Home Business News Alessio Rastani: The end of bitcoin?

Alessio Rastani: The end of bitcoin?

by LLB Editor
18th Feb 14 8:42 am

From the man who told the BBC that “Goldman Sachs rules the world”…

The digital currency “bitcoin” has been one of the hottest stories in the world. Last year it went up by 5000%. 

But its price took a major hit last week as one of the biggest bitcoin exchanges, Mt. Gox, halted all its customer withdrawals.

Readers of this column probably know by now that I have not been a huge fan of bitcoin.

In my article 3 Bubbles That Need to Burst, I warned that bitcoin was a bubble and just like all bubbles it would end ugly.

In an interview with “bitcoin enthusiast” Max Keiser, I made it clear that buying bitcoin was extremely risky. Apart from the fact that few vendors even accept bitcoin, its volatility has seen its price move 5%-plus 116 times in the past year. The US Dollar has not done that once.

In any case, the price of bitcoin is now almost where it was in November last year, under $300.  Take a look at this chart:

Bitcoin chart

I know many bitcoin fans consider this crash as a buy opportunity. Perhaps it is. But perhaps it isn’t…

I remember back in the year 2000, when the dotcom bubble began to burst, many people considered that crash to be a “buy opportunity” too.Sadly, those folks who considered dotcom stocks a bargain, continued to cry “bargain” until their stock went all the way to zero.

I am not saying that bitcoin will go to zero. But I think the easy money has probably been made in bitcoin. The fact that it closed below its December lows of $550 is already a bad sign.

Even if bitcoin bulls have their way and bitcoin managed to rescue itself from this downturn, I cannot see the crypto-currency as an “investment”.

When I look to buy something as an investment it must be (a) hated, (b) have an intrinsic value of “quality”, and (c) to be at the very least in an upward trend.

Bitcoin fails all three of these requirements: 

The public sentiment towards bitcoin continues to remain very bullish (a quick search on any social media will show you that). Bitcoin has hardly any intrinsic value. Compare that with gold, silver, platinum or good quality stocks that produce dividends like Microsoft, Intel and Coca Cola. 

Finally, bitcoin is in a downward trend, and buying it at this point would be like catching a falling knife.

Alessio Rastani is a stock market trader at LeadingTrader.com. He is the self-proclaimed trader who shocked the world by declaring live on BBC News that he goes to bed “every night dreaming of the next recession” and that “Goldman Sachs, not the governments, rule the world”. He’s a controversial figure, not least because he’s a self-taught non-institutional trader with no FSA license. But he certainly isn’t shy about sharing his views. Do you agree with his words? (His words are his own and not endorsed by LondonlovesBusiness.com)

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