Bitcoin, Bitcoin, Bitcoin. Can you say price mania? I was reading a post yesterday on Steemit about a guy that says he now has 80 percent of his entire net worth tied up in Bitcoin. That to me is fucking scary…I read another post on a site where a user was going to take out a second mortgage against his home in order to buy Bitcoin and just use the “Guaranteed Profits” to pay it back. When reason, risk management and common sense are thrown out the window it is time to step back and take a breath.
It’s time to ask why? Why is the price appreciating at an uncontrollable rate? What is the actual value of the underlying asset? How practical is its everyday use and how has it, can it, or does it change my everyday life for the better? Is Bitcoin a marketable cure for cancer; nope.. (well maybe, the cancer that is the current financial system of oppression and control by the bank owned government). But even then how does it benefit you? How does it change your everyday life? Are you paying your mortgage in Bitcoin? Is your utility company and phone company direct debiting your Bitcoin wallet for monthly fees? Nope… So what, you get all your money out of FIAT, fuck the bank they can’t lend my money out and make a profit anymore.. now what? You still have to convert it back to $$$ at some point to handle your monthly expenses. I think that is the paradox, that we are playing the game to get more of what we actually despise; dollars.
My wife has around 2000 friends on Facebook; this being the result of her being a decade younger than me and growing up in a generation wherein social status was determined by your friend count. I keep tabs on Crypto related postings within her peer group. Of note is she is from a very small town in Ohio wherein farming and trade with the Amish dominate the local economy. That said I have noticed a shift from “Buy, Buy, Buy”, to “get the fuck out now!”, “Sell, its going to come crashing down”, “Don’t buy anymore now”, etc. That being today’s postings.
When I start hearing a bunch of shit kickers that were previously on the buy train losing faith in the ride and looking to get off at the next station it concerns me. Perhaps this group of market savvy tech geeks has carefully analyzed the charts, volume moving averages and determined that a pullback is in the works; or perhaps their spidey sense is telling them that something just does not feel right. Like going camping with your buddy and waking up with a flashlight pressed into the small of your back; wait we didn’t have any flashlights.. WTF…It just feels wrong.
When reason, risk management and common sense are thrown out the window it is time to step back and take a breath. At this moment the price of Bitcoin is based solely on the expectation that it will increase in value. Absent that expectation, well I don’t think I need to elaborate there. I was in another conversation on STEEMIT in regards to market tops wherein he stated that not everyone is in yet, not everyone is on one side of the trade so we having nothing to worry about, that he would only start to worry about it being fiction not fact if “Grandmas start buying Bitcoin”. To that end, I organically came across this today in my perusing of the news:
“Rita Scott’s grandson convinced her in mid-November to get in on the latest investing sensation and buy bitcoin. “I thought it was a big coin,” the 70-year-old said. “I didn’t even know what it was, a piece of coin? Why would I invest in a piece of coin?” With a few hundred dollars of her money she invested in it, and started checking the prices several times a day, even while playing video poker at a casino in her hometown of Las Vegas.”
Consider if you will that the 70 year old Grandma above is who you are throwing your money in after. Her buy and the droves of less than informed speculators that buy with her are directly responsible for the high premium you now pay for a Bitcoin. As for me I would prefer tossing my lot in after analyst that have actually examined the underlying value of an asset; not based on pure speculation.
To those that have made a killing in the last few weeks or days may hats off to you. Your irrationality paid dividends, but you have to be looking for a time to convert those paper profits into real profits. The market is extremely volatile right now, and I see Etherium and LTC price action reflecting that. Everyone seems to be waiting for the crash at the moment. Last night people were jumping ship on Litecoin and quickly dumped 180,000 coins to try and get ahead of the crash that didn’t happen. This type of fear makes investing extremely risky.
To me the current irrational rise in BitCoin price and inevitable result are demonstrated below:
Here is Bitcoin price over time and how long it took to achieve each milestone.
$0000 - $1000: 1789 days
$1000-$6000: 280 days
$6000- $7000: 13 days
$7000- $8000: 14 days
$8000- $9000: 9 days
$9000-$10000: 2 days
$10000-$11000: 1 day
$11000-$12000: 6 days
$12,000-$13,000: 17 hours
$13,000-$14,000: 4 hours
$14,000-$15,000: 10 hours
$15,000-$16,000: 5 hours
$16,000-$20,000: 2.5 hours
$20,000-->$15,000: 37 Minutes.
So what do the charts say; well Bitcoin is going to be Bitcoin today.. expect irrational upside price action followed by sharp drops of $1000 or more, followed by more frenzy fueled buys to new highs. The 1 Day, 3 Day and Weekly charts are in uncharted territory. BTC is so extremely overbought at the moment that the Stoch RSI is pegged at 1 and just sitting there as it has been since November 25th. I expect the Bitcoin rally to carry on a bit longer and sweep in some more stragglers before the herd is marched to the slaughter house.
The type, level and scope of correction that we are likely to experience will be nothing short of spectacular. I fully expect to see people jumping from the roofs of high rises to the welcoming pavement below. That said, BTC is not going anywhere, the next major shakeup will not kill it by any means as institutions now have a vested interest in its long term survival. In fact I fully expect it to rise from the Ashes like the Phoenix, and Iwill use its current prices as a measure of where it can go. I choose not to jump in now and be the last to board the Titanic.
Of note, Coinbase seems to be leading the price trend at the moment with upwards of a 10% arbitrage opportunity between Bitfinex and Coinbase at the moment. Coinbase to me is more the accumulation of smaller fish, speculators, and less sophisticated investors than is Bitfinex. That said it seems to drive home at least to my disillusion mind that the vast majority of the price action and demand are coming purely from speculation.
What I will likely do is quick buys and sells of 1 coin here and there as the irrational faith in current BTC prices seem to have some life left. When I am getting $1000 dollar swings, it benefits me to come in and scoop the bottoms.
Etherium @ $438
The $420 dollar support level seems to be holding well but so much is dependent upon Bitcoin right now. As it goes up it sucks money out of Alt coins and into the swirling vortex of Bitcoin price speculation. If BTC manages to hold its price, begins to trade sideways over a period of days then look for a rapid and unprecedented rise in Etherium price. If; however, Bitcoin corrects in a massively spectacular way, expect it the ensuing chaos to come down on Etherium and other Alt coins like Odins Hammer. The sell off will be fucking amazing, it could likely push Etherium to the mid $200 dollar range again. It will be marvelous, like going into Goodwill on half off day, with an additional 50 percent off coupon and a 10 percent veteran’s discount. I don’t think I will trade this one today.
LiteCoin @ $97.50
Not much to write here. Is it a HODL at the moment? Fuck no, we saw that last night when the rats jumping ship slashed the price 6 percent in an hour to get out from under the shadow of the falling sky scraper they saw as the inevitable Bitcoin crash. Is it a buy at this moment? Sure.. prices seem to be swinging mid $90’s to $100.. If you choose to HODL make sure you have tight stops in place to protect against the inevitable correction around the corner. As long as you keep stops you should be good to go, if you can get some trailing stops and set them at 4% even better. As with Etherium if Bitcoin prices can stabilize and hold the current price level, trading neither up nor down, then Litecoin is likely to explode upwards. People in the Crypto world bore easily when Bitcoin is not making gains of 5 percent per day or begins to trade sideways. Accordingly they move back over to Alt Coins. Right now Bitcoin controls the price action so look to it as an indicator of Alt coin action.
My previous analysis: