‘I don’t believe bitcoin is unique in any way’: Why investors should be careful with

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Warren Buffett called Bitcoin “rat poison,” but the technology behind it is something everyone can agree on. Here are other life-changing uses you didn’t know about.

There’s absolutely no substance behind this rally.

Last year certainly qualifies as one of the most volatile in stock market history. Investors navigated their way through the widely followed S&P 500 losing over a third of its value in about a month. They also enjoyed a bounce-back rally for the ages, with the S&P 500 hitting new highs less than five months after finding a bottom on March 23.

If there’s one figure that stands out above all else, it’s that 10% of the roughly 3,700 stocks with a market cap of at least $300 million ended 2020 higher by at least 100%. That’s a head-scratching number considering the magnitude of the recession caused by the coronavirus disease 2019 (COVID-19) pandemic.

There’s no question that select equities and assets got ahead of themselves over the trailing nine months since the stock market bottomed. However, one investment looks to be the most dangerous of all. That investment, which I strongly believe should be avoided at all costs in 2021, is cryptocurrency bitcoin.

This investment is nothing but trouble

The largest digital token in the world by market cap hit an early morning high on Jan. 3 of $34,000. For some context, bitcoin has doubled since Nov. 27, is up 200% since mid-October, and has risen 363% over the trailing-12-month period. Bitcoin’s implied market cap of $628.2 billion now accounts for nearly 73% of the $866.3 billion in value tied up in more than 8,100 digital tokens.

Why is bitcoin rallying? Search any number of social media platforms and you’ll get no shortage of responses from enthusiasts. Bitcoin bulls often suggest that its competitive edge, community consensus, and game-changing potential to transform payment processing made this rally easy to predict.

Dollar-cost averaging: A crucial investing strategy for a potentially rocky year

Investing apps make it easy for beginners: Here’s how I started.

As for me, I don’t believe bitcoin is unique in any way, save for being one of the preferred investment mediums on cryptocurrency exchanges. In other words, if investors want to buy a less-popular token, they’ll usually need to exchange their fiat currency to bitcoin first before making their purchase. That, my friends, is the only true utility that bitcoin serves.

Below is a growing list of reasons I believe bitcoin is the most dangerous investment of 2021.

The concept of scarcity has been pulled out of thin air

Bitcoin bulls often point to its so-called hard cap of 21 million tokens as proof of its scarcity. Simple economics tells us that if demand for a good exceeds supply, and supply is limited, the price of that good should rise. Case closed, right?

Not exactly.

You see, we’re not talking about a physical good being in limited supply. Bitcoin’s token cap is nothing more than an…

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