Bitcoin has been on a tear lately, exploding from $3,000 to over $13,850.While pundits try and ascribe reasons for the move, bitcoin traders who have managed to ride the wave are cheering. For now. If anything, this wacky move only serves to support the long-term bearish argument on bitcoin.
One of my primary objections to holding, or even trading, bitcoin is its volatility. Most of the time, when a stock is riding a wave higher, there’s a reason for it. Not so with BTC. It moves for one reason: emotion.
As an investment commodity with no hard asset behind it, its value in any given moment is dependent on what one trader thinks another trader thinks bitcoin is worth, who depends on what he thinks another trader thinks bitcoin is worth, and so on. Pure speculation.