An early bitcoin investor says the best time to buy is when nobody's talking about it - and warns this isn't the first crypto bubble
- An early bitcoin adopter says the best time to buy is when no one's talking about it.
- He started out with an initial purchase of 2.5 bitcoins in 2013, when the token was trading around $100.
- The buyer, who prefers to remain anonymous, lost 16 bitcoins in the 2014 Mt. Gox scandal.
The ultimate time to buy
"The best time to buy bitcoin is whenever blood is on the street, everyone's panicking, and no one's talking about it," the investor, who prefers to remain anonymous, told Insider in a phone interview from Manila, Philippines.
In 2013, he made an initial purchase of 2.5 bitcoins from a seller who went by the name "Mang Sweeney" on LocalBitcoins.com when the cryptocurrency was trading at $100 per coin. "Mang" denotes a sign of respect in the local language in the Philippines.
At the time, the platform allowed face-to-face meetings, after which the seller would transfer the cryptocurrency on-the-spot via their laptop or mobile. Mang Sweeney was already trading bitcoin when it was worth $10 a coin since speculative buying and selling was popular even then, according to the anonymous buyer.
Still, online interest in bitcoin in 2013-14 was nowhere near current levels. A chart below shows how Google searches for "bitcoin" in the Philippines have risen steadily since that period, then hit a peak in late 2017 when its price shot to a record high. It declined throughout 2018, but has returned in the last year.
"People forget this isn't the first bubble," the investor said. "Until people understand the technology of it, it will always be a speculative asset."
The early bitcoin buyer said he doesn't advise friends and family to trade the token when it's stuck in bubble territory. "When no one wants to touch it, that's when you buy it. Not when people are talking about it," he said.
Bitcoin's deflationary nature discourages using it as a real currency, according to him. He lost 16 bitcoins in the Japanese cryptocurrency exchange Mt. Gox, one of the few exchanges that early adopters could trade on. It closed abruptly in 2014 following its collapse after hackers apparently raided the exchange. Almost 850,000 bitcoins belonging to investors were lost.
Read more: This day trader just made the biggest trade of his career exploiting the momentum around bitcoin. Here's how he did it - and his 4-step strategy for identifying speculative themes to trade.
Anyone talking up the $100,000-$150,000 level, according to him, are actually unloading their bitcoin investments bit by bit while saying it'll get to a certain price because some of them have already accumulated large amounts.
"The only reason I would tell people to dabble in it is because it's important to understand how it works and how to take care of it. If you don't know your way around passwords or simple two-factor authentication then you're going to get creamed. People will steal your bitcoin," he warned.
But there are voices cautioning investors who are beginning to view bitcoin as digital gold.
"For bitcoin to be considered in a portfolio and to become an investable asset, similar to gold, the asset would need to improve the risk-return profile of that portfolio," said Gerald Moser, chief market strategist at Barclays Private Bank. "This seems a tall order."
While it is near impossible to forecast an expected return for bitcoin, its volatility makes the asset almost "uninvestable" from a portfolio perspective, he said.
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