Like the list of things that could potentially kill Deutsche Bank, the roster of events that can send bitcoin into a tailspin continues to grow. Bitcoin-linked buttplugs, John McAfee self-mutilation and cannibalization promises, Winklevii and the slow realization of the essential pointlessness of the whole crypto project have all proven poison to BTC’s value against fiat currencies, which given the whole philosophy behind bitcoin should be irrelevant but of course isn’t. Speaking of things that shouldn’t necessarily be, Mark Zuckerberg is planning a cryptocurrency of his own. You might think that the prospect of a competing fake currency from one of the world’s biggest and most ubiquitous companies (and not, say, Kodak) might have bitiots a bit worried that their crypto might not end up being the crypto to end all cryptos, and that conversely plans by lawmakers and regulators to destroy the Facebook token in the womb might cheer them. But, of course, it’s the opposite.
The world’s most popular cryptocurrency has fallen sharply as regulatory scrutiny of Facebook’s ambitious plan to release its own digital coin, called Libra, has spoiled bitcoin’s big rally this year.
The price of bitcoin recently slid to about $9,100, according to research site CoinDesk. Before bouncing back later Wednesday, it had lost almost a third of its value after trading above $13,000 a week ago, which was near its high for the year.
Enthusiasm about Facebook’s plans drove much of the earlier rally. There was hope that Libra would bring widespread cryptocurrency adoption and legitimize the industry, from which bitcoin would benefit.
To make matters worse, investment guru and bitcoin skeptic Ray Dalio’s here to remind users of a different social media platform that there’s a proven non-fiat-currency store of value out there, and now’s a pretty good time to buy some.
Most people now believe the best “risky investments” will continue to be equity and equity-like investments, such as leveraged private equity, leveraged real estate, and venture capital, and this is especially true when central banks are reflating…. I think these are unlikely to be good real returning investments and that those that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant, such as gold. Additionally, for reasons I will explain in the near future, most investors are underweighted in such assets, meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more of this sort of asset. For this reason, I believe that it would be both risk-reducing and return-enhancing to consider adding gold to one’s portfolio. I will soon send out an explanation of why I believe that gold is an effective portfolio diversifier.