A Bit Of Perspective

It is hard as I type this to not be, once again, inundated with news about something pertaining to either Bitcoin™, or cryptocurrencies in general. Once again there are ads about retirement, making “oooodles” of profits, and so forth. So much so that if I actually owned a “bit” I would gladly surrender one full “coin” at whatever today’s market value is just to purchase a spam-filter powerful enough to make it all stop. It is beyond ridiculous, not just the ads per se, but the self-serving articles being published as some form of “insightful research” to “guide you through the potential profits ahead for cryptocurrencies.”

Let’s just call it what it is, shall we? Self serving, spam pretending to be written under the guise of research.

My opinion of most, if not all, is this: It’s not worth the digital ink its written on. And if I were a digital dead fish? I would be embarrassed to be wrapped in any of it, yes, it stinks that bad.

So with the above said I just would like to offer what Silicon Valley likes to call a “picture” as to offer some (actually my) perspective. To wit:

 

(Source)

The above chart represents Bitcoin’s current value based in $Dollars as of today around 9:00am ET. The bars/candles represent daily increments. I have made some notations to add some perspective to exactly where it currently is trading at, and how it got there. The route as they say, is a little different from what is being told and sold currently.

Let’s make this simple shall we? Or as one of my favorite comedians would say, (Joan Rivers) : “Can we talk here?”

The reason for the current “mania” that seems to be taking place throughout the crypto arena is that Bitcoin has suddenly “doubled” in value over the last week or so. Sounds utterly fantastic right?

Well, it is if you were one of the daring that bought in when it crashed to that level which represented a near 75% loss, for a great many.

You know, the many that were counting their digital gains before they turned them into cold-hard-cash. Oh, and don’t forget the ones that actually put in cold-hard-cash at that top. Remember? All at the advice of many of those “gurus.” Their losses aren’t digital – they’re real. Think about it.

As the above chart shows: All that has happened over the course of the last few weeks is that Bitcoin has made what is known in technical analysis land as an “oversold bounce back to the upper-side of a channel, in a well established down trend.” Period.

Could it rocket higher? Sure, who knows, But what I’m addressing is what is actually taking place via a real world view. Not: Fantasyland.

Again, all it has done is to recover from being some 75% down, to now only about 50%. That’s the real world.

Or, said differently: If you were one of the “lucky” to “invest for your retirement” at the top at around $20,000? Instead of your net balance being around $5800, it’s now at about $11,000.

Just another $9K or so to go, and you can break even. Just hope you didn’t need any of that “retirement” money to pay the bills over the last few month. But hey, it’s sure to double again, right? And soon, right? But wait, they said that at $20K, so, who knows I guess. But then again, who cares! After all, it’s only money, right? Or is it? Hmmmm. Maybe we should ask the “gurus” again? After all, they would be the ones that know, correct? Just look at their track-record. Wait, ah, yeah, sorry, let’s move on shall we…

Here’s the dirty little secret no one else will dare say – so I will, and it is this (All my opinion, as well as conjecture):

Unless you were one of the few (and it is a very few) that for whatever the reason took a chance and purchased crypto when it was the equivalent of pizza money? There is nothing when looking at the chart above that can not be done like: doubling, tripling, quadrupling, and more of one’s money in plain old, far more secure trading venues like options, dreaded penny stocks, and more.

People (as in professional day traders et al) do it all the time, and nearly everyday. The caveat that goes with is this: They also blowup their accounts just as spectacularly as they made it. Some, so much so, that they may even end up owing far more than they ever made. If you think that isn’t so, then my guess is you truly don’t understand trading and all its risks. But I digress.

If, for whatever the reasons, the crypto-gods decide to levitate their markets to around $115,000.00 (no, that’s not a typo) that’s how far or much it would take to make the types of returns that were gained, then lost, by those represented via that first arrow marked “This is the real…” when it traversed from about $4K in parabolic fashion to around $20K. You know, when all the “gurus” told everyone to “get in!”

If you are in the crypto space right now and currently sitting at around 11K? You need to ask the most compelling, as well as important question:

Looking at the above chart – what are the chances of it rocketing up to $115K over the next several months raining riches upon those of the HODL investing crowd – vs – the odds of it falling back down to where I have marked with “Next” leaving a wake of destruction for almost all that ever bought into the hype?

Bonus question, this one for the “gurus” themselves:

If in fact this thing does begin to fall back to Earth and approaches the bottom portion of that channel, what then?

Should they still HODL? Or, get out then, and break even?

Other than that, I have no strong feelings on the matter. Do with it what you will.

© 2018 Mark St.Cyr