On November 8th, 2017, Bitcoin broke $7,700. It did so despite criticism from financial incumbents and central bankers. Even September’s crackdown in China couldn’t keep it down for long.

Overall, this year has been great for Bitcoin, with a few bumps along the way. In January this year, it was trading at around $1,000; now, a little over 11 months later, it has surpassed $7,000.

To put things into perspective, if you had invested $500 in Bitcoin on November 8th, 2015, in just two short years, it’s worth would have surpassed $10,000 for a gain of more than 2,000%.

At its peak this week, Bitcoin surpassed a market cap of $119 billion. If it were a stock, Bitcoin would be bigger than Nike, Bayer, Mitsubishi and Goldman Sachs.

All this sound’s exciting, but if history is anything to go by, such unprecedented market growth isn’t always sustainable.

Back in the 90’s, when the internet was taking off, “dotcoms”, or internet companies, saw massive growth. Valuations were sky-high, and investors were falling over themselves trying to buy stocks in literally any company with a “.com” in its name.

In November 1998, theglobe.com went public and closed first-day trading at $63.50. It was delisted in April 2001 at 16 cents. Similarly, Amazon.com had gone public in May 1997 at $18 a share, but between December 1999 and September 2001, it saw a high of $106.69 per share and a low of $5.97 – an overall drop of around 94% in value.

These figures relate to the dotcom bubble bursting, and that was, quite literally, a lesson worth trillions of dollars.

The dotcom bubble was purely a result of speculative investing. People had stopped caring about actual valuations, and more importantly, basic due diligence. We are witnessing a similar phenomenon in the crypto boom now, as investors throw money at cryptocurrencies and “blockchain-powered” solutions without a second thought.

Just as most companies that were big in the dotcom era are now forgotten, many of these cryptocurrencies and digital assets will also fade away. That’s the way financial markets work. New technologies come along; better services are introduced. While the technology it’s built on is growing in popularity, Bitcoin as we know it today is not guaranteed to thrive forever. Granted, the rewards are huge, but so are the risks. These are uncharted waters.

A common strategy is to simply buy and hold popular tokens and digital currencies. While that may work for some, the people who bought Amazon.com shares around $100 during the bubble had to wait about ten years for them to reach $100 again.

Make no mistake, there is money to be made in cryptocurrencies. Back in 1995, there were about 7 million internet users. Ten years later, the number had jumped to 1 billion. Today, there are about 7 million cryptocurrency users; in ten years, we may be looking at billions. This is evidence that the crypto market is in its infancy at present. It is only going to evolve and expand from here on.

You can take some risks today, hold for the next ten years, and if you’re lucky, you will have found the Amazon, Yahoo or Google of cryptos.

However, if you’re looking for sustainable returns while navigating these uncharted waters, you should invest in a fund that does not depend on any one currency going up with time. When volatility is high, diversification is your ally.

Disclosure:

As of the publication date of this report, BitBull Capital Management LLC and its affiliates (collectively “BitBull”), others that contributed research to this report and others that we have shared our research with (collectively, the “Investors”) may have long or short positions in and may own options on the token of the project covered herein and stand to realize gains in the event that the price of the token increases or decreases. Following publication of the report, the Investors may transact in the tokens of the project covered herein. All content in this report represent the opinions of BitBull. BitBull has obtained all information herein from sources they believe to be accurate and reliable. However, such information is presented “as is,” without warranty of any kind – whether express or implied.

This document is for informational purposes only and is not intended as an official confirmation of any transaction. All market prices, data and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and BitBull’s views as of this date, all of which are accordingly subject to change without notice. BitBull has no obligation to continue offering reports regarding the project. Reports are prepared as of the date(s) indicated and may become unreliable because of subsequent market or economic circumstances.

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This report’s estimated fundamental value only represents a best efforts estimate of the potential fundamental valuation of a specific token, and is not expressed as, or implied as, assessments of the quality of a token, a summary of past performance, or an actionable investment strategy for an investor.

This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment or token discussed herein.

The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond BitBull’s control. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on all tokens discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.