I have a friend who's been investing loads of cash into BTC and doing well. My advice to him (and others) is to take a certain % out every time it spikes and transfer it to a more stable currency, while leaving enough in that it can continue to snowball. This is doable.

For instance, he took $2k and turned it into $12k in a few months. I told him, "Take 4k out and put it into an index fund." That way, he comes out ahead no matter how you slice it, even if he loses the rest of what he has in BTC. If what he has remaining in BTC goes up to $18K, I'd take another $4K out and move it into an index fund. Rinse and repeat.

It's not as risky if you run it that way.

"...who's been investing loads of cash into BTC and doing well."

I have a problem with the terms "investing" and "doing well" here.

Buying bitcoin is not investing. You are not funding any productive enterprises---not even indirectly as in buying stocks on the secondary market. You are giving someone money in return for a ledger entry. You expect someone to give you more money for that ledger entry at some time in the future, which is the problem with...

An "investment" in bitcoin isn't doing well, or doing poorly, or doing anything. A stock can do well, if the enterprise it represents is producing economic value and thus the stock represents an increasing value (and assuming the market recognizes the increase, which is another discussion). If you BTC is worth more today than it was yesterday, the only thing that has changed is the price (and the conversion of some more coal into heat and carbon dioxide) and prices don't have anything resembling inertia. The "doing well" can turn to "doing poorly" tomorrow with nothing more than a change of market opinion.

Except you are assuming it will just magically go up. If you are the unlucky person to do that at the peak, then you will lose most if not all of your money.

Which is why you put $2k in, and don't bet your house on it. Or if you do bet the house, be aware you could lose it all (or be set up for life, of course)

The overwhelming majority of Americans do not have $2k lying around for a risky investment, nor do they understand the risks associated with crypto (especially the speculative coins).

In order for someone to invest in crypto as diversification, on the order of 5-10%, they'd need to have $20-40k lying around.

Needless to say, outside of the tech bubble that situation is quite rare.

This idea that young people should be more circumspect ignores basic tenants of the time-value of money, and how life and responsibility work. When you are young you have the most amount of time to make up for losses and mistakes. You are also far less likely to have mouths to feed, a mortgage, and college tuition to think about.

Things can get really bad if you are nearing retirement and lose even 15% of your portfolio in a downturn. On the other hand you can lose 100% and even have to declare bankruptcy at 25, and still have plenty of time to get your life back on track.

I am not saying that Bitcoin or anything like it is a good investment. I'm saying that it gets harder to take risks as you age, unless you've been very successful and/or lucky. But being either of those things probably required some risk taking in the first place.

Savings accounts used to pay 10% interest. Now all investments that beat inflation are "risky" including s&p indexes, simply because they are at their all time high and there is so much uncertainty in the world. So by that calculus the risky investment that's been showing 5000% annual return is more attractive than the risky investment that's showing 15% return.

Nope. Wrong. Just because they're at their all-time high doesn't mean they won't continue to go up. Doesn't mean they won't tank tomorrow. And it's naive to think there's more uncertainty in the world today than there was 20, 30, 50 years ago.

Your "more attractive" investment has shown 5000% annual return for 1 year...the "risky" investment has shown 8-10% return ON AVERAGE for over 100 years.

The S&P saw extended significant bear markets in 2007, 2000, 1987, 1980, 1973, 1968. It's naive to think that it won't happen again.

What you are saying is that if I put my money into S&P 500 10 years before I was born, it would match the gains on the same investment in cryptocurrency from 1 year ago.

Salty nocoiners.

Nocoiners? If you’re that confident in the future of BTC, please take me up on my offer to sell me some puts (see my other comment)

I'm not interested in your put options on BTC (nobody in their right mind would sell you that), but I would make a wager that the percent increase of total "market cap" of all "cryptocurrencies" (loosely defined as cryptographically secured tokens redeemable for fiat currency, e.g. coins listed on CoinMarketCap) at least 2 out of 3 of 5, 10, and 15 years from now exceeds the total "market cap" increase of the S&P 500 in the same period. I believe my bet more closely models the prediction I am making - that cryptocurrency gains will continue to outstrip S&P 500 gains.

I would take that bet, since I think 98% of the crypto's on this CoinMarketCap will be non-existent in 5 years.

I think you misunderstood me - I don't think that buying and holding any of the current tokens on CMC is a particularly good idea. You have a very very low chance of picking the ones that will be around in a few years. However, staying aware of what new development are coming around and trading into the new promising ones as they become successful may be a good growth strategy. I agree with you that 98%+ of the current coins will be dead in less than 5 years - but there will absolutely be new ones with an increasing amount of value.

There may well be a point in the coming months or years that the market cap of current crypto deflates - maybe by 90% or more - but new cryptocurrency applications and tokens will certainly exist in 5, 10, 15, and 100 years.

> And it's naive to think there's more uncertainty in the world today than there was 20, 30, 50 years ago.

There's more uncertainty in bitcoin today than there was in almost all available investments 20, 30, or 50 years ago.

> Savings accounts used to pay 10% interest. Now all investments that beat inflation are "risky"...

Note that when savings accounts paid 10% interest, inflation was (I think) at 14%.

> Someone who's rich wouldn't really notice 10% of their net worth gone.

It depends more on how leveraged your wealth is than on how much you have.

> The entire economy is definitely not as risky as BTC. The economy doesn't see 50% swings in value week-to-week.

Price volatility != risk. A number of people lost everything they owned in 2008. Everything. In fact, I've heard it said that half of the world's wealth disappeared.

I think its just the opposite - young people generally have a higher risk tolerance and would only be at an advantage against older investors when it comes to the most innovative and new investments that they may have insight into.

> This is a crazy way for young people to think though and the opposite of how they should be thinking

I dunno, seems like this sort of risk is the only way to get anywhere now.

Using that logic, you should “diversify” into lottery tickets too

Not really, crypto is high risk but it's a far cry from a lottery. The point is that safe investments over a couple decades do nothing for people who are trying to actually move their life forward now.