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Bitcoin getting it wrong and seeing a price correction

 When Bitcoin hit $3,000 some years ago a friend said to me this was a great trade, and I should invest.  I told him, that to me, for now, Bitcoin was a purely speculative play and not an investment.  The same way a Picasso at $100 million was not an investment it was speculation, speculation that someone else would pay more for an asset that has no function -- sure its pretty but so is a poster!

Bitcoin made it all the way to $60,000 or thereabout. my friend who had bought 500 coins at $250 in 2016 would be worth $ 90 million if he had sold at the peak -- he didn't sell at the peak he sold at around $10,000.

Now Bitcoins are going down based on nothing, except that investors have soured to the instrument -- by the way, it's not only bitcoin that has seen a massive drop in price, it trades around $38,000 today down 37% from its peak in early April 2021, all other cryptos took a hit.

My point was always the same if there is no reason for the price of a financial instrument to go up, then there is no reason for it to go down.  Good investments are when there is an asymmetry in the ups and the downs.  Tesla is a good example, it trades at insane multiple, and it's easy to see how a short of that stock makes sense if you can short the company via the option's market by buying puts.  For those interested in GameStop that's what undid the brokers, the options market where traders had to cover positions that were out of the money.

There is no way that the price of Bitcoin dropped because of what Elon Musk said on SNL over the weekend, but then again why not.  That makes just as much sense.  The weakness of cryptos has always been the same, they reject a payment system controlled by "the Man" yet at the same time are dependent on the same legal system to ensure that their claims against real assets are respected.

Personally, I think that crypto and the blockchain technology underlying it are important tools but they are immature and need a more institutional bend to make them work.

As someone said to me over the weekend, will you buy your newspaper with a bitcoin...no you will not!

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