Trump Says Bitcoin is Dumb. He’s 100% Right.

President Donald Trump weighed in on bitcoin on Thursday, and let his feelings be known in characteristically clear terms:

He went on to say how fabulous the US dollar is:

President Trump is absolutely correct. Let’s quickly parse the three points that he made.

Bitcoin is Ridiculously Volatile

The volatility in bitcoin is unlike anything I’ve encountered in 25 years in the market, and I cannot think of any security in modern history that has been as volatile as bitcoin. The only tradable security that comes close is crude oil in its various forms.

Why does volatility matter? Volatility is equivalent to risk. The average annual return for bitcoin is 60%, with a 95% probability of ranging between -100% and +220%.

Assets don’t get any more volatile than bitcoin. | Source: Woobull.com

As far as crude oil goes, using the United States oil fund as a proxy, the ten-year average annual return is -11%, with a 95% probability of ranging between -68% and +46%.

As a means of comparison, the ten-year average and return of the S&P 500 is 15%, with a 95% probability of ranging between -10% and +40%.

The long-term average return for playing blackjack in a casino is -1%. You are better off playing in a casino and knowing you will lose 1% of your money than trading bitcoin.

Bitcoin’s Value Is Based on Thin Air

Bitcoin and other cryptocurrencies…

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