The sign to watch out for is when you have personal friends investing their life savings in Bitcoin - not $100 here and there, but $100k. And not 100K people in a single day (that's peanuts in the grand scheme of consumer markets...I've run Harry Potter fansites with more users than that, and it wasn't even one of the big ones), but tens of millions.
I say as long as you follow centuries-old investment advice (diversify, always have a backup plan, have enough cash for a crash), there's no reason not to explore a new investment instrument. AKA, "fuck it, why not?"
Depending on how much you make I don't see why not invest "only $1000," as long as your other tested investment instruments are already qualified (emergency savings, 401k/roth/whatever, stocks, bonds, int'l investments).
Nobody can predict what is going to happen with BTC or the whole cryptocurrency eco-system in general. There's still potential for the technology to take off and gain widespread adoption, just as there's the potential for all the big players to lose interest and move on to something else.
If you want to 'invest'(I prefer gamble, or play at this point) - go for it. Just like every fad there are groups of people who believe strongly in the idea of the thing, and those who just want to get rich off of the thing.
At this point nobody has definitive answers on the future of BTC.
Public interest / perception is the biggest factor at play here. There can be literally 0 uses for cryptocurrency, but if news outlets are telling a layperson to buy it, they'll buy it. As long as the big players are interested in keeping it afloat, I don't see what would cause it's price to crash down to 0 over night.
"Gambling" has connotations of immoral behaviour, especially in zero-sum or always-lose scenarios like poker and casinos. I don't think it's fair to describe educated and informed investment or buy-ins with words like that. I think "risky venture" is a less loaded, more neutral, term to describe it instead.
As it is, I don't see Bitcoin and other currencies as true investments - just yet - I see the surge in Bitcoin mainly as a "distributed Ponzi-scheme" instead: those who are cashing-out now are those who bought-in early and being paid by the people buying it now - and the people buying it now expect more other people to buy into it later, pushing the price higher while supply and availability dwindle (owing to BTC's 28M cap). However, unlike a Ponzi-scheme, Bitcoin, Ethereum and others do have utility as a means of moving money around independently of existing, often state-controlled, bank networks or remittance services - and eventually Bitcoin will be the tool of choice for that - and when the tens of millions of people wanting to move money around do so is when we will know the real, unhyped, value of Bitcoin - until then, the question is if $7,000 USD/BTC is an obscene over-valuation, or is still comically low - and I don't know which side to believe.
We'll get a better idea when, or if, legacy companies like Western Union and SWIFT get involved - or when real-time BTC transactions cost less than a VISA or Mastercard transaction (say ~3%). Right now a 250 byte transaction will cost 54,240 satoshi ($3.83) and take 30 minutes to get the first confirmation - making it totally unacceptable for retail purchases, for example. Hopefully when the Lightning Network or other solutions get finalized we'll start to see some real traction, but how many bubbles will burst before then?
(Disclaimer: I'm a HODLer of BTC and ETH).
This is not a repeat from every bubble ever. This time it's different!
Bitcoin may well be in a bubble, but it isnt mathematically and legally guaranteed to decrease in value overall as compared to what most people consider traditional forms of "gambling".
Well we'd need to figure out what would trigger a sell-off and whether that sell-off could be sustained. I've got no clue what would trigger a sell off but for whether a sell-off could be sustained, I'm not sure, there are lots and lots of true believers at this point. I think there could be a really interesting psychological dissection of investors in BTC and other high volatility assets because there's a sort of annealing of their risk attitude where every dip is a buying opportunity, the risk perception of people like that might be completely different from someone like me with no stake in BTC.
It could have literally zero utility whatsoever - as long as people keep buying the hype that this will one day be a massive store of value - it will be a massive store of value.
The better answer ...no one knows anything. 100% unadulterated speculation.
If they're truly using the word "only" when they describe it I do not think you should worry. If they're saying something like "I put in a $100 so this better pay off!" that's a much bigger cause for concern.
Yes, if cryptocurrencies prove to be a real revolution the way the Internet was, there's plenty of upside left. If not, though, I'm not sure there's too many greater fools left if my mother's almost there.
As they say, you know it's time to sell when shoeshine boys give you stock tips...
It seems to only exist for speculation. Its meteoric rise in the face of all this screams bubble to me. (But.. I've also been saying this for a while.)
For example, the housing bubble in 2008 was detected when rental and mortgage prices diverged greatly.
Since the bare-bones value of Bitcoin is tied to the cost of computation power and electricity to mine, you could theoretically track the price of bitcoin vs. the cost of the computational power to mine bitcoin at it's current block difficulty.
I guess "but that's illegal!" is a strong argument for those that have a lot of trust in governments. I... don't... so I'm happy to use non-governmental instruments. I still pay my taxes and contribute, I'm not an anarchist, I just like having means to express value that aren't controlled by governments.
As in, is it likely that someone would/could be targeted by law enforcement because of that, and could a comment like that be used in court?
I guess my words could bite me in the ass but I am fairly confident as a non-dealer I'm not exactly a target. Probably on a radar for when the Fed runs out of Big Fish, but for now probably fine.
I've listened to friends and family discuss investing "only $100" or "only $1000" for fractional amounts of bitcoin with the idea that they're sure fire bets for making money.
I feel a bit like a rube sitting it out on the sidelines (and they're chastising me for not acting) as the price keeps going up-and-up and for most of them, these small investments (some quite large) have paid off for them.
When does this bubble burst? And, what is it going to look like? 100k people in a single day is crazy to me as a layperson, but if this was to be compared to a stock run (disregarding dilution) what type of alarm bells should be ringing for those with the most to lose? Or, are we past that point now?