Bitcoin Will Not Make You Rich

Summary

The article cautions that while Bitcoin's value has seen significant fluctuations and occasional surges, it is not a guaranteed path to wealth, especially for inexperienced investors who may be swayed by speculative predictions and are at risk of losing money in market crashes or scams.

Abstract

The article "Bitcoin Will Not Make You Rich" discusses the volatile history of Bitcoin, highlighting its dramatic rise to nearly $20,000 in January 2018 and subsequent fall to around$ 3,400 within a year. It underscores the risks of investing in Bitcoin, referencing stories of significant financial losses post-market crashes. Despite recent price increases following the 2020 halving, the article suggests that only a small percentage of traders actually beat the market, and that Bitcoin's price fluctuations are not a reliable route to riches for the average person. It also warns of the dangers of speculation and scams, such as pyramid schemes like Bitconnect and Onecoin, advising potential investors to conduct thorough research and use established platforms like Coinbase and Kraken to avoid being defrauded.

Opinions

The author believes that the rapid increase in Bitcoin's value in the past should have been seen as a bubble rather than a reliable investment opportunity.
The article implies that many investors were blinded by the potential for wealth, ignoring the risks associated with the cryptocurrency market.
It is suggested that the majority of day traders do not outperform the market, with only about 10% being successful.
The author is skeptical of speculative Bitcoin price predictions, such as those made by John McAfee, labeling them as "lottery ticket fantasies."
The article emphasizes that to achieve significant wealth from Bitcoin investments, one would need to invest a substantial amount of money and also be able to sell at the peak price, which is challenging due to human instinct and market unpredictability.
The author advises a cautious approach to investing in Bitcoin, recommending thorough research and the use of reputable dealers to avoid scams.

Bitcoin Will Not Make You Rich

In January of 2018 Bitcoin plummeted from a high value of upwards of twenty thousand dollars.

Keep that sentence in mind when investing in Bitcoin. Within roughly a years time it’s value had fallen to around $3,400. The astronomical rise of Bitcoin should have been an obvious sign of a bubble, but for many it was pie in the sky dreams instead. How many homes and Lamborghini’s would they be able to buy with their new found winnings?

When the cryptocurrency market crash happened the market fell by more than $400 billion within 8 months. The story of an Australian man who lost his life savings of upwards of $120,000 dollars is just one of many horror stories at the time. The use cases for cryptocurrency have grown massively since then, but the values haven’t come close to reaching all time highs again.

New Highs Here in the year 2020 the next halving of Bitcoin has recently taken place and once again the price is slowly starting to creep back up. At the time of this writing Bitcoin is valued at roughly $11,700 which is a growth of a couple thousand dollars in the past few weeks.

All one has to do is look back towards the previous halvings of Bitcoin to get an idea for what could be ahead. In each case there has been a bit of a slow down followed by incredible growth in value, followed by a massive pull back.

There is a chance that as the price grows we will see a parabolic rise once again. If the last time this happened is any indicator then we will see people new to investing tossing money into crypto markets once again. Inexperience in investing can lead towards massive losses.

The prices fluctuate greatly on Bitcoin and somebody who has taken the time and invested in themselves to learn how to trade a market can certainly make a killing on Bitcoin. The higher the volatility of the asset the more money to be made trading and crypto can be highly volatile. Unfortunately, few people learn how to trade with precision and acumen. According to Forbes only roughly 10% of day traders end up beating the market.

Speculation with Bitcoin is all over the place. With prices ranging from $500,000 per Bitcoin within the year; according to internet personality John McAfee; to $20,000 being the price target to beat. With the amount of uncertainty in the market Bitcoin is a wild commodity to be invested in. These are lottery ticket fantasies that will drive investors towards caviar dreams of making millions. The simple truth is much different though.

Reality

For the layman Bitcoin is not something that is likely to make them a fortune. Assuming the price doubles by the end of the year from the all time high this would put the price around $40,000 per Bitcoin. If an investor purchased right now this would place any investment gains at roughly 4x. Certainly a much better investment than the market in such a short time period, but for most it is not truly life changing returns.

To truly get rich off of 4x gains the amount invested would have to be incredibly large to begin with. $100,000 investment would only get you to $400,000. Nobody can predict the future which makes it impossible to know if Bitcoin will actually get to that price level.

Then there is the issue of selling at peak. Selling at it’s peak price is always a gamble. It is human instinct to hold on to the last minute in an attempt to not lose out on extra gains, which often times leads to greater losses instead.

Scams With the rise of prices once again there is also an increase in crypto scammers. For the inexperienced investors the dream of making 100x gains on their investments are often times incredibly enticing. This led to the rise of a number of crypto pyramid schemes the past few years including Bitconnect and Onecoin. Always remember the old adage when investing, “it’s too good to be true”.

Research into an investment product before actually buying in will mitigate many of these incidents. There are tons of reputable Bitcoin dealers online including Coinbase, Kraken, Binance, Robinhood, and many others. Using an established location is a solid way to avoid scams.

As for making massive riches when investing in crypto don’t expect overnight success. Through proper investing over time you might be able to purchase that multi-million dollar mega mansion you always dreamed of. Bitcoin might be a part of it, but keep yourself grounded and keep working.