes to make money money (not a typo). He is criticizing you for not understanding economic history and the nature of manias. Continuously focusing on the technology *only* is missing the bigger picture.

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  4. I admire your willingness to keep trying to get through to people Bob. Hopefully they will wise up and see the state will never allow Bitcoin to thrive.

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  5. I am not a "bitcoin trader". I have abandoned dollars. I have no intention of ever "cashing out" of bitcoins. I've already cashed out of dollars and into bitcoins. The real worry for those of you holding dollars is that you will not be able to get out of them in time.

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  6. Mr Wenzel, please stop this Bitcoin hatred. You're embarrassing yourself. You offer no useful info except that Bitcoin is not currently for the timid. There will be NO FINAL CRASH!

    How Bitcoin will behave and the price at any given time in the future cannot be predicted because people act by free will. However your hate of Bitcoin is blinding you to the fact that what you are seeing is how a free market establishes itself even while being attacked by the state.

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  7. Ageism? There's an argument that should be considered. Oh sorry grandpa, it's a technology that's very hard to understand, can I wipe your chin for you Sir, yes you're drooling. Damn old people!

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    1. Yea, it's pretty disgusting. They might as well claim is VCR(DVD/Blueray) blinks 12:00 all the time as well.

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  8. Bastiat would have loved Bitcoin.

    "And so, as I have already said many times and shall doubtless say many times more (for it is the greatest, the most admirable, and perhaps the most misunderstood of all the social harmonies, since it encompasses all the others), it is characteristic of progress (and, indeed, this is what we mean by progress) to transform onerous utility into gratuitous utility; to decrease value without decreasing utility; and to enable all men, for fewer pains or at smaller cost, to obtain the same satisfactions. Thus, the total number of things owned in common is constantly increased; and their enjoyment, distributed more uniformly to all, gradually eliminates inequalities resulting from differences in the amount of property owned."

    "...A greater amount of gratuitous utility implies a partial realization of common ownership."

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  9. Hey, Honey Badger, smart move getting out of cash (dollars) and moving into something that a majority of people don't use, understand, or ever heard of. I have a bridge to sell you in New York, too. By the way, I don't accept shitcoins.

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