Bitcoin is heading for $10,000. Next stop $1 million!

What's that noise? It's the sound of people who bailed out of cryptocurrencies kicking themselves for selling at recent lows, assuming the whole thing was going to collapse (as countless experts warned it would). It's a familiar sound, in my home. Ouch, there I go again.

Bit of nonsense

On 24 June, bitcoin hit a seven-month low of $5,755. A couple of days later I panicked and sold another tranche, after reading expert commentary suggesting it would soon slide below $5,000, on its way to zero, its natural worth. Once again, my timing was impeccably bad. Bitcoin is up 40% since then. Double ouch!

I still can't shake the feeling that bitcoin's natural worth really is zero. Yes I've heard the underlying blockchain is trailblazing technology, but that's a different thing. Its practical uses remain limited, given the slow pace and high cost of transactions. Sorry, crypto-fans, the best credit cards are still faster, easier and cheaper to use. Mainstream financial and fintech upstarts are offering all sorts of fancy payment systems while bitcoin flounders.

Ups and downs

I bought bitcoin, and later ethereum and ripple, as pureplay volatility trades, which seemed to be their most practical purpose. And I did well enough for a while but who didn't? The trick is knowing when to sell and here I haven't done so well, repeatedly selling at the bottom rather than top of its price range.

This is just one of the problems with trading, as opposed to investing. It brings out your most pathetic instincts: fear, greed, vanity, that kind of stuff. You hail your own genius when your asset rises, then turn to jelly when it falls. You think you're a beautiful, original thinker only to follow the herd, like every other beautiful, original thinker.

Big short

This week, bitcoin burst past $8,500 but nobody can really agree why. Some say it's climbing because major Wall Street institutions are starting to embrace it, with talk of the Securities and Exchange Commission smoothing the regulatory path for five bitcoin ETF applications.

Another theory is that investors were closing their short positions, and the resulting pick-up emboldened buyers. Some say summer trading on low volatility may also be a factor. Nobody knows, not really.

Fear and greed

Bitcoin has a habit of developing a momentum all of its own. If it flies past $10,000, all the old excitement could be back. Self-appointed experts are jostling to predict it will hit $20,000, $100,000, or a cool $1m, just as surely as it was heading towards zero a few weeks ago.

The hype plays tricks on your mind. There are better things to do than sit in front of a computer all day watching your portfolio change colour and messaging fellow addicts on the other side of the world (yes I did that too).

Investing in a globally diversified portfolio of stocks and shares is still the best way to become a pensioner millionaire. Bitcoin will never hit $1m, by the way, but if it does, you know what I'll be doing... and it will hurt.

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harvey holds a piffling amount of Bitcoin, Bitcoin Cash and Ethereum but has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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