Bitcoin Pigs Get Fat, But The Hogs Are Going To Get Slaughtered

Matt Thalman - INO.com Contributor - ETFs


Unless you have head your head stuck under a rock for the last 12 months, you have heard of Bitcoin and how the price of the first crypto-currency has skyrocketed this year. After hearing about this 'once in a lifetime investment opportunity,' I am sure most of you have thought about buying some digital currency. Maybe some of you have even taken the next step and bought some. (Congratulations to those of you who did.)

But as the saying goes, 'Pigs get fat, hogs get slaughtered,' I hope for your sake you are a pig and get out while you can. Unless you got your hands on some Bitcoin's in the last week, you have made money.

A recent Bank of America Merrill Lynch survey found that the Bitcoin traded is one of the most crowded trades on Wall Street, which obviously explains some of its massive run-up. Bitcoin's amazing performance over the last year now appears to have attracted some very risk-averse investors.

We have seen the price of Bitcoin fall 30%, 40%, even 50% in just a years' time. But, investors keep running into the asset and pushing the price to new all-time-highs.

So what would actually cause a Bitcoin collapse?

Big name investor after big name investor has raised concerns about the crypto-currency. But even the well-respected JP Morgan Chase & Co. (NYSE:JPM) CEO Jamie Dimon didn’t take the wind out of Bitcoin when he called it a "fraud" and said it will "blow up."

The people that have come out and publicly announced their bearish sentiment are not run of the mill investors; these people are in-tune with the markets. They have teams of people working for them that fully understand how Bitcoin and the other crypto-currencies work. Furthermore, guys like Peter Schiff, who predicted the financial crisis, believe Bitcoin is a bubble.

So it's clear that some investors don’t care what the 'smart' money on Wall Street think about Bitcoin and other crypto-currencies. But, they do care what governments think and say about them. Back in September reports arouse indicating the Chinese Government would soon start cracking down on Bitcoin exchanges. The price of Bitcoin fell from over $5,000 to around $3,000.

Since then though the price has climbed back above the original $5,000 and climbed all the way above $6,000, before pulling back to around the $5,500 range. This was not the first time the Chinese government caused the price of Bitcoin to tank. In 2016 the government made its first efforts to crack down on the currency in an attempt to slow the outflow of money in the country.

Each time China has attempted to slow Bitcoin, it has bounced back higher than before. This is because many Bitcoin investors don’t believe a government or any other entity will be able to control Bitcoin because of the block-chain technology. And I would have to agree with this thinking.

However, a government doesn’t necessarily need to be able to control the currency in order to slow Bitcoin down or even stop it; the government would just need to make it difficult for those trying to use Bitcoin for transactions. This was is what the U.S. government did with online poker, an industry which was booming and now has fallen back into the shadows. Of course, Bitcoin couldn’t be completely stopped in this manner, and either was online poker, but making it illegal and more difficult would definitely hurt the brand and the allure for the average investor.

While it is unknown how likely it is that a government will make Bitcoin illegal, it is easy to see how that scenario is likely due to the regulatory nature of Bitcoin. While China is concerned about its citizens moving money out of the country, perhaps the bigger issue is how governments use their central banks to affect economic growth, if their citizens are all using a currency such as Bitcoin.

In my opinion, it is hard to see how governments around the world allow Bitcoin to go unregulated in its current form in the coming years. When that regulation comes, Bitcoin will fall and most likely not bounce back because the true underlining allure of Bitcoin is its secrecy and block-chain technology, not it's invest-ability.

Bitcoin originally gained mainstream attention after a little 'black market' website called Silk Road was shut down in 2013. The currency was used by individuals buying and selling drugs and other illegal items because no one could track the flow of money. Bitcoin has only recently morphed into an 'investment' as it became more popular and mainstream.

Take the mainstream investors away from Bitcoin, and the hogs get slaughtered. As others have said, I believe Bitcoin and the other crypto-currencies are a time-bomb waiting to implode. I wish I could tell you when that will happen, but I can't see the clock. Just remember, be a pig, not a hog.

Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513

Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

25 thoughts on “Bitcoin Pigs Get Fat, But The Hogs Are Going To Get Slaughtered

  1. Bitcoin hits CME futures. It will be manipulated like every other derivative driven market. But with zero...I repeat, ZERO basis for support.

    At least every other asset or index has something relevant to base movement against. What do you base bitcoin price on? Gold or the dollar or bonds, equities? hmm. ya party's over.

