New York, NY — Bitcoin rose to another record close today on strong demand from speculators and “investors” alike.
Physicians and other speculators are tracking and trading the cryptocurrencies on their phones and computers, whether it be in the operating room or in between clinic patients.
“I have no idea what a blockchain is, but what I do know is that when I buy bitcoin, I make money,” said Dr. Harvey Diamond.
To the chagrin of economists and financial bloggers, bitcoin mania has hit fever pitch.
Trading in bitcoin goes against every rule of their financial book. Many economists and other financial commentators are calling bitcoin a bubble, waiting to bask in their “told you so” moment when the bubble bursts.
Of course, Bitcoin has humbled financial bloggers and economists since at least 2011:
- October 2011: The Economist discusses the bursting of the Bitcoin bubble.
- November 2013: The Economist decided to run another article on the bitcoin bubble, saying it “looks overvalued.”
- December 2013: Jesse Colombo at Forbes discussed the bursting of the last bitcoin bubble.
Bitcoin has since roared back from its previous bubble pops, and the usual suspects are lining up again to call the next bubble:
- September-October 2017: Nobel laureate Robert Shiller calls bitcoin a bubble and a fad.
- November 2017: The Economist really wants to call the bubble bursting: “There may be good reasons for buying bitcoin. But the dominant reason at the moment is that it is rising in price”
- November 2017: Another Nobel laureate, Joseph Stiglitz, called bitcoin a bubble that “ought to be outlawed“
The meteroic rise in the cryptocurrency comes just in time for company holiday party season, when no doubt many physicians and other high-income professionals will brag about how early they got on the bitcoin bandwagon.
“I bought 0.1 bitcoins back when it was $500 last year. I should have bought more.” said Dr. David Gold.
Like most bubbles, the financial media has struggled to coin a storyline as to why bitcoin keeps on rising each day. The current storyline is that bitcoin will soon begin trading on mainstream exchanges.
But really, its speculators operating on the greater fool theory: even if they think bitcoin is overvalued, they believe that they will be able to sell it to someone else at a higher price.
“Everyone tells me to buy low and sell high, but for bitcoin, its buy high and sell higher.” said Dr. John Silver, who, not surprisingly, is long bitcoin.
Even Bogleheads, the index fund investing forum that generally eschews alternative investments such as currencies, is all abuzz about bitcoin. Diving into bitcoin at this point, of course, would violate one of John Bogle’s core principles to “stay the course“.
“Be fearful when others are greedy, and be greedy when others are fearful.” Warren Buffett famously said. No one can argue that bitcoin investors are very, very greedy right now.
“But don’t think that you can make money shorting the cryptocurrency,” said Wall Street Physician, a former trader and current physician. “No one know where the top will be. Markets can remain irrational far longer than you can remain solvent. If you short the currency at $10,000, and bitcoin tops out at $100,000, then you’ll have been run over by the bitcoin steamroller. Stay on the bitcoin sidelines.”
What do you think? Do you own any bitcoin? Then gloat about it in the comments below! Are we in a bitcoin bubble? Make your prediction in the comments below, and come back in a year to see if your prediction came true.