"I will take the risk vs. reward all day long."
That was a quote uttered by Brian Kelly on CNBC's Fast Money segment yesterday.
What was he talking about you might be wondering?
None other than Bitcoin, and specifically Bitcoin's future prices of course.
This quote came about as Kelly was in a debate with a Bitcoin bear on the Fast Money segment last night.
Specifically, he was in a debate with Robert Shiller when the phrase was uttered.
If you are not familiar with Robert Shiller, he is a Nobel Prize winning economist that called the housing bubble in the 2000's before it burst.
Lately he has been talking about Bitcoin and the possibility of it being in a Bubble.
Also keep in mind that he called the housing collapse in 2003, so he was about 4 years early on his call. Just throwing that out there.
Brian Kelly was up to debate him on that very topic as a battle of two heavy weights got underway!
The most interesting thing about the debate to me was that Shiller seemed to back off some comments he made the other day about Bitcoin. At first, he seemed to be like others calling Bitcoin a bubble without really understanding why it might not be.
Then yesterday with Brian Kelly, he backed off those remarks and said that parts of the cryptocurrency market were likely in a bubble and that a bubble itself doesn't mean it's going to go away, just that prices are going to correct because of irrational exuberance.
Which he very well might be right about.
After all, Bitcoin has died 27 times now since 2009.
Dying a few more times should be expected at this point.
Heck, you can even join in the debate as well if you'd like by visiting the Fast Money Twitter page and taking their poll:
Which brings me back to the title of my post...
Brian Kelly responded with something along the lines of this:
(Loosely quoted)
"You know, Bitcoin doesn't even have to take over as a primary means of exchange. It doesn't have to replace the dollar or the yuan etc. If Bitcoin were to just become a store of value, akin to digital gold, Bitcoin could go up to $25k per coin and that would still equate to less than 5% of the entire market cap of gold."
That seems very reasonable to him.
So, even if Bitcoin isn't going to be the game changer that some make it out to be, it's still likely to appreciate a lot more from current levels.
Which means in Brian Kelly's eyes, the risk/reward is risking $4600 USD at current levels to receive $25k at some point in the near future worst case scenario, and possibly much higher if it does gain some adoption.
Which is precisely why he uttered the phrase:
"I will take that risk vs. reward all day long."
I will as well Brian, I will as well.
Stay informed my friends.
Sources:
https://cointelegraph.com/news/bubble-expert-shiller-vs-brian-kelly-bitcoin-could-burst-or-take-off
Image Sources:
https://twitter.com/CNBCFastMoney
Follow me: @jrcornel
I actually watched this debate and I got the impression that Shiller tried to remain somewhat balanced in his bubble claims.
Yes, it almost seemed like he didn't fully understand the technology and all the possible implications, but instead was commenting more on price action. IE, it had run up too far too fast and was likely to pull back "soon".
Most of these old-school academics really don't understand the new generations and their values. I would invest in bitcoin just purely out of the disgust that the millennial have gathered for central banking, corrupt politicians and Wall St.
Yo ,
Thanks for the great content
The Bitcoin Battle Royal was entertaining to watch. I like to make informed and knowledge backed investments. I do not see Bitcoin as a risk, but rather a smart investment.
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Haha awesome piece. Loving the quote and Brian Kelly is right to say that. The risk reward ratio is looking very healthy with current projections. They are merely projections, but I agree with them and see the $25k happening in a few years. Keep up the good work man, still enjoy your posts.
I do as well, thank you for the kind words!
Yes! Mainstream is buying in that it is a store of value. Because of it's status as a uniquely independent asset, it is a great hedge against all other assets in the portfolio, even precious metals. I think most money managers will realize that the risk is worth the reward because it is an insurance policy for future volatility in the rest of the portfolio.
I think so as well.
yes it was a very interesting debate both of them,
but how the end result of their debate, you do not tell it @jrcornel
thank you and interesting post
The end result seemed to be that Shiller was backing off his bubble call on Bitcoin. That was my take away at least. He was quick to remind that just because something is currently in a bubble does not mean that it is going to die and go away, just perhaps that it is due for a price correction.
Yes, thank you @jrcornel
at least I understand
The Blockchain is a great technology and for the time being we can expect that emergent nature of the community will overcome all the bans, governments and restrictions and to continuously change technology on its way.
Having said this it's very difficult to bet on the right crypto, which one will be the one that will solve the specific issue of the moment?
My suggestion would be to:
I wrote a small series on diversification benefits and the income that can be created through it.
CryptoPortfolio - Extract a "diversification dividend" - Part 1: Geometric and Arithmetic Returns
CryptoPortfolio - Extract a "diversification dividend" - Part 2: Portfolio Risk and Diversification
CryptoPortfolio - Extract a "diversification dividend" - Part 3: How to make 8% more per year
I would be grateful to anyone who wants to take a look and let me know what he/she thinks! Thanks
awesome
Bitcoin and any other cryptocurrency may fail unexpectedly for reasons we don't know. That said, cryptocurrencies as a whole have shown positive trends and have reaffirmed my confidence time and time again. Like you said in your article the posibility to take $4,600 invested to make $25k is in my opinion worth it. I cannot be sure that the $4,600 won't incur a loss, but I am willing to take that chance.
yes great content by you, indeed it was an exceptionally fascinating verbal confrontation them two, be that as it may, how the final product of their civil argument?
Nice @jrcornel