By: Dividend Sensei
In 2017 it seems the entire world caught cryptocurrency fever. The price of Bitcoin, the first major crypto coin, shot up an amazing 1,500%. That puts even the insance Nasdaq led tech bubble of the 90s to shame. When it hit its peak a single Bitcoin was trading for almost $20,000, the equivalent of a new car.
But what’s more amazing is that Bitcoin wasn’t the best performing major crypt coin of 2017, not even close. The honor of the best performing major crypto in 2017 went to Ripple, which increased a staggering 360 fold. A single $1,000 investment at the start of the year could have bought you a new house. At its peak the co-founder of Ripple and chairman of the company that operates its software, Chris Larsen, was worth $60 billion making him the fifth richest person in America (richer than the founders of Google).
But wait it gets even crazier! A small and little know crypto coin, called Experience Points set the all time record for the single best asset appreciation performance in the history of investments. It rose a stunning 13,706,718% over a 53 week period. That means that a $10 investment, if you were lucky enough to get out at the top, would have netted you $1.37 million, enough to retire on.
All told the peak market cap of all cryptocurrencies peaked at $825 billion, about 20% larger than the economy of Saudi Arabia and equal to the GDP of the Netherlands. Now obviously this crypto mania was a bubble, or so many investors think. As of this writing Bitcoin is down to $8,256 (down about 60% off its peak) and the aggregate market cap of all cryptocurrencies is $373 billion (down 55%).
But what if Bitcoin and crypto isn’t in fact a bubble? What if this is the real deal and an exciting new technology and an entirely new asset class that could replace regular currency and maybe even gold? In other words what if the Bitcoin bulls are right and this time is different and prices can in fact grow to the sky if powered by blockchain?
Maybe Bitcoin’s 60% plunge is just a classic deep value buying opportunity and anyone that buys today at $8,250 will be able to sell their coins for as much as $19 million…each…by 2019 (as some bulls have speculated)? Note that this would mean a market cap of $323 trillion or about four times the size of the 2017 global economy, and 30% larger than the net worth of the planet last year. Wouldn’t you be crazy to not invest as least SOME money into crypto? Just in case it turns out to be the real deal and a life changing jackpot equivalent to a lottery ticket? Actually there are three reasons why I would urge all but the most risk tolerant speculators to avoid Bitcoin and all cryptocurrencies entirely and not “invest” a dime into them.