Bitcoin’s Unlikely Performance Doppelganger: Levered Amazon.com

Bitcoin has had a spectacular year, with its price growing by 2,000 percent, topping out at nearly $20,000 before falling to a little over a third of that value. So, we posed the question to ourselves: how might investors have achieved Bitcoin-like returns over the last two years without needing Ambien to stomach the whipsaw swings in price?

June 01, 2018

Not a day goes by without some dramatic news about cryptocurrencies, sending their prices either in a downward spiral or shooting skyward with a double digit daily gain. Bitcoin, in particular, has had a spectacular year, with its price growing by 2,000 percent, topping out at nearly $20,000 before falling to a little over a third of that value.

Last week the DOJ launched a criminal probe into Bitcoin price manipulation immediately pushing the price down closer to the $7,000 level, and no doubt unnerving Bitcoin investors. Yet, news of a major exchange in talks about adopting Bitcoin trading and VCs pouring billions of dollars into cryptocurrency firms continues at a breakneck pace.

Such wild swings of crypto-prices don’t seem to be related at all to other currencies and even less so to stocks, other than blockchain related, of course. With all the factors that are affecting cryptocurrencies’ prices—regulatory concerns, criminal investigations, rumors of hacking and fraud, and real cases of fraud and hacking—crypto-investors would seem to be in constant need of antidepressants or sedatives.

Wait, that’s an interesting idea: what if the prices of Bitcoin and drug companies are related? Unfortunately, Bitcoin has zero correlation to the stock price of Sanofi, the maker of Ambien, so there goes the idea of at least one plausible connection.

Not only that, Bitcoin has zero correlation with pretty much anything, from the S&P 500 Index to an individual stock like Amazon.com1. Seriously, who would expect any similarities between Bitcoin and Amazon?

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