As reported in the FT, “Crypto’s critics see this development as yet more evidence of a bubble that is bound to burst. Fabio Panetta, member of the executive board of the European Central Bank, last month compared digital assets with a Ponzi scheme. “Crypto evangelists promise heaven on earth, using an illusory narrative of ever-rising crypto asset prices to maintain inflows and thus the momentum fuelling the crypto bubble,” Panetta said in a widely-reported speech.”
I recently noted that “When you allocate your capital into Bitcoin or similar, where does it go? Who is using your capital? How are returns made? Do you care? Investors will care. Speculators probably don’t!
There is danger in confusing investing with speculating. If you choose crypto to allocate part of your capital, you are not an investor. You are a Speculator. This is not bad it just means you need to understand the risks and consequences of your actions. Those in biggest danger are the ones making money but don’t understand why..those who have FOMO. It appears all too easy to make money. It’s like a drug that offers an easy route to wealth. The tipping point comes when you forget you are a speculator and think you are an investor.”
If you allocate your money to Crypto, are your eyes wide open to the risks? Remember, it’s a little like the Wild West. It is not clear where Crypto is heading. With speculation, you have to accept you may lose.
And now we have developments to gear up Crypto in an attempt to give yield. You can put petrol on a fire but whilst it can have the desired effect, it also carries crazy risk.