People have often compared Bitcoin to making a bet in which you have a 50% chance of losing everything, and a 50% chance of making multiples (far more than 2x) of what you started with.
There are times when the payout on that bet is much lower, when everyone is euphoric and has been convinced by the positive feedback loop that they will win. And there are times when the payout on that bet is much higher, when everyone else is extremely fearful and is convinced it will not pay off.
A good way to think about how much money to invest in these kind of bets if you think you have logarithmic utility with respect to money is the Kelly criterion.
A good way to think about how much money to invest in these kind of bets if you think you have logarithmic utility with respect to money is the Kelly criterion.