The Bitcoin Dilemma.The Bitcoin Dilemma.
Unlimited Upside Potential
Since Bitcoin's price is largely driven by speculative growth capital flows, much like the S&P 500, it has the potential, over very long periods of time, for continual price increases.
$100K, MIL:1M , $10M, even higher...
Unlimited Downside Risk
Unlike an index of stocks, which can rotate out underperforming companies, Bitcoin as a standalone asset cannot.
S&P 500 in comprised of 11 sectors, where an underperforming sector can pick up the slack, as capitals rotate out of the leaders. Bitcoin cannot.
If faith in Bitcoin wanes or it is outcompeted by newer technologies or regulatory changes, there is no mechanism to replace it or adapt its structure.
This makes it susceptible to large drops in value if the market turns negative, with theoretically no bottom in sight.
#bitcoin #spx #capitalflows
With all that said, I am a chart trader.
I will follow the trends, using proper risk and money management, no matter how compelling (or not) a narrative or story line is.
Hope you enjoyed my thoughts on this delicate subject for some!
Remember, there is always something we do not know, and accepting that is the 1st step to growing and learning.