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Abstract

our Bitcoin, you will be mightily disappointed in the direction it has gone. If you bought it several years ago at $400, you might be a little worried that your fantastic profits have been shaved. But hey, you can ride out a little volatility — or in Bitcoins’s case, a lot of skittish variances.</p><p id="2219">This is where the sunk cost fallacy comes in.</p><h1 id="b693">Sunk Cost Fallacy</h1><p id="8b4e">It’s the weekend, your family and friends are having a drink. You order takeaway food and, as usual, order too much. So, you over-eat just to ‘get your money’s worth’.</p><p id="c640">Sunk cost fallacy is our tendency to follow through on an endeavour if we have already invested time, effort or money into it, whether or not the costs outweigh the benefits.</p><p id="4173"><b><i>Stuffing more food into your mouth than your stomach can handle is a surefire way to an unhealthy future.</i></b></p><p id="f82a">Stock investors should be aware of this phenomenon. A company might seem like an excellent investment, but when it drops and keeps on dropping, sometimes the best policy is to cut your losses — and cut them early.</p><p id="f942">Sunk cost fallacy can keep you invested in a failing company — some people will chase their losses and double up on their investment. It is wise to be careful.</p><h1 id="4659">There Is More to Bitcoin Than Making Money</h1><p id="1a87">There is more to Bitcoin than making money?</p><p id="a143">Most people don’t understand Bitcoin. Most people have a simplistic view of investments.</p><figure id="309f"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*EZ-eHgagvrGji77MrZS12A.png"><figcaption>Author prepared image via Canva</figcaption></figure><p id="5cb6">Maybe the smart thing to do is invest in the companies that buy and sell Bitcoin —<i> Coinbase</i>, for example.</p><p id="2cbf"><b><i>Coinbase</i> listed on 14 April 2021 at$ 328.</b> What’s not to like? They make money trading Bitcoin. Whether the price of Bitcoin goes up or down, they get a percentage of every transaction.</p><p id="865e">It’s a big company — it has a market cap of $47b and in March 2021 had a net income of$ 771m. Unlike Coca Cola, Coinbase is not sharing that income with its investors, it does not pay a dividend. And its <a href="https://www.investopedia.com/terms/p/price-earningsratio.asp#:~:text=To%20determine%20the%20P%2FE,earnings%20per%20share%20(EPS).">P/E ratio</a> is three times higher than Coca Cola.</p><p id="c76d"><b>Today, <i>Coinbase</i> is trading hands at $245.</b></p><h1 id="5777">Nobody Actually Wants Bitcoin</h1>

Options

<p id="9aba">We want the things it can buy.</p><p id="4016">The wealth we accrue is what helps us sleep at night. Whatever they may be, our stores of wealth are our guarantee that we can feed and clothe ourselves.</p><p id="c23a">We want our stores of wealth to grow and create more value. Whether it be the dollar in our purse or the Bitcoin in our digital wallet.</p><p id="aec7">When our basic needs are being met, we get greedy, we want more. If we make $10 we want $20. If we make $2m we want $10m. Bitcoin is like any other value store, it fuels our greed.</p><p id="d8db">How much is enough?</p><p id="8776">When we can afford to build a rocket to take us into space for a few minutes and fulfil a childhood dream, does that satisfy our greed? It appears not.</p><p id="f14f">It is our greed for more that has allowed Bitcoin to thrive. And as usual, it is the 1% of owners who have the majority of the pot.</p><p id="1721">The tail-enders to the crypto game will exchange their last pennies for a piece of the action. And that gives the big boys an opportunity to swap their blockchain for a Rolls Royce, a 150ft yacht and a Patek Philippe watch.</p><p id="b47e">I don’t know if Harry Dent is right. I don’t know where Bitcoin will end up. Harry thinks it will drop to $4,526. <a href="https://www.youtube.com/watch?v=IKPLH7n5DWw">Some say</a> it is a scam and will go to zero. <a href="https://www.youtube.com/watch?v=AlHFzczbtis">Others</a> have bet their house on it going stratospheric.</p><p id="8a05">I don’t have any skin in the game. I have no Bitcoin or any other cryptocurrency, but if Harry is right, and it does drop to $4,526, I might sit up and listen.</p><div id="78e2" class="link-block"> <a href="https://malkymcewan.medium.com/membership"> <div> <div> <h2>Join Medium with my referral link - Malky McEwan</h2> <div><h3>As a Medium member, a portion of your membership fee goes to writers you read, and you get full access to every story…</h3></div> <div><p>malkymcewan.medium.com</p></div> </div> <div> <div style="background-image: url(https://miro.readmedium.com/v2/resize:fit:320/0*yXm1YeZ6PgYfkFVV)"></div> </div> </div> </a> </div><p id="5581"><i>This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.</i></p></article></body>

Harry Says, ‘Hurry Up and Sell All Your Bitcoin’

Sunk cost fallacy is going to stop you from making even more money when you buy it back at $4,526

WANTED: Hazmat Suit, Armour, or Bulletproof Vest

It’s what I need — or at least a thick skin.

