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The Bitcoin Schizo Curve

When I bought some BTC in the fall of 2015 I was fully aware that I might lose my entire investment in the new, fledgling technology. Before I bought in I quickly discovered that there were several massive, eye-popping, price crashes prior to 2015. Nonetheless, the promise of a booming return coupled with a better future for millions, perhaps billions, of disenfranchised people across the globe led me down the Bitcoin rabbit hole. My intent was to be a long term HODLer but that was sort of derailed when I was diagnosed with stage 4 cancer the following year. 🙂

Since there have been 7 huge crashes between my original buy date and this week’s crash, I was not particularly crestfallen by the 50% Bitcoin price crash. You know how the saying goes: “been there, done that!”. I do sympathize, however, for the noobs who jumped into BTC near the $64K high just a few short weeks ago. It was simply bad luck in timing… but only in the short run. If you didn’t panic sell and get rekt, then just be patient and HODL your way through the current downturn. Set your sights on a bumpy 4 year HODL before thinking of selling any BTC for large purchases like a house, boat, education, car, etc.

As far as I know, no other asset class has ever gone from 0 to $1T in market capitalization as fast as the king of crypto. The tradeoff for this high growth rate has been the “V” word – volatility. The scary chart below clearly shows the Bitcoin schizophrenic price volatility endured by HODLers through the years.

All the hard core Bitcoiners I follow say that Bitcoin’s price volatility will decrease with time when the slope of the classic technology adoption “S” curve it’s following starts the flattening phase. I believe that too, but I was wrong in thinking that the softening had begun when institutional investors started buying Bitcoin last year. As you can tell from my hard science-derived graph below, Bitcoin has many more schizo gyrations to go before it settles into a boring, stable, financial asset.

To the gold bugs who think Bitcoin’s extreme volatility disqualify it as a store of value, have a looky here. Behold the extreme volatility of your beloved shiny rocks during the hyperinflation runup in Weimar Germany.

Categories: bitcoin
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