It was an in an article on December 30, 2016 that I wrote that my conviction Trade for 2017 was: 1. Long BITCOIN. BITCOIN was trading at levels around $1,000.00 going into 2017. My Thesis was that BITCOIN and the entire crypto-currency World which had been very esoteric and something of a closed World of ‘’bug-eyed’’ Gamers and the Off-Grid Folks who wanted throw the Yoke of Government off their backs, would ‘’mainstream’’ And it ‘’mainstreamed’’ beyond my wildest dreams through 2017.
By November 2017 BITCOIN was knocking on the door of $10,0000.00 and on the 27th November 2017, I wrote an article captioned Bitcoin “Wow! What a Ride!” and advised booking the profits on the Trade. A more than 9.7 times price inflation was getting uncomfortably close to outpacing the Tulip Mania.
BITCOIN’s parabolic price rally had spawned thousands of other crypto currencies which were sold on the same grounds as the greatest South Sea Bubble prospectus: “For carrying on an undertaking of great advantage, but nobody to know what it is.” It had become a ‘’Voodoo’’ world where the promoters were like WB Yeats’ The Second Coming.
The best lack all conviction, while the worst are full of passionate intensity.
The Price inflated further reaching a high of $19,763.00 on December 18, 2017. By the first of January this year we had retreated to $13,428.00. On January 2, 2018 I reiterated my point to get out and said ‘’ I am no longer bullish bitcoin, in fact, I am bearish’’.
At this point in time, I met folks on these streets who would pull out their computer and show me how they were making money every second [look at that they would say and indeed there was a number and it was ticking higher] mining BITCOIN. The recent cryptocurrency market decline has resulted in a similar drop in mining profitability and forced Chinese operators to sell their mining devices at a loss.
Some mining machines are being sold on the second-hand market for merely five per cent of their original value. Others would tell me, I’ve bought Nvidia. Crypto at this point was at peak phenomenon.
As I write this BITCOIN is trading at $3,650.00. I think its going right back to levels below $1,000.00.
Merryn Somerset Webb, editor of the finance magazine Money Week and a long-term sceptic about Bitcoin, told the BBC she feels vindicated:
“The things the old fuddy-duddies have been saying about crypto-currencies for the last couple of years turn out to be mainly true - that they’re in the main vehicles for speculation, that the currencies in themselves have very little value. In most cases their value is around zero and that’s where they’re getting to gradually.”
We have yet to hit peak melt-down. The reason being so many folks espouse the HODL -buy-and-hold strategies in the context of bitcoin and other cryptocurrencies philosophy.
Game Kyuubi posted “I AM HODLING,” a drunk, semi-coherent, typo-laden rant about his poor trading skills and determination to simply hold his bitcoin from that point on. “I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e,” he wrote in reference to the now-famous misspelling of “holding.” “WHY AM I HOLDING? I’LL TELL YOU WHY,” he continued. “It’s because I’m a bad trader and I KNOW I’M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a million bucks sure no problem bro.”
He concluded that the best course was to hold, since “You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold.In a zero-sum game such as this, traders can only take your money if you sell.” He then confessed he’d had some whiskey and briefly mused about the spelling of whisk(e)y.
Selling at todays levels frankly is still a great trade.
Aly-Khan is a financial analyst