Saving for Retirement? Bitcoin safer than a CD

16 Nov

Yesterday I made the bold statement that there is zero chance that anyone who really understands the true nature of bitcoin believes that the dollar price will decline in the long run. Today I thought I would analyze the data to see just how long a run we are talking about. I downloaded the complete set of MtGOX BTC price and volume data from Bitcoincharts.com, beginning on July 17, 2010 through November 15, 2013 (1213 days). I wanted to find the shortest period during which a person could buy BTC at the daily high on the first day, sell at the daily low on the last day, and not lose money.

The answer… 633 days. If you bought bitcoin on any day before April 9, 2012 and held it for at least 633 days, you made money. And not just a little money. The worst return came from buying on June 8, 2011 at the high of $31.91 and selling on March 1, 2013 at the low of $32.92, giving a total return of 3.17%, or 1.83% annualized. I just did a quick web search and the best rate I could find on a 24 month certificate of deposit was 1.45%.

On the other hand, the average annualized return over all 633 day periods was 178.72%, and if you happened to be the lucky guy or gal who bought on September 28, 2010 at $0.06 and sold on June 21, 2012 for $6.56, you bagged an annualized return of 5,979.28%.

And of course, if you bought BTC at MtGOX on day one at $0.05 and are still holding on, with the price at $475.00 (just below the all time high of $478.50 set moments ago), your unrealized annualized gain as of right now (November 16, 2013; 10:05 pm EST) is 284,649.30%. This is how that Norwegian kid with 47 krone became a millionaire.

And this ain’t over yet, folks. If you read my post yesterday, you have seen the rationale for my prediction of least 2 to 4 orders of magnitude in price rise before bitcoin finally levels off.

In my next post, I will speculate on whether or not the Feds really want to get in front of this juggernaut.

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