  2. The real bubbles are the US dollar and fiat currencies in general which all sit on top of a gargantuan pyramid of debt and this debt pyramid will implode. Bitcoin and gold will remain and will go much higher.

    1. Sorry Crytos are illegal, gold/silver are the only money for 5000 years .block chain is good but Tulips are not. check out US Constitution.

  3. Bitcoin is like penny stocks, or perhaps the dotcoms. Its value is based on the "bigger fool" theory. As long as people are willing to buy them, the value will continue to appreciate. This is also analogous to carbon credits, or even the US Dollar since President Nixon severed it from gold. All of them are commodities. As long as there is demand, there is "value."

    1. Your missing the POINT..if you want to change the system ,like I do we need to get rid of the FED and CENTRAL BANKSTERS. Until then stack for the future don't hold DOLLARS and don't get caught up with PET ROCKS.

  4. Bitcoin is like penny stocks, or perhaps the dotcoms. Its value is based on the "bigger fool" theory. As long as people are willing to buy them, the value will continue to appreciate.

  5. Interesting that the doomsday shouters are all sitting on the sidelines crying foul because they were too scared to try something new. Oh boo hoo, get over it. Will Bitcoin fall in price sometime in the future? Yea it probably will, in fact I give it a 100% chance of dropping in price. Will this be permanent? I seriously doubt it. You can sit back and gloat every time Bitcoin falls, and I will sit back and improve my finances every time it rises in price.
    You can sit back and huddle over your fiat currencies which in fact DO NOT actually have any more value than Bitcoin. The stored value of the dollar bill is simply based on the belief in value, not actual value. The value is in the what people perceive it is, not tangible assets. Dollars have been around for centuries because gold and silver is bulky and hard to transport or trade. However it has been rather shaky over the past few years and with pressure applied by the Chinese, and other countries it may collapse. Bitcoin has only been around a few years, so it has not yet stabilized the value.
    Another Cryptocurrency may eventually topple Bitcoin, and so be it. However it seems to me that waiting to see what will happen without ever sticking your toes in the water is self defeating. You do not achieve success if you will not ever take a risk.
    Try a little and see how it works.

  6. Bitcoin will succeed ONLY if it becomes the "defacto" standard. The Constitution protects does not guarantee. Get in but know when to get out and do so.

  7. Sad to hear you say this, linear thinking will not allow you to take advantage of real technology and trends. But we exponential thinkers have always been ridiculed at the beginning of every trend. Jamie Dimon? Of course he is doing every thing he can to protect the system as it is, a corrupt system. The Petro dollar will collapse along with many of the accepted corrupt ways of our system and the powers that be, and that's a good thing. Sure, I continue to hold names like TOT etc. but not investing in cryptos is really not taking your grand children's future seriously. Not only should you be invested in cryptos [even if its just a small amount] but you had better be looking to develop one for your own companies [ah, maybe you don't really understand how we will be using these] and especially preparing yourself for the use of block chain technology within your own companies, you will regret not doing so in 10 years because you will be left behind just like many were when we were laughed at for opening web based stores in the 90's. Who's laughing now, who will be laughing in 10 to 20 years?

    Flame away, but please take air in through your nose.

    Ray

  8. It's like any other investment. As Kenny Rogers used to sing, you got know when to hold 'em and when to fold 'em. And, when to walk away. And, to Tim who said that Bitcoin is not Money. I agree. But, my house is not money either but it does have perceived value. AND... people barter all the time, they have even created their own barter script.
    Bottom line, I have a couple of bits that I'll be hanging on to for a while.

    1. I am a stacker of gold and silver and yes us fiat money is no good..but read the constitution ONLY gold and silver is money for payment ...so the US Government is breaking the law to.

  9. "A recent Bank of America Merrill Lynch survey found that the Bitcoin traded is one of the most crowded trades on Wall Street" Give me a break, nobody has any yet. Adoption is very low like under 2% still. This is just a scared bank talking trash.

  10. Bitcoin simply express that to capture huge gain, up-to which extend,people found greedy,foolish and blind follower of crooks. in India, there is famous phrase like, " crooks never remain hungry, when and where there are greediness spreader around them"

        1. Hello Ray,
          Thank you for reading and for commenting. I am always trying to learn and have been very interested in cryptos lately. In your comment you mention "Cryptos actually represent real value. Read up." Can you send me the information that I should read up on which will prove your statement. I should also let you know that I am currently working on a piece which will discuss the value's of currencies and if you have some information on that, it would be very helpful.

          Thank you again,
          Matt Thalman

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