Less risk now then ever to buy Bitcoin?

RationalSpeculator

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This bull will try to shake you off. Hold tight!

Quote from: BitChick on October 25, 2013, 12:28:52 PM

I am seeing several threads pop up discussing early adoption and there seems to be some envy from some of us that were not here a year or two ago. However, having heard about Bitcoin over a year ago I remember feeling uneasy about investing anything in it at the time because of some of the risks back then.

Let's go back a bit and remember what it was like. The exchanges were not stable. Remember all of the DDOS attacks? The price was way more volatile (this was fun for speculators but that is about it) and there was no certainty whatsoever that Bitcoin would somehow not be shut down by the government. I am sure there are even more risks than these.

Skip ahead. Today most of these risks have diminished. The exchanges are so much better (not perfect but improving!). There are some regulations put into place that show that Bitcoin is not going to be shut down at least. And now (this is the main reason I do not see Bitcoin going anywhere) wall street has it's eye on Bitcoin! Once they start throwing money into it there will be no stopping it I believe.

So sure it costs more to buy one today, but it is less risky than it has ever been to do so.

What do you think?

I think you make very good analyses. Risk of government outlawing bitcoin has indeed gone down a lot in the West since 2012.

The question is, has value gone up already enough to represent that?

Long term I think absolutely not.

But short term I agree with:

Quote from: freequant on October 26, 2013, 02:19:49 PM

The systemic risk of Bitcoin dropping to zero due to a government crackdown down is lower.
But the trading risk of loosing money by having to sell lower than you bought is extremely high right now since we are
1) on a down trend
2) nowhere close to a historical point of equilibrium
3) very far from the mean which, if you apply a mean reversion strategy, shouts "sell" pretty loudly.

Once the price as reverted to its pre-bubble level (~130), then yes you can consider that buying bitcoins is less risky than it used to be one year earlier in similar circumstances

I think being sufficiently invested is always important but having cash ready to buy between $60 and $130 an equal wise course of action.

rpietila

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Quote from: neutrinox on October 26, 2013, 02:42:51 PM

Quote from: sinner on October 26, 2013, 02:21:45 PM

seizure of DPR's coins depresses me Sad

Why? What's the worst thing they can do with those coins?

In my opinion they have three options:

1.) Destroy the coins -->less coins for everyone -->price goes up
2.) Keep the coins for a long time -->less coins for everyone -->price goes up
3.) Sell the coins -->weak hands panic -->cheap bitcoins for the rest (who probably will be fully aware that the sold coins are the FBI coins).

And as little as I like the US Government, it might still be better to have them own the coins compared to drug dealers and murder-for-hires.

+1. Once in a while the govt actually does its duty to find and punish murderers (assuming that the story is true).

Mike Christ

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Quote from: neutrinox on October 26, 2013, 02:42:51 PM

And as little as I like the US Government, it might still be better to have them own the coins compared to drug dealers and murder-for-hires.

I don't see the difference.

neutrinox

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1MCKW9AkWj3aopC1aPegcZEf2fYNrhUQVf

Quote from: sinner on October 26, 2013, 02:21:45 PM

seizure of DPR's coins depresses me Sad

Why? What's the worst thing they can do with those coins?

In my opinion they have three options:

1.) Destroy the coins -->less coins for everyone -->price goes up
2.) Keep the coins for a long time -->less coins for everyone -->price goes up
3.) Sell the coins -->weak hands panic -->cheap bitcoins for the rest (who probably will be fully aware that the sold coins are the FBI coins).

And as little as I like the US Government, it might still be better to have them own the coins compared to drug dealers and murder-for-hires.

rpietila

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Quote from: ArticMine on October 26, 2013, 02:23:36 PM

There was also another bubble in early 2011 and also one in the fall of 2010. http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-08-31zeg2011-04-03ztgSzm1g10zm2g25

Yeah, and on par with these easily, is the Pirate@40 bubble.

I just arbitrarily decided that price will have to decline 80% in order to qualify as a bubble. Nothing in the history of financial markets has repeatedly recovered from such and made new highs in a matter of months.

Bitcoin is a highly disruptive innovation and what is happening in the exchanges is a collective effort to price it. The behavior is not at all typical to a fad. When I bought several months after the 2011 bubble pop, I was taking a risk that it was a fad. I got rewarded for the risk.

