Thanks for including that article. I will paste in the last two paragraphs before commenting:
The bottom line is this year's bitcoin popular speculative mania has gone parabolic. Such extreme gains are never sustainable, as they require exponentially-growing capital inflows. Once this greed-drenched bubble stage is reached, it's only a matter of time until the burst inevitably follows. The resulting selling from panicking traders is so violent that most of the mania gains are fully annihilated in a matter of months.
While bitcoin and its blockchain distributed-ledger technologies are amazing and will indeed likely change the world, they don't justify bitcoin's extreme vertical gains. Plenty of past bubbles were based on great new technologies too, but those prices still collapsed once the supply of greater fools exhausted itself. After skyrocketing so darned fast, bitcoin is certainly the riskiest major investment in the world. Caveat emptor!
Way back in the dotcom bubble era Qualcomm (QCOM) split 4 to 1 when the share price was at its peak. I could include a long term chart for the issue but I figure the ticker hasn't seen that price level even after the bust and subsequent bull market that began in the Obama administration and has lasted for nearly a decade. Qualcomm returned to earth but it remains an important and profitable technology company. The same could be said for just about any listed company on the NYSE and NASDAQ in the past 10 years.
What I've learned so far is large and important listed companies and private organizations are implementing this blockchain technology. My understanding is it is a kind of distributed ledger that is constantly updated. It won't be a profit center unto itself, but it will enable large companies to operate more efficiently.
The parabolic graph for silver -- the one for gold is similar -- reminds of something Jim Rogers said in a book about trading I read last century. "Buy value, sell hysteria."
The current bitcoin chart sends a message that says, "you're a fool if you're willing to pay the current price."
But as long as some "fool" is willing to pay the current price, another fool will appear to pay the next highest price until a point is reacher where the next fool willing to pay the next highest price doesn't appear at the trading pit.
Then it's a stampede for the exit.
Mark Cuban became a billionaire because some company's management was willling to pay an outrageous sum of money for his streaming software company. He was smart in that sense. I guess he understood the market for his stock as well as the markets for lots of other internet related stocks had inflated the market values to a point they couldn't be sustained for much longer. So he sold and bought a professional basketball franchise.
The point Michael Lewis makes in his book about four guys who shorted the housing bubble is they realized in order for it to be sustained the lenders would have to lend to just about anyone.
The stampede for the exit doesn't begin with every cow participating simultaneously. All it really takes is a few cows to take off and the rest of the herd will follow. It merely looks like every cow has headed for the exit at the same time.
Even among cows, some are dumber than others.
The Nasdaq's third tier, the AMEX can be just as bad, and last but not least, the OTC, it seems, are financial venues that reward failure.
