JP Koning provides some advice on whether to buy bitcoin at current levels (around $38,000). He offers three visualizations of the future path for the price of bitcoin to help with that decision. If it’s slowly becoming money then buying and holding, ignoring its diminishing (proportional) volatility is a good strategy. If bitcoin is a bubble, buying could be disastrous because eventually it’ll be worth zero. If bitcoin is a game, it depends if you’re getting into the game early (when bitcoin is a good buy) or late (bad).
I’m intrigued by the “game” scenario, which implies that bitcoin’s price will never stabilize. There will always be big downward and upward spikes, which make it such an exciting game. And new game players will re-enter to play after every downward spike, re-anchoring bitcoin’s price and setting the stage for the next ramp up. Also, for the foreseeable future, bitcoin’s price will continuously hit a terminal ceiling ($50,000? $200,000?) dictated by its maximum participation rate (5%? 15?). [Read more here, including the comments!]
* To get these updates sent to your inbox, please sign up here. Also, for those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: https://www.diigo.com/user/kiffmeister/Fintech.
The CBDC Think Tank (CBDCTT) is hosting an in-person CBDC Workshop in Washington DC on February 24 exclusively for central bank and finance ministry staff looking to understand and position for CBDC issuance. [Register here]