From China to Bitcoin, Dumb Money is everywhere
“The bubble is too big and the prices too high,” said Liu Zhou, founding partner of Fortune Capital in Shenzhen, at a conference last week. “I’m worried the industry is overheated.”
Last week, the price of bitcoin increased 40% over 40-hours. With that surge, bitcoin is up 1560% on the year.
This year, Chinese venture capital and private equity firms raised double the amount as 2015. David Su, a Chinese investor, used to spend weeks or months on due diligence before putting money to work. In a now saturated market, he sometimes only has three hours to make those decisions. Weeks or months gives us analysis-based decisions; hours gives us little more than intuition.
Some people are calling bitcoin “a bubble.” But bubbles don’t happen with smart money. They happen with dumb money. It seems we see a lot of dumb money in the market.
As one entrepreneur said about bitcoin: “I’m 90% certain this is a bubble. I just don’t know if it reverses itself at $20,000 or $100,000.”