BitCoin

Just been thinking about the irrational exuberation behind bitcoins crazy parabolic run this year. Here are some thoughts.

My $590 investment in bitcoin is currently worth $17,000.... that's crazy. Anyhow, this mania is literally bringing to mind Tulip mania. I wasn't around for it, but I've heard it explained before. Part of me is wondering if $17k will be the all-time high, and then I am immediately saying "Tulips were not for any reason worth what they wen't for, but bitcoin... That's a currency that can absorb current market capital of fiat currencies world wide.

What has me feeling some anxiety, is that my current holdings in Bitcoin, Etherium & Litecoin are such that if the values merely Triple, I will be able to pay off my house. Saying "merely" sounds hilarious in speaking of an asset gaining 300%, but Bitcoin has gained over 1000% this year.

My initial thoughts in the previous months have been that like penny stocks, the lowest price asset will attract the most buyers, and thusly Litecoin has been the cheapest of the 3. I wanted to put $5k into litecoin alone, but Etheriums chart was primed for a breakout to new highs as it had been forming a wedge of lower lows against a ceiling it was struggling to break. I ended up putting $4k into Litecoin and $1k into Etherium. Etherium totally broke out 2 days later, and Litecoin followed suit as Bitcoin gained 60% in just a few days.

The massive move was scaring me as I felt it was moving too far too fast. When buying (or selling) takes place on such a massive level, the exhaustion usually leads to a swift collapse. In the case of bitcoin, these crashes have historically been bought up as investors see it as a discount to get in. They see bitcoin as a sure thing, and thus that mindset among the collective dollars becomes a self  fulfilling prophesy.

The huge catalyst in my understanding as to why bitcoin has been relentless, is that A) people who understand what bitcoin's potential is, are reluctant to sell. Just look at me. I bought at $590 and am still holding, so maybe there are not that many sellers? And B) the huge futures exchanges are actually going through with a Bitcoin Futures contract that will enable all the billionaire investors to get in on the action. The influx of capital (which is still very small compared to the dot com bubble) can drive bitcoin way way up. Who knows... For me, I missed the move in Litecoin from $3 to $70, at least I got in with a few positions at $20 and now $70 while it possible rockets up to the $1,000 mark. I feel that as long as Bitcoin remains stable at such high prices and at least gradually keep gaining, Litecoin can bring others to the mindset that it can do similarly, thus attracting their money. Bitcoin was once a $70 coin as well, and I think that is the thought that is driving the money into it.

The future of Cryptos will be a very interesting one indeed. I just hope I am not going to be the guy who had thousands of dollars completely evaporate and not taken the profit when he could have. I am so close to my target though... It will be difficult to manage my emotions through the future price action. We will see...

Bitcoin: $16,000 Etherium: $731 Litecoin: $317