Bitcoin will trigger the next financial crisis!
I was writing about Bitcoin and the Blockchain lately.
Now I am quite worried about our economy driving into the next crash soon.
Bitcoin is currently at ~8000$ and falling from 20'000$ all-time high.
The big issue, almost nobody seems to understand is: If the Bitcoin price is falling below mining costs, miners will stop their activity, the Blockchain will stop working and ALL COINS will be worthless as Bitcoin is the "Currency" to convert all other coins back to normal cash!
This is frightening as the amount of capital invested in Bitcoin was around 300 billion USD in December 2017 and 150 billion USD now.
(Apple is worth more than 900 billion)
The critical question is: What does mining cost currently?
I estimate the "break even" is currently between 2000 and 5000$ depending on the locations energy prices.
What will happen if the Bitcoin value will fall below average mining costs?
If the Blockchain transactions got stuck and chained up, while speculators want their money back, nobody will handle transactions anymore and the system will just disappear.
I could not care less if this hot air would disappear, but I also see the industry built around the cryptocurrency hype.
When Bitcoin crashes, all FinTech Startups will be worthless immediately, including the Venture Capital invested.
The market capitalization of the FinTech industry together with the market capitalization of Bitcoin and other coins is currently high enough to cause a substantial correction at the stock exchange.
I was just looking at the market capitalization of CDO's in 2007 and came to the conclusion it had been more or less 400 billion. (Please correct if I got this wrong)
What should you do?
1. Sell your Bitcoin and other coins now
2. Buy Gold
3. Short Equities and Indexes
4. Bonds around the world will explode on top of the current bond craze
I am not the only one who found out about Bitcoin being hot air!
When I worked in the financial products department of a private bank here in Switzerland as a management support in 2007 I followed Nouriel Roubini who predicted the crash then. He is also predicting Bitcoin to cause trouble just now. Another big investor Jordan Belfort comes to a similar conclusion.
If the management in charge then at the private bank, would have moved faster according to what I told them to do in their investment strategy, they would have saved some millions for the institution and for their investors.
What we will experience soon is called a Black Swan and I can just recommend the book by Nassim Nicholas Taleb (my original is from 2007 and the new edition is from 2010):
I was a young guy and I cannot blame the gray-haired managers for ignoring my advice then.
Now I have gray hair too :-)
By the way ... as Bitcoins can be traded 24/7 every day, if the crash happens during the weekend, exchanges, opening on Monday will be busy and actions might be late ...
Do what you think is appropriate!
Have a great day and better invest in your education than trading hot air!