Bitcoin
If You Had Invested Your $1200 Stimulus Check in Bitcoin…
You have just received your stimulus check. Stuck at home, bored, and with cash, why not invest it. What better way to spend your time cooped up at home right? Not so fast.
Bitcoin Support and Criticism
You may have heard of bitcoin from the news, especially at times when it dramatically dumped 10% in a matter of 2 hours (happened recently on April). The loud entrance of this new digital currency back in 2017 had caught many people off-guard. It made overnight millionaires out of children, startled financial institutes, and created some of the most speculative margin traders.
Bitcoin is in essence a digital currency. It features a blockchain public ledger powered by a distributed network system, which are maintained by “miners”. As a reward for holding up the backbone of the network, miners are paid fees in portions of bitcoin.
I’m sure you have went through this, but understanding bitcoin is no easy feat. Here is a little secret: no one really does. Heck, no one even know if Satoshi, the creator of bitcoin, is real.
But that is not stopping people from putting their hard-earned cash into the 11 year-old digital money. Some say this technology is innovative, others say it is nothing more than a mean for illicit transactions.
Recently, even bigger name players like Robert Kiyosaki have joined in the foray, speaking of bitcoin in the same breathe as Gold and Silver.
Others like Warren Buffet remained a bitcoin critic, lambasting it as worthless and vowed to never own cryptocurrencies.
Then we have bizarre moments like the Twitter exchange between R.K. Rowling and Elon Musk. Curiously, Peter Schiff, a long-time cryptocurrency skeptic but a gold bug, has kept relatively silent.
Investment or Gambling
If there is anything we learnt from Bitcoin, it is that the free market is driven by the rich. The price movements so often swings along with the whales.
From the above chart, we see 2 major price movements — the 5% pump on 7th May and 6% sell-off on 10th.
It is also during these price action that Bitcoin exchanges reported heightened activities and market sentiment. Margin traders focus on such changes where they historically make investors millionaires — or out of business.
The rest of us folks live by their whims and fancy, pump and dump. When the whales decide to sell, the market sets off crashing. On other times they buy, the market promptly send the price swinging wildly and breathe life to the morale of the bitcoiners enmass. News channels quickly latch onto a story for the pump to make it look substantial. Cue the hype and $200k predictions.
In fact, most bitcoin traders crave these rapid volatile movements that so frequently break its case for digital store of value.
Nonetheless, I thank this volatility for the ROI. I made a decent return of $558 from the recent bitcoin rally. If you had invested all of your $1200 stimulus check on bitcoin back in April, it would be now worth $1758 as of May 20th.
If you had invested all of your $1200 stimulus check on bitcoin back in April, it would be now worth $1758 as of May 20th.
This time, the mainstream narrative goes like this: the Federal Reserve’s stimulus package, which involves printing trillions of fiat money, sent the world fearing for the worse, driving up prices of commodities like gold and, some argue, Bitcoin.
What’s next?
I have been watching Bitcoin for 2 years, survived the sub $3000 winters, and came back for more. I am only sure of one thing, no one knows whats’ next.
In a free market like bitcoin, there is more to gain from waiting in the coattails of whales than technical analysis. What’s next you ask? We wait and listen for the whales.
$1200 Stimulus Is Now Worth
Update: $1758 as of May 20
Update: $1646 as of May 24
Update: $1648 as of May 27
Update: $1780 as of May 31
Update: Coming Soon…