I haven’t had as much to say about bitcoin lately as I did late in 2017 and earlier this year. I was not surprised when bitcoin surged to $20,000; that’s how bubbles work. I was even less surprised when it plunged over 65% to about $6,000 in the first quarter of 2018. That’s the flip side of the bubble and is also completely predictable. My bubble forecasts were totally validated, so I moved on to other topics.

Since then, bitcoin has traded in a range from about $7,500 to $9,500 with occasional spikes or dips outside those boundaries. That price action reflects dynamic tension between the early investors who are still trying to liquidate positions while they have some profits, and optimists who are trying to buy “cheap” bitcoin in the hopes that it gets back up to its old levels (it won’t).

Meanwhile, the bubble victims who bought in at $12,000, $15,000 and $18,000 are “holding” their bitcoin in the vain hope that they can at least get even. They won’t. Eventually they’ll give up, accept reality and dump their positions.

That capitulation will drive bitcoin lower. Over a period of years, bitcoin will sink to about $200 where it was when the mania began a few years ago. This article is a sobering reminder that whenever investors rely on the “greater fool” theory, they are not really making an investment; they are just gambling and hoping that they can get out of the casino before the roof caves in.

Relatively few manage to do this. Most buy in too high, or wait too long to sell and ride the wave down after riding the wave up. This article reports tat Bill Gates and Warren Buffett, two of the greatest investors and richest individuals of all time, agree with me that bitcoin was never more than a mania — and never will be.

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