Paul Mampilly Blog | Bitcoin’s Collapsing … but There’s a Much Safer Digital Currency | Talkmarkets
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Paul Mampilly is an American investor, former hedge fund manager and winner of the prestigious Templeton Foundation investment competition. Paul has been featured on CNBC, Fox Business News and Bloomberg TV. He is the founder of the popular investment newsletter Profits Unlimited, ... more

Bitcoin’s Collapsing … but There’s a Much Safer Digital Currency

Date: Thursday, September 28, 2017 3:11 PM EDT

I believe in bitcoin.

It’s a solution to a real problem seen in all paper currencies: inflation.

Over time, governments end up destroying your savings through inflation.

That’s true in every currency. Dollars. Euros. Francs. Pounds.

That’s because the cost of printing money is less than the value that it buys. In other words, it’s a good deal for the government.

It’s also an easy solution for any government because all you have to do to spend money is print it. Not to mention that it gets people’s approval and helps to win elections.

Of course, if you’re a saver, you get put through the wringer.

Inflation makes suckers out of savers.

But if you buy into this way of thinking, then you can understand how bitcoin’s success was inevitable.

I only wish I had understood this concept earlier. Because if did, I would have bought bitcoin myself.

But because I didn’t know what I didn’t know, I missed bitcoin’s surge to $5,000. The price has now come down from that point. I realize that some of you may be looking at that decline and wondering if you should get in. Here’s what I believe…

A Bad Investment

Despite my belief in bitcoin, right now, I’m staying away from it.

The reason being is that bitcoin has become too popular. By that I mean, there’s been too much buying of bitcoin.

See, because of how I evaluate investments, I know that buying into something that’s too popular is a bad move. Because often times, when too many people own one thing, it means the price has gotten too high.

This exact situation is how bubbles are formed.

And right now, it looks like bitcoin is a bubble that’s about to come crashing down.

Parabolic Gains

Bitcoin’s massive run-up from $970 to a peak of more than $5,000 earlier this year are exactly the kind of parabolic gains you see in a bubble.

Ditto for the copycat initial coin offerings (ICOs) that were launched to take advantage of people who missed out on bitcoin.

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