Bitcoin has broken out of its sideways trend and this is highly likely to spark a rally to $6000. There is apparently no acute reason for this move and people always want to know who caused something and have a pressing reason why.
Sadly this is a trap. The Greek philosopher didn’t know anything about bitcoin but indirectly he had a lot to say about speculators and the implications of his quote is one I embrace. “Strong minds are interested in ideas, average minds events and weak minds other people.”
The who and the what is only often superficially why and the current rapid move in Bitcoin is a perfect example of that.
The ‘why’ is simple. A huge group of people including myself love Crypto and want to own it. Bitcoin and its ilk is not a niche craze. There is as much interest in it as Equity trading amongst the man/woman in the street. This interest is particularly strong amongst young people the so called millennials. They love Crypto. If they were not in the ‘poor’ period of their economic lives, Bitcoin and Ethereum etc would have gone even more ballistic in 2017 and as they age into prosperity Cryptocurrencies will ascend with them.
This passion for Crypto is not going away and it is only a matter of time that we experience another ‘bubble.’
Unlike the clueless that say Bitcoin is not useful money, people who have used Bitcoin for B2B transaction will affirm Bitcoin has a strong use case and this will slowly allow Crypto to seep into day to day usage. Private issued money is just not something that is new. Be it Green Shield stamps, Travellers cheques, Western Union numbers, Laundromat coins, gaming tokens or frequent flyer miles, the model is well established. The only difference with Crypto is that the barriers of implementation are a lot lower.
However lets not waste more “hash power” preaching the intuitively obvious, what now for the price of Bitcoin and Crypto.
I wrote previously that which ever way the bit coin price goes from the recent second occurrence of sideways trading, would define a big move in that direction. Now it has broken out to the upside.
This is an extremely strong chart and you would expect a rise to $6000.
For me the question is, not will it hit $6000 but instead, is this the end of the “cryptowinter.”
I think that this is now highly likely. I should say we have seen the bottom of the market now but in reality I bought a nice chunk of BTC recently but have yet to invest what I would if it was $2500. That said I’m back to about my Crypto-position in terms of BTC when I sold out between $16-$18000.
I think $10,000 for BTC in the coming year is quite possible, then the question will be is this a long term rally to the $100,000+ levels the true believers predict or will it follow a more disappointing path, one followed by commodities in the 70s.
When the commodity bubble of the early 70s kicked off, all kinds of instruments went to the moon only to collapse back. This was merely a first instance and over the following decade commodities repeated this boom/bubble cycle in ever decreasing scale until by the 1990 the commodity market was comatose. This is a potential fate of Bitcoin because markets often express similar bubble behaviour as we can from the similarity of many markets when they bubble and bust.
I think Bitcoin will not suffer this fate as unlike Commodities and Equities, you can not dilute BTC. In Crypto in a new bubble new coins would be created, but this value ascends into BTC as it is the key trading currency in Crypto and the key offramp to ‘fiat.’
A proliferation of altcoin in a bubble will therefore not dilute the value of Bitcoin, only enhance it.
So my general expectation of the future (and naturally my hope) is expressed by this old Bitcoin crash chart.
My general strategy is unchanged. Acquire regularly and buy bigger chunks when bullish, buy a lot on any significant dip.
There is however more exciting and risky way to go…. The altcoins.
Here are some tips.
Buy anything Coinbase sells.
Conicase only has a limited Crypto offering and when the crowds return this is what they will buy. Be a bit wary of Ethereum and Bitcoin Cash, that is to say be underweight.
I love Monero. This is a very well run coin with a dedicated team keeping the coin from being stitched up by the big miners like Bitmain.
Keep your eyes on Raven. This is a coin going places.
Dogecoin is worth owning, because it has a great brand.
These coins will have more zap in them than BTC and on a rally will outperform. If you can find tiny coins with good prospects then this is where the huge returns lie. It’s a risky game but small positions can turn into big profits or small loses so its worthwhile to sprinkle some small bets about.