I currently have a small percentage of my portfolio in Ethereum. I’m considering making it a large percentage, maybe 20%, due to the Squish Chaos report. It was mentioned here on LW earlier, but didn’t generate much discussion. Squish claims to be about 90% in Ether. The case seems compelling: Ether price could easily go up 7x on fundamentals and maybe 50x in the short term, probably within a year, at least according to the report. If true, this is an amazing opportunity, similar to being a Bitcoin early adopter, but the case seems too one-sided. I’m detecting a whiff of greed and groupthink from some other traders I’ve been discussing this with.
He who knows only his own side of the case, knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side; if he does not so much as know what they are, he has no ground for preferring either opinion. —J.S. Mill
So can someone please talk me out of it?
My best counter-case so far: Ether is extremely volatile and has dropped 90% before. (But eventually recovered.) Crypto is very over-hyped generally. (But this report seems unusually well-researched.) If I took every crypto bet that seemed good, I’d quickly lose my shirt. (But I rarely make bets this size. Even if I’m wrong, I’d probably recover from an ~18% loss within a year from my other investments.) By the EMH, if the future price is known, it should cost that much already, sans the risk-free rate and premium for risk. (But crypto markets are clearly not efficient yet, Squish makes a case why this can’t be priced in yet.) Any time there’s an Ethereum software update, we risk a hack. (The risk is still worth it, and another update could reverse losses, cf Ethereum Classic origin.) Ethereum is a bubble/ponzi scheme that could collapse at any moment. (Ethereum might have a better case on fundamentals that Bitcoin. Since Bretton Woods, fiat is also ponzi-like, yet stable enough due to policy. Squish suggests that Ether should be worth 7x current value on fundamentals alone.) The fundamental valuation is circular: smart contracts are only useful for making more kinds of tokens. (Even assuming 0 fundamental value, current prices are much higher than 0 now. Canada already has an ETF for Ether, the US will probably follow suit.)
I currently have a small percentage of my portfolio in Ethereum. I’m considering making it a large percentage, maybe 20%, due to the Squish Chaos report. It was mentioned here on LW earlier, but didn’t generate much discussion. Squish claims to be about 90% in Ether. The case seems compelling: Ether price could easily go up 7x on fundamentals and maybe 50x in the short term, probably within a year, at least according to the report. If true, this is an amazing opportunity, similar to being a Bitcoin early adopter, but the case seems too one-sided. I’m detecting a whiff of greed and groupthink from some other traders I’ve been discussing this with.
So can someone please talk me out of it?
My best counter-case so far: Ether is extremely volatile and has dropped 90% before. (But eventually recovered.) Crypto is very over-hyped generally. (But this report seems unusually well-researched.) If I took every crypto bet that seemed good, I’d quickly lose my shirt. (But I rarely make bets this size. Even if I’m wrong, I’d probably recover from an ~18% loss within a year from my other investments.) By the EMH, if the future price is known, it should cost that much already, sans the risk-free rate and premium for risk. (But crypto markets are clearly not efficient yet, Squish makes a case why this can’t be priced in yet.) Any time there’s an Ethereum software update, we risk a hack. (The risk is still worth it, and another update could reverse losses, cf Ethereum Classic origin.) Ethereum is a bubble/ponzi scheme that could collapse at any moment. (Ethereum might have a better case on fundamentals that Bitcoin. Since Bretton Woods, fiat is also ponzi-like, yet stable enough due to policy. Squish suggests that Ether should be worth 7x current value on fundamentals alone.) The fundamental valuation is circular: smart contracts are only useful for making more kinds of tokens. (Even assuming 0 fundamental value, current prices are much higher than 0 now. Canada already has an ETF for Ether, the US will probably follow suit.)