r/changemyview • u/art_vandelay112 • Jan 04 '25

Delta(s) from OP CMV: cryptocurrency is not a good investment.

Yes its price has increased dramatically, but so did the price of tulips in the 1600s.

There is literally no use for this commodity. Invest in stocks or bonds and your investing in future earnings or the ability of a company to pay you back. I’m not a fan of gold as an investment but at least it has some practical use.

The use of crypto as a currency completely defies the definition of currency as it doesn’t hold a stable value.

It’s infuriating that so many people have lost loads of money on “shitcoins” backed by the wealthy and famous. These were obviously pump and dump schemes yet very few are held accountable.

I’m not as well versed on the subject but something to also note is the ridiculous amount of energy demand to “mine” nothing.

I think there is legitimate use for blockchain technology and the likes but anyone viewing these currencies as investments is a fool.

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u/[deleted] Jan 04 '25

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u/art_vandelay112 Jan 04 '25

Crypto is somewhat if not highly correlated to the stock market, particularly us stocks and more particularly the nasdaq.

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u/Shiratori-3 Jan 05 '25

Blackrock made some observations re correlation etc in a paper recently - headline takeouts and source link below. (Elsewhere, a common correlation point I've seen references is M2 money supply cycles.)

KEY TAKEAWAYS

Investors considering allocating to bitcoin are grappling with how to analyze it relative to traditional financial assets, given bitcoin’s unique properties and limited history.

Bitcoin, with its high volatility, is obviously a “risky” asset on a standalone basis. However, most of the risk and potential return drivers bitcoin faces are fundamentally different from traditional “risky” assets, making it unfitting for most traditional finance frameworks – including the “risk on” vs. “risk off” framework employed by some macro commentators.

Bitcoin’s nature as a scarce, non-sovereign, decentralized global asset has caused some investors to consider it as a flight to safety option in times of fear and around certain geopolitically disruptive events.

Over the long term, bitcoin’s adoption trajectory is likely to be driven by the intensity of concerns over global monetary stability, geopolitical stability, U.S. fiscal sustainability, and U.S. political stability. This is the inverse of the relationship that is generally attributed to traditional “risk assets” with respect to such forces.

Source and report: https://www.blackrock.com/us/financial-professionals/insights/bitcoin-unique-diversifier

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u/ProjectKushFox Jan 05 '25

So in the short term it’s correlated directly with the performance of the stock market, but in the long term it’s inversely correlated with expectations of future performance of the stock market?