Now bitcoin is the least risky thing out there, except for the high variance in less than 2-year holding period:
- The banks typically instruct you to hold cash only, if your investment horizon is so short. Everything else may show a negative after such a short time.
- The worst you could have performed by holding bitcoin 2 years is about +150%. SERIOUSLY NOW, if you read this and don't invest minimum 50% of your worth to bitcoin, you are not optimizing your wealth (that's OK)

tvbcof

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I've always considered Bitcoin a long-shot and highly speculative play, but one with VERY significant potential reward. I still do, but I consider the odds of success higher now than I ever did. Unfortunately it is also the case that one's money does not go as far as it did several years ago if one chooses to take the bet. Life is like that I guess.

n8rwJeTt8TrrLKPa55eU

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Quote from: BitChick on October 25, 2013, 12:28:52 PM

I am seeing several threads pop up discussing early adoption and there seems to be some envy from some of us that were not here a year or two ago. However, having heard about Bitcoin over a year ago I remember feeling uneasy about investing anything in it at the time because of some of the risks back then.

Let's go back a bit and remember what it was like. The exchanges were not stable. Remember all of the DDOS attacks? The price was way more volatile (this was fun for speculators but that is about it) and there was no certainty whatsoever that Bitcoin would somehow not be shut down by the government. I am sure there are even more risks than these.

Skip ahead. Today most of these risks have diminished. The exchanges are so much better (not perfect but improving!). There are some regulations put into place that show that Bitcoin is not going to be shut down at least. And now (this is the main reason I do not see Bitcoin going anywhere) wall street has it's eye on Bitcoin! Once they start throwing money into it there will be no stopping it I believe.

So sure it costs more to buy one today, but it is less risky than it has ever been to do so.

What do you think?

Definitely a more mature and diversified ecosystem than 6 months ago, and waaaaay more mature and diversified than 12 or 24 or 36 months ago. The potential reward is clearly lower than when it was at $5, but the risk has markedly decreased to compensate for that. A deeper analysis along the lines you propose was written recently by Edan Yago at the following link, it's well worth reading in its entirety:

Quote

The last few months have been marked by significant de-risking of Bitcoin as an investment.
Several strong positive trends have added value the ecosystem and that have yet to be fully reflected in the price.
I believe that the outlook for the next 6 months is low risk (relative to Bitcoin) with high potential upside.
Over the very short term, I expect the most likely scenario to be a sharp but short correction, followed by a run up to major (10X+) increase in price, catching up to and eventually overshooting both the reduced risk and increased value.

http://edanyago.me/2013/10/23/a-bubble-for-our-toil-and-trouble/

ArticMine

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Monero Core Team

Quote from: rpietila on October 26, 2013, 01:31:15 PM

I think the most important thing is that bitcoin is the only asset in the history of financial markets that has seen 2 such bubbles as we had in 2011 and 4/2013, and survived them both, currently sitting at its all-time-high (if measured by 10 day average).

My logical conclusion is that it is indestructible and it is virtually risk free to buy bitcoins. The only thing that can happen is that the exchange rate may move -50% or -80% against you, but then again, how else can it rise 2000% or 3000% in 2 months? Surely that magnitude of rise has to be accompanied with some volatility.

Bitcoins are the easiest to store and most difficult to coerce from you so they are the ultimate in safe-haven investments. Only the natural need to diversify hinders a logical thinker from investing all his wealth into bitcoins.

There was also another bubble in early 2011 and also one in the fall of 2010. http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-08-31zeg2011-04-03ztgSzm1g10zm2g25

sinner

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seizure of DPR's coins depresses me Sad

freequant

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The systemic risk of Bitcoin dropping to zero due to a government crackdown down is lower.
But the trading risk of loosing money by having to sell lower than you bought is extremely high right now since we are
1) on a down trend
2) nowhere close to a historical point of equilibrium
3) very far from the mean which, if you apply a mean reversion strategy, shouts "sell" pretty loudly.

Once the price as reverted to its pre-bubble level (~130), then yes you can consider that buying bitcoins is less risky than it used to be one year earlier in similar circumstances

rpietila

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Activity: 1722

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I think the most important thing is that bitcoin is the only asset in the history of financial markets that has seen 2 such bubbles as we had in 2011 and 4/2013, and survived them both, currently sitting at its all-time-high (if measured by 10 day average).

My logical conclusion is that it is indestructible and it is virtually risk free to buy bitcoins. The only thing that can happen is that the exchange rate may move -50% or -80% against you, but then again, how else can it rise 2000% or 3000% in 2 months? Surely that magnitude of rise has to be accompanied with some volatility.

Bitcoins are the easiest to store and most difficult to coerce from you so they are the ultimate in safe-haven investments. Only the natural need to diversify hinders a logical thinker from investing all his wealth into bitcoins.

BitChick

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Quote from: ?? on ??

