Pinned straw:
I've had a few family and friends reach out recently helpfully highlighting for me that bitcoin has "crashed".
Thanks?
It's weird how, unlike other assets, people love to dunk on you when the market price moves against you. I have held a negative view on bank shares for a long time, but I cant imagine sending a snarky message to shareholders I know because the price fell.
What is it about BTC that engenders so much schadenfreude?
Aaaanyway, it did prompt me to compare it against other more "sensible" assets. Not so much to enter into petty sniping and point scoring (I'll save that for twitter), but because it hopefully offers some useful context.
In doing so, it's pointless to look over any meaningful timeframe. At least for the point I'm trying to make. There's just very few assets of scale that can compete with a ten year CAGR of 75%pa. And even a perma-bull like me will acknowledge that such an insane rate of return cant be sustained over the long term. Even digital trees dont grow to the sky, so that's a dangerous thing to extrapolate.
The point is to try and tease apart risk, quality and volatility over the short term. As we all know, these rarely have any meaningful relationship over shorter periods of time (which is, in part, what we long term investors try to exploit).
For example, if I had put my money into a passive index fund a year ago, I'd have outperformed an investment in a bitcoin ETF, but not by much...
Yeah, dividends need to be included, but that hardly leads to a massive difference. Which is interesting given the extreme difference in the (perceived) risk profiles of these two ETFs.
Speaking of the banks, here's how CBA (arguably the best Aussie bank) has performed relative to the Vanguard bitcoin ETF since it hit it's June high
Bitcoin is down ~10% in the last 4 months, but CBA shares are down ~18%.
Yes, I've been extremely selective in my timeframe here. But my point is that so have the people who are dunking on bitcoin lately. The 4 month performance of CBA is as irrelevant to any sensible bull case, and the same is true of the last 4 week performance of bitcoin.
Besides, this is entirely normal for bitcoin. Since 2017, there have been at least 10 drawdowns of 25% or more, 6 bigger than 50% and 3 bigger than 75%. Every dip was, with hindsight, an incredible buying opportunity.
My point is that short term volatility says NOTHING about risk or quality. Not for CBA, not for a passive ETF, and not even for magic internet beans. Not that all of these things dont have genuine, legitimate risks. Only that volatility is not one of them.
Final thought -- it's at times like these that I always remind myself of Lynch's maxim: "Know what you own, and why you own it".
The bull case for bitcoin hasn't changed in the last month. If anything, it's gotten stronger. That doesnt mean it cant go lower. I have no idea what it does over the next 6-12 months, but history suggests it could easily go much lower.
If it does, the only thing that will bother me is all the hot takes from uncle bob :)
I knew AMP had taken a small BTC position in their super offering but intersting that such a staid and underperforming legacy financial firm is now writing Livewire articles on it! Link here, with a few interesting updates on the ownership mix at the end of 2025.
Wow, what a horrendous article....lol
Yep, it's awful. I teach a Masters Data Literacy course, and one of the topics we cover is about how to adjust the vertical axis to spin your data. The one benefit I found in this ABC article is that it has now given me another example graph to use in that class next year:
Good question @thunderhead.
Data science academics argue a fair bit about data visualisation, and especially what goes on the vertical axis of a scatterplot or line graph. The general idea is that you don't want to zoom out so much that you can't see the variation, eg this global warming graph
But you also don't want to give the impression of magnified variability, or that the data goes to zero, which can happen when your data extends to the bottom of the y-axis. One rule that seems to be becoming standard is "A golden ratio for line charts with truncated y-axis", which is also discussed here. The basic idea is that you want the bottom 1/3 of your vertical axis to be empty (those articles give some reasoning for why that is).
For the bitcoin graph from the ABC article, with a quick look, it seems like the bitcoin price is basically worthless in April 2025 and then had something of a speculative madness until October, and now it is coming back to worthless again. Since the author's point is that bitcoin has almost no use cases, that is surely the intent of the image. But to provide a genuine picture of what is happening, you want to show data in the genuine context to what your point is. The actual price is nowhere near zero.
Of course, there is also the problem with the choice of horizontal-axis range --- including a little bit more time than a single year on the horizontal axis would show the bigger context, that the price is generally highly variable, and it is still much higher than it was not that long ago.
Fret not @Strawman. All the boomers and boomers-to-be are just jealous they weren't along the ride for the absurd returns Bitcoin has posted since inception, despite several stomach-churning drops (will this time be any different? This isn't even "real" pain yet going by its history). I guess they are feasting on their fully franked bank dividends - all power to them!
Little doubt that it is looking ugly, especially at a time when its fellow risk assets have largely held steady. Is it a leading indicator of worse things to come for equities? Or do we have some divergence and correlations are breaking down (this would be a good thing if Bitcoin is a true hedge). There will be a time to start buying again, but I am inclined to wait and see until some sustainable green shoots emerge in the price action.
Discl: Not Held.
Aye @thunderhead. It was last successfully tested during Trump's ill-fated Liberation Day, but this support/resistance area goes back to Mar 2024 at least ... If it does not hold, next support level is ~52,403 to 56,176
My 2c here…,
Many, in fact the vast majority, still don’t really understand what Bitcoin is and why it is not Crypto per se.
So those who think it is a scam or otherwise have not done the work are happy to say ‘I told you so’ when we get dips like this whereas a bit of research will show this Is perfectly normal and is in fact a small’ish decline compared to history but we could well go lower yet. However, when the price rises they also say oh this won’t end well…. Yes I am generalising but hopefully you get my point.
Anyhow, as Bitcoin is over half of my holdings in my SMSF it is not great to see how much I am down but equally I sleep well at night as I know why I hold it.
In fact, I just purchased some more this morning. It is business as usual folks.