Are We In A Bubble?

By now you've learned some of the fundamentals of profitable investing, including:

Dollar cost averaging
Buying the "big" coins
Researching the "small" coins
Watch the news for changes in market volume
If you execute those actions, your chance of long term success goes up considerably.

But what about the short term profits?

And what about the current market environment?

I've been around long enough to know that investing is similar to the famous Mike Tyson quote:

"Everyone has a plan until they're punched in the face."

So let's talk about the current state of crypto in terms of whether or not you should sell.

First - the #1 most important thing to understand is the difference between VALUE and VALUATION.

VALUE is how blockchain and cryptocurrency will change the world. There's very little debate about this. We are witnessing the new "big thing" in technology.

VALUATION is how many people think something is worth. This is where it gets tricky, especially in a market that's brand new.

Here's a fun exercise - go to any of the Facebook Groups or Twitter accounts that are related to cryptocurrency and take a look at how many people confuse these two concepts.

Most people are talking about the VALUE of cryptocurrency as a way to justify the VALUATION.

History will tell you that these two are rarely (if ever) correlated in a market environment - anyone who tries to justify a valuation in this way is really short sighted.

This means that VALUATION is a product of:
Value
Hype
Timing
Emotion
Risk
And many other factors.

So the question is: how much of the VALUATION (current price of coins) based on the actual value (blockchain tech) and how much of the VALUATION is based on the other factors?

The other factors are what makes a bubble. Value is what creates long term wealth.

Are we in a bubble? My answer is yes, I think we are in somewhat of a bubble.

There will be some sort of correction, but then it will go back up BIG time over the next 5-10 years.

Why do I think that?

Because when you look at the history of markets you realize that it's actually just the history of emotions. The ups and downs of any market are simply a measure of emotional sentiment.

In the current crypto environment, here's what I see:
An incredible technology and platform that will change the world (value, long term gains)
A lot of engineers/founders who are suddenly rich and are promoting the hell out of something without any attention to the counter viewpoint (valuation, short term gains)
A lot of new investors who are seeing enormous returns and not understanding exactly how it happened (valuation, short term gains)
An overwhelming majority of people who are suffering from "Confirmation Bias" which means that they only read + discuss viewpoints that reinforce what they believe is right. In this case, that's the idea that coins will go up 100x (valuation, short term)
It's hard to argue with any of these points.

The question, however, is whether or not the true value of crypto can catch up to the emotional surge.

The only way that can happen is if we start to see coins implemented in real use cases around the world - Bitcoins being accepted everywhere, Ethereum being used in legal contracts worldwide, Ripple being used by banks, etc.

Yes, this is all happening on a very small scale right now, but it needs to be much, MUCH larger. When it does grow, so too will the value of the coins.

That's when you'll see the prices skyrocket and not come back.

So - should you sell right now?

Hard to say.

If you have the stomach for a volatile market and believe in the platform long term, hell no you shouldn't.

If you are looking to bank profits short term and live an die by the daily charts, then yeah, you may want to sell at some of these record highs.

My two cents and some of the best advice I ever received:

You only lose money when you press the sell button.

Buy coins you believe in, hold them for the long term.

Time will tell, but I personally and focused on buying as much as I can - each week, recurring buy schedule, slow and steady.

In the next article I'll send you some information about how to "buy the dip" and why it's the fastest way to build a profitable portfolio.

Wait for the next article