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I'm just wondering if crypto should be part of a sound investment strategy. The question of whether crypto is like stocks is separate, I think, and I see your p
by kzrdude 5y ago
I'm just wondering if crypto should be part of a sound investment strategy. The question of whether crypto is like stocks is separate, I think, and I see your point.
- PragmaticPulp 5y agoThe two questions aren’t very different. Because crypto doesn’t derive value from any underlying assets, it’s not a traditional investment. It’s basically the essence of speculative trend-following distilled into tradeable tokens. The value only goes up so long as the hype continues to increase and the market can find more believers to buy the coins, pushing the price higher. If you think investing in such a scheme is profitable, you have to believe that more people will continue to believe in the scheme in the future to continue the price growth. The risk is that people stop believing in the scheme and start withdrawing their money to place in other assets (traditional investments or the new hot cryptocurrency), which depresses the price and simultaneously makes it less attractive to new investors.