http://goo.gl/8Xobwl


Bitcoin is acting a bit cr-oizy. Well, more than a bit crazy, that bitcoin has swung from $350 to $900 in the past ten days.

Just today, bitcoin has traded from $450 to $750 on Mt. Gox and other exchanges. Volatility, anybody? There’s no major exchange like a normal currency and/or a stock or bond would trade on for $BITCOIN (yet), so it’s going to be wildly volatile for a long time, I would expect, even if it does end up becoming a de facto alternative currency.

If you haven’t bought any bitcoins yet, and want to do so, go read Bitcoin: Everything you need to know and why you might want to join in the frenzy and go read some of the news and latest scuttlebutt on bitcoin first. And then look to put in a bid to buy a first small tranche below $600 and then bid on another tranche down below $500. Don’t stress over the process and the time it will take to get it all filled and executed. This is a market truly in its infancy.

Finally, let me be perfectly clear – DO NOT RISK MUCH MONEY ON BITCOINS!! BITCOINS HAVE BIG UPSIDE POTENTIAL, BUT ALSO COULD BE A ZERO.

As I’ve said since it was below $100/$BTC, I don’t think you should risk any more on Bitcoin than up to 1% of your portfolio, and that’s for a risk-taker kind of trader and investor. If you’re a conservative trader/investor, well, consider just a few basis points of exposure then. I mean, do you really worry that if you were to put 0.2% or 2/10th of 1% of your stock/bond/metals/currency portfolio into bitcoins that there’s anything to worry about? If it goes up 10-fold or hits mainstream, you’ll have some nice gains and feel like a genius. If it gets outlawed or compromised technologically and goes to $0, well, it was a tiny bet to begin with and I’ve lost more than 0.2% of my portfolio on single trades many, many times and will do so again many, many times.

This is gonna be my last bitcoin blog post for a while, despite the wild popularity of these articles and my continued long-term bullishness on bitcoin as a currency. But I don’t want to become known as Bitcoin Cody or something.