Crypto newsbitcoin continues to pull back whole market down heres your strategy
Updated December 02, It's more than welcome news to investors, who are embracing the increasing value of the digital currency, but market analysts are a bit more sceptical. Bitcoin is a type of digital cryptocurrency that first emerged in Mr Noonan told ABC News Breakfast there are a few reasons that make bitcoin an attractive bet to some investors, including the fact it does not have a central bank and that there is a limited supply of bitcoins.
One of the other factors credited with driving the prices higher has been the announcement that investors will soon be able to bet on bitcoin futures. Even the Nasdaq is reportedly looking at getting in on that.
There's also a great deal of hype going on, fuelled somewhat by the intense media coverage it's been getting lately. Some experts and economists see the massive growth in bitcoin value over a short period of time as an indication that people are buying because of the hype.
They appear to see it as a risky investment at best, extremely volatile at worst. It's why analysts are comparing it to Tulip Mania and the dot-com crash. Bloomberg's Stephen Gandel has even estimated that based on valuation, bitcoins are four times more expensive than dot-com stocks were at the height of their bubble. Over the past two years, the digital currency has experienced numerous crashesusually every couple of months. But it is unlikely to pose a risk to the global economy like other bubbles, according to bitcoin expert Adrian Lee, a senior lecturer in finance at the University of Technology in Sydney.
That's because, for one thing, there's not as much money tied up in bitcoin as there was during the dot-com bubble, Mr Lee says, pointing out that while there is billions in bitcoin, there were trillions spent during the dot-com bubble. What also makes this unique is that it is unlikely people are borrowing to invest in bitcoin, according to RMIT professor of economics Jason Potts. Our experts said that seemed unlikely. It's still a relatively small number of people with money invested — roughly similar to the amount of people using email inMr Potts said.
So we're still very much in the early adoption phase. And Mr Potts said there had not been many retail investors involved.
That would limit the fallout to the wider economy in a worst-case scenario. But then again the exchanges don't require much overhead to run it, so if it fell they'd still be OK," Mr Lee said.
Some people who bought at the wrong time would be angry, other people who have been waiting to buy would be happy," he said. Those who have invested in associated entities, including mining infrastructure and ICO-based businesses, would also lose out, Mr Lee said. If it were as a result of central banks cracking down on bitcoin then you would expect the value of other cryptocurrencies to also fall. But if it was because of irrational exuberance, then only those cryptocurrencies that have experienced similarly sharp rises in their value would drop.
The bitcoin expert told the ABC that the recent surge in value is not a 'bubble' but a "price discovery". Besides, Mr Potts says there's been what could be described as "crashes" in bitcoin every few months.
It has grown [apart from ] every other year so over in the long-term it's been a solidly performing asset," he said. First posted December 01, If you have inside knowledge of a topic in the news, contact the ABC.
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The digital currency making millionaires. Bitcoin value slides as China slaps fundraising ban on booming cryptocurrencies. A digital cryptocurrency It operates on a decentralised peer-to-peer network, with no central authority or government backing They can be bought with fiat currencies like Australian dollars from online exchanges or created through mining.
The likelihood of a crash has been contested by different economists and experts. We asked if you were worried about a bitcoin crash. Read the discussion in the comments. Bitcoin explained Can't tell a bitcoin from a blockchain? Read our explainer to see how the cryptocurrency works. Will the Bitcoin bubble burst? The boss of JPMorgan Chase said if his staff were caught trading bitcoin he would "fire them in a second" and it's a "fraud".
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It's been a rollercoaster ride for bitcoin investors over the last six months. Then, all of a sudden, things got crazy. Over the next six weeks, crypto-mania literally took over the world. Next, almost as quickly as it rose, its price retreated. Anyone who piled in crypto newsbitcoin continues to pull back whole market down heres your strategy the top learned the hard way.
Yet despite the fact the cryptocurrency has undergone a massive correction and is now trending up again, I won't be investing in in. Here are four reasons why. For starters, it's impossible to value bitcoin. With a stock, I can look at earnings, cash flows and dividends, and use models or ratios to get a rough idea of what a company could be worth. Given that bitcoin has no earnings, cash flows or dividends, I can't do that.
How much is it really worth? It's kind of a pure 'greater fool theory' type of investment. There's also another important implication of bitcoin's lack of cash flows and dividends. Given that the cryptocurrency doesn't pay an income stream, it means that the only way I could ever make a profit from it, is if I can convince someone else to buy my bitcoin from me for a higher price than I paid. In finance, this is referred to as the 'greater fool' theory.
Can I be sure someone else will pay a higher price than me for my bitcoin in the future? Bitcoin also has very little practical use, for several reasons. For example, look at its insane volatility. Furthermore, it's almost impossible to actually buy anything with it. Can I head down to Sainsbury's and pay for my weekly shopping with it? Can I grab a coffee at Costa with it?
Bitcoin has very little real-world use. Lastly, if there's one financial expert I'm willing to listen to in relation to bitcoin's prospects, it's the greatest investor of all time, Warren Buffett. And it's fair to say, Buffett doesn't see any investment appeal in it at all, recently labelling it as " rat poison squared " and stating that cryptocurrencies will almost certainly " come to a bad ending. As a result, I'll be steering well clear of it for now. Of course, picking the right shares and the strategy to be successful in the stock market isn't easy.
The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of crypto newsbitcoin continues to pull back whole market down heres your strategy ordinary investors in this straightforward step-by-step guide. There are no strings attached, simply click here for your free copy. Search The Web Search Aol. Should I buy bitcoin now its price is rising again? You Really Could Make A Million Of course, picking the right shares and the strategy to be successful in the stock market isn't easy.
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