For me, personally, the risk of not holding any bitcoins is far greater than the risk of holding bitcoins. YMMV.

Right? There is always the risk of not buying any that people seem to not think about.

wopwop

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Quote from: BitChick on October 25, 2013, 12:28:52 PM

I am seeing several threads pop up discussing early adoption and there seems to be some envy from some of us that were not here a year or two ago. However, having heard about Bitcoin over a year ago I remember feeling uneasy about investing anything in it at the time because of some of the risks back then.

Let's go back a bit and remember what it was like. The exchanges were not stable. Remember all of the DDOS attacks? The price was way more volatile (this was fun for speculators but that is about it) and there was no certainty whatsoever that Bitcoin would somehow not be shut down by the government. I am sure there are even more risks than these.

Skip ahead. Today most of these risks have diminished. The exchanges are so much better (not perfect but improving!). There are some regulations put into place that show that Bitcoin is not going to be shut down at least. And now (this is the main reason I do not see Bitcoin going anywhere) wall street has it's eye on Bitcoin! Once they start throwing money into it there will be no stopping it I believe.

So sure it costs more to buy one today, but it is less risky than it has ever been to do so.

What do you think?

I think BitChick is an annoying person

notme

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Quote from: shields on October 25, 2013, 02:33:08 PM

Quote from: mgio on October 25, 2013, 02:29:01 PM

Are you kidding me??

Bitcoin has been as low as 60 and as high as 210 (using coinbase for data) in the past month.

Just yesterday it was above 200, now it's in the low 70's.

Bitcoin is as volatile as ever and it is EXTREMELY risk to buy right now. You could buy at $175 right now and tomorrow it is under 100.

That's only a risk if you know you'll have to sell tomorrow.

+1

Dollar cost averaging is they way to win in this market.

shields

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Quote from: mgio on October 25, 2013, 02:29:01 PM

Are you kidding me??

Bitcoin has been as low as 60 and as high as 210 (using coinbase for data) in the past month.

Just yesterday it was above 200, now it's in the low 70's.

Bitcoin is as volatile as ever and it is EXTREMELY risk to buy right now. You could buy at $175 right now and tomorrow it is under 100.

That's only a risk if you know you'll have to sell tomorrow.

mgio

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Are you kidding me??

Bitcoin has been as low as 60 and as high as 210 (using coinbase for data) in the past month.

Just yesterday it was above 200, now it's in the low 70's.

Bitcoin is as volatile as ever and it is EXTREMELY risk to buy right now. You could buy at $175 right now and tomorrow it is under 100.

NUFCrichard

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Does anyone think that it will never be this high or higher again? I guess almost everyone here assumes it will be $200 again at some point, so don't worry about catching the very bottom, unless you are highly leveraged!

notme

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Quote from: SheHadMANHands on October 25, 2013, 12:46:10 PM

If you have the balls, now is certainly not a bad time to buy BTC. Take a step back and look at what fundamentals are telling you compared to what your emotions are telling you (fear). The further it falls, the better the buy.. assuming you have the long term confidence in Bitcoin. If you didn't, you probably wouldn't be here. Those who don't truly believe in Bitcoin but are just here to gamble shit their pants and dump after a 20% drop.

Just keep in mind that capitulation may continue for a few days after such a nice run up (all the weak hands moving out, or people trying to make a quick buck). You can't predict exactly when it'll end, partially because a few big players could randomly determine that.

And that's why you have standing bids every 2% or so. That way you get a good average price no matter where it bottoms

.

MAbtc

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Quote from: SheHadMANHands on October 25, 2013, 12:46:10 PM

If you have the balls, now is certainly not a bad time to buy BTC. Take a step back and look at what fundamentals are telling you compared to what your emotions are telling you (fear).

I picked up 5 or 6 coins on the way down, woke up to see my bids down to $156 (BTC-E) had filled. Was hoping we'd go a bit lower. Tongue

Just sayin'.

SheHadMANHands

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If you have the balls, now is certainly not a bad time to buy BTC. Take a step back and look at what fundamentals are telling you compared to what your emotions are telling you (fear). The further it falls, the better the buy.. assuming you have the long term confidence in Bitcoin. If you didn't, you probably wouldn't be here. Those who don't truly believe in Bitcoin but are just here to gamble shit their pants and dump after a 20% drop.

Just keep in mind that capitulation may continue for a few days after such a nice run up (all the weak hands moving out, or people trying to make a quick buck). You can't predict exactly when it'll end, partially because a few big players could randomly determine that.

Topic: Less risk now then ever to buy Bitcoin? (Read 2082 times)