Bitcoin fell like a rock last week as many speculators in the cryptocurrency decided to book profits and head to the sidelines after JPMorgan Chase CEO Jamie Dimon warned about the dangers of Bitcoin, saying “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” He even said the cryptocurrency “is a fraud.”
The virtual currency was also pressured by the decision by Chinese authorities to crackdown on the digital currency. Last week’s plunge came after Beijing ordered cryptocurrency exchanges to stop trading and block new registrations, due to fears that increasing number of customers piling into the market could lead to a string of wider financial problems.
“All trading exchanges must by midnight of 15 September publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations,” the government notice said, according to Chinese state newspaper Securities Times.
BTChina , one of the biggest Chinese exchanges, was the first to announce it was shutting its doors to all trading by September 30. OkCoin and Huobi followed this news with an announcement saying they would close on Friday.
The news from China is likely to have a big impact on Bitcoin prices because the nation accounts for almost a quarter of bitcoin trades and is also home to many of the world’s biggest bitcoin miners.
It’s One Man’s Opinion, Why All the Anger?
It’s important to note that Jamie Dimon’s comments were his opinion so you have the choice to believe what he said or not believe. For every negative comment from a banking heavy-weight like Dimon, we can find a similar number of positive comments about Bitcoin.
Making investment or trading decisions based on the opinions of others is nothing new to the financial community. That’s what makes a market. For example, some soybean traders may believe one weather service when they say the crop will get ample rain. Others will believe the other weatherman who says there will be a drought.
Perhaps the most successful investor of all-time, Warren Buffett has often said he doesn’t invest in anything he doesn’t understand. Once again, that’s his opinion and if he says he doesn’t like Bitcoin, he may be telling us, he doesn’t understand the cryptocurrency market. As a professional, he isn’t afraid to say he’s missed opportunities in the past. One of his biggest regrets may be passing on Apple or Amazon when shares were cheap. However, he doesn’t dwell on it.
Bitcoin Has Become a Trading Market
I think what’s making Bitcoin investors uncomfortable with the events last week is that Bitcoin is no longer flying under the radar and that it has become a trading market. And trading is 90% mental and 10% mechanical.
I suspect that many Bitcoin “investors” were happiest when they could buy the digital currency, put it in their electronic wallet and forget about it because they believed it was going to go to $10,000, $50,000 or even $100,000. If that’s their strategy then no one should argue with them.
However, if you decide to become a Bitcoin “trader” then you are going to have to put up with the volatile swings that are part of all markets. You’ll have to deal with choosing the right digital currency to trade. Just like stocks, some will win, some will lose.
You see investing and trading are two different animals. When no one was watching Bitcoin, profits may have come easy, but now you’re going to have to work for it. I embrace cryptotechnology and all the good that will come about because of it. I also embrace volatility but I know my limits. If you’re going to trade Bitcoin and all the opinions, issues and excessive price swings that go along with it then you’re going to have to learn to embrace volatility because it’s not going to go away anytime soon. I say embrace volatility or perish.
The other thing, make sure you know if you are a Bitcoin investor or a Bitcoin trader. There’s an old adage amongst traders and it goes something like this: All it takes is a small loss to turn a short-term trader into a long-term investor. In other words, if you decide to trade Bitcoin during these turbulent times, make sure you are willing to take small losses if you are wrong. Otherwise, you may end up holding on to something that may in the long-run be nothing but an illusion.
The Best and Safest Way to Buy and Sell Bitcoins
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