“You know squat about crypto.”

“Your understanding of cryptocurrency as a whole is questionable.”

“Bitcoin evangelists will come and hunt you down and beat you to death with the FUD stick.”

These comments, and more, were in response to my article Bitcoin Will Drop 94% in the Next Year.

Hey guys, don’t shoot the messenger. Or at least read the damn thing all the way through, because it’s not all bad news.

I should highlight:

“Harry Dent (the famous American financial newsletter writer) thinks blockchain will be the next big thing.”

The Mother of All Recessions

Harry is adamant Bitcoin is in for a rough ride over the next year — along with all other markets and stores of wealth. We’re in for the mother of all recessions, he tells us.

I wouldn’t have written about it if I didn’t think his argument was compelling.

He thinks the US (and the world) has the worst monetary policies ever. Banks will be destroyed, which means tough times for you and me.

You and your household can’t keep taking out new credit card debt every month and not expect it to come back and bite your backside. In the same way, governments can’t keep printing money out of thin air and expect their problems to go away.

The Timeline

Harry Dent talked about this and the coming crypto crash during a YouTube interview on 8th April 2021.

Bitcoin was changing hands at $58,091.

Today, 27 July 2021, Bitcoin is being bought and sold at $39,488.

How you view this drop will depend on where you bought in. If you paid $58,000 for your Bitcoin, you will be mightily disappointed in the direction it has gone. If you bought it several years ago at $400, you might be a little worried that your fantastic profits have been shaved. But hey, you can ride out a little volatility — or in Bitcoins’s case, a lot of skittish variances.

This is where the sunk cost fallacy comes in.

Sunk Cost Fallacy

It’s the weekend, your family and friends are having a drink. You order takeaway food and, as usual, order too much. So, you over-eat just to ‘get your money’s worth’.

Sunk cost fallacy is our tendency to follow through on an endeavour if we have already invested time, effort or money into it, whether or not the costs outweigh the benefits.

Stuffing more food into your mouth than your stomach can handle is a surefire way to an unhealthy future.

Stock investors should be aware of this phenomenon. A company might seem like an excellent investment, but when it drops and keeps on dropping, sometimes the best policy is to cut your losses — and cut them early.

Sunk cost fallacy can keep you invested in a failing company — some people will chase their losses and double up on their investment. It is wise to be careful.

There Is More to Bitcoin Than Making Money

There is more to Bitcoin than making money?

Most people don’t understand Bitcoin. Most people have a simplistic view of investments.

Maybe the smart thing to do is invest in the companies that buy and sell Bitcoin — Coinbase, for example.

Coinbase listed on 14 April 2021 at $328. What’s not to like? They make money trading Bitcoin. Whether the price of Bitcoin goes up or down, they get a percentage of every transaction.

It’s a big company — it has a market cap of $47b and in March 2021 had a net income of $771m. Unlike Coca Cola, Coinbase is not sharing that income with its investors, it does not pay a dividend. And its P/E ratio is three times higher than Coca Cola.

Today, Coinbase is trading hands at $245.

Nobody Actually Wants Bitcoin

We want the things it can buy.

The wealth we accrue is what helps us sleep at night. Whatever they may be, our stores of wealth are our guarantee that we can feed and clothe ourselves.

We want our stores of wealth to grow and create more value. Whether it be the dollar in our purse or the Bitcoin in our digital wallet.

When our basic needs are being met, we get greedy, we want more. If we make $10 we want $20. If we make $2m we want $10m. Bitcoin is like any other value store, it fuels our greed.

How much is enough?

When we can afford to build a rocket to take us into space for a few minutes and fulfil a childhood dream, does that satisfy our greed? It appears not.

It is our greed for more that has allowed Bitcoin to thrive. And as usual, it is the 1% of owners who have the majority of the pot.

The tail-enders to the crypto game will exchange their last pennies for a piece of the action. And that gives the big boys an opportunity to swap their blockchain for a Rolls Royce, a 150ft yacht and a Patek Philippe watch.

I don’t know if Harry Dent is right. I don’t know where Bitcoin will end up. Harry thinks it will drop to $4,526. Some say it is a scam and will go to zero. Others have bet their house on it going stratospheric.

I don’t have any skin in the game. I have no Bitcoin or any other cryptocurrency, but if Harry is right, and it does drop to $4,526, I might sit up and listen.

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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.