No, Bitcoin is no more than a trading vehicle and highly speculative long-term investment

That's right: it's nothing else at this point. 

Just a trading vehicle, and very volatile at that, so not particularly suitable for your grandma or grandpa. Nor perhaps even for your parents. Still, I can imagine that younger people may feel more or even quite comfortable with it, although that also depends on how risk averse they happen to be.  

Bitcoin is not even a currency that it was designed to be. At least, not good enough for most people to embrace it without reservations at this point. And it definitely is not some tool for social justice as some Bitcoin activists seem to intimate (and perhaps even sincerely believe) while spreading the Bitcoin gospel (see what I am alluding to by checking out my tweet embedded below). 

I must say that I cringe every time when I hear all those badly or not at all substantiated hopes and expectations placed on this poor would be currency and its even poorer siblings (other cryptos) by the advocates of the alternative (or digital) currencies. 

I believe that there is some future for Bitcoin and some other cryptocurrencies, but perhaps only when they stabilize and become used primarily as currencies. I believe that it's quite possible that this will eventually happen, so putting in some money on it is not an entirely stupid idea, although pretty risky. But then again, investing is very rarely risk free, no matter what some people some of the time may think. 

Hence, apart from being a trading vehicle, very good for those traders whose strategies thrive on great volatility (and most trading strategies, I think, do better when volatility is higher rather than lower), it is also, perhaps one in a life-time, investing opportunity. Provided you are willing to wait long enough, probably at least 5 years to reap the rewards. 

But it is a highly speculative opportunity, so absolutely not for everyone, but rather for those with deeper pockets. In other words, if you really cannot afford to lose the money you want to invest in Bitcoin, you should find something less speculative. And even if you can afford that, putting more than 20% of what you can lose into it would not be a particularly well-informed decision, to put it mildly. 

On the other hand, it's your money, so you can do with it as you please. I am just saying...

However, being obsessed with Bitcoin and cryptos in general, a poorly regulated market, is as dangerous as seeing Bitcoin as some social justice tool that it was never meant to be. I must say that I too might have been spending too much time on these issues, but at least I am somewhat self-aware of it. 

There are so many other trading and investing opportunities that you cannot help but wonder if the media pushing the Bitcoin related news all the time (just check out the Yahoo! Finance site, my main source of financial news, to see what I mean) are really serving us well. I doubt it and with this in mind I would encourage you to look beyond all this Bitcoin and cryptos hype. 

Stocks, futures, e-minis in particular, are as good trading vehicles as Bitcoin, if, actually, not better. Forex, trading real, well-established currencies, with its enhanced volatility and very good liquidity is an excellent alternative, along with futures and more liquid, high-capitalization stocks, for those who like some more volatility in their trading. 

Just look around and don't get stuck with some newfangled digital investing vehicles, which while arguably holding quite a bit of promise are also very risky and may not be worth your time not to mention your hard earned dollar, euro, or yen.

For the record, I have never bought even a tiny fraction of any digital coin and I have no plans of doing so at present.

Posted on January 25th, 2022.

Last updated on January 25th, 2022.