I decided that it was only right and proper if I updated you folks with my recent experiences/thoughts on Crypto currency and investments. Well, I sold out of my very small RIOT blockchain holding at a 37% loss the other week (about £500 lost). I had purchased the RIOT stock at about $50/share IIRC and this was close to the top of the 2021 H1 BTC peak. Furthermore I didn't spend long enough researching the firm, or critically analysing the situation.
I do still believe that there is a future to BTC (a value indeed). But my sale was motivated by several fronts:
1. Whilst I could have waited for RIOT to recover, I adher strongly to notion of opportunity cost. IOW whilst I could see a scenario where I wait for recovery their SP, I could alternatively be using the money better in various other stocks whose behaviour I find more predictable.
What I failed to appreciate at the time of purchase, and I now believe this to be very significant, and that's that continual inflow
s (sorry GoSeigen I know that you hate the F word) late 2020 and 2021 were driven by the US stimulus checks, landing on the laps of people caught up in the hype. However, now the stimulus checks (I think) will stop, and a slightly tighter regime will follow. Hence I don't see retail being as bullish in BTC or other cryptos.
Furthermore I started to find it very irritating how Mr Musk was (IMHO) manipulating the scene with his utterances. I do believe however that eventually his influence in these matters will dwindle.... but I'm not currently interesting in following that.
2. The second thing, and equally significant that put me off, was that in buying RIOT I stepped outside of my usual comfort zone of applying at least somekind of fundamental analysis to the stock, i.e. an earnings (or projection of) multiple or DCF analysis.
Whilst I do believe a DCF analysis on RIOT would be possible, it would all be underpinned by the value of a coin of BTC, which I find an impossible price to fix.
Personally I believe that BTC does have a value, my problem is whether that value is $0.34 or $34,000 per coin. I believe its value relates to firstly the fixture of its supply and presumably the immense security (I guess?) built in to the BlockChain. However I guess one's BTC holding is probably only as safe as ones digital wallet. What makes me consider the strength and hence implied "value" of the security aspect of the BTC/BlockChain is when I compare it to the 2007 Northern Rock bank run. I try to imagine, how things would have turned out if financial bodies hadn't been able to sure up the cash reserves of Northern Rock. In thought experiments I contemplate how possibly in similar future scenarios (some where in time and location) people could potentially lose all their local currency from the High Street bank, but have the contents of their digital wallets intact. My assumption is that it is these imagined "benefits" which originally made people "assume some kind of value to BTC" once upon a time.
So there you go. I still believe the BTC will go on, whilst I'm less sure of things like Ether and Dogecoin since they have unlimited supply. I too, have considered the Tulip explanation, but having researched that very shortlived historical event (and even read a related fiction book on the subject!
), I see many significant differences.