Sometimes I may be too cautious for my own good. Regular readers will probably recognise my pessimistic strategy where I expect the worst to happen. This is just how I choose to trade a volatile market as I am happy with modest returns and thankful for when prices rally hard.
Following the China ban on Crypto, I watched as the market collapsed, where Bitcoin saw a record single-day drop in price, falling to under $3k. I avoided coming back into the market as I thought the recovery would be temporary and we could see a sub $2.6k Bitcoin. We might still.
The market has rallied over the last two days, so I decided to put some fiat money back into Crypto, though still nervous I bought into a number of my favourite reliable, stable coins.
While nervous there are things to be confident about though:
- Market swallowing the China ban and bouncing back
- Volume of mainstream news
- Some significant market buys when the price dropped, indicating more institutional investment
- Social channels laughing at the ban
The China ban might prove to be a pivotal time for Bitcoin and Crypto; it may be the time which proves that Crypto will survive alongside or without government support.
The reality is that Crypto still isn’t mainstream yet. I recognise this with the simple fact that when people ask me what I do for a living, and I ask if they have heard of Bitcoin, most haven’t a clue what I am talking about. In Tom Lee’s interview on CNBC yesterday, he reiterated his view that Bitcoin is headed to $25,000, explaining that at the moment less than 300,000 Bitcoin wallets own more than $5k of Bitcoin. For a global currency with a population of over 7 billion people, this is really low.
I’ll explain my trades below, but today I made another significant buy of Bitcoin. Even if in the short-term the price drops again against more news, FUD or even November’s controversial hard fork, which by the way I don’t think will happen now; I am confident that this time next year, Bitcoin will be higher than it is now. Whether it is marginally higher, up to $6k or even $10k, I have no idea, nobody does, but if more institutional money comes in, the banks come in, or even a government makes a significant play, the prices will shoot way beyond where we are now. This is a risk I am happy to take because I have always said, these investments are a long-term play, 3–5 years.
Going back to Tom Lee’s interview, two things specifically stood out to me:
- If Bitcoin can become regarded as a store of value like Gold and can take 5% of its market, then we will have a $25k Bitcoin. Personally, I still think we need transaction utility for this to occur but the current prices are without utility now.
- Compared to fiat transactions, the decentralised nature of Bitcoin creates network value. To create a fraudulent transaction would cost over $30bn. What this means is it would cost $30bn to create one fake Bitcoin.
So many parts of our lives have become digitised by the Internet, thus destroying old markets. Just look at what MP3s did to CDs or blogs have done to traditional publishing. Bitcoin and the blockchain can and is arguably disrupting money. Like I said when discussing the China ban, if it wasn’t working then why would a country need to ban it?
Below is a breakdown of the trades I have made and why.
Bitcoin
I haven’t increased my Bitcoin position for quite some time, choosing to trade in altcoins instead. While my portfolio has performed well, Bitcoin has continued to rally throughout the year, proving a resilient and safe investment. It has the brand, the first mover advantage and the benefit of being the base layer currency for all of Crypto.
If Crypto grows, then it does so with and because of Bitcoin. If Bitcoin becomes a leading global currency, then I want a significant position. When institutional money comes in it will likely look for the most stable investment, this will probably be Bitcoin.
Syscoin
This has been one of my favourite coins of the year. I sold out two positions recently at £0.21 for a profit of 308% and £0.24 for a profit of 375%.
The price has dropped 47% from a peak of $0.33 which was only seven days ago. I don’t feel that it can drop much further as it is close to support. Growth may not be instant, but it is a reliable investment in a coin which does attract price rallies. Also, my buy price is significantly lower than what I sold it off at which is also nice.
Litecoin
Litecoin has performed well this year. Charlie Lee has led the way in driving tech adoption for the coin, first with Segwit and now with the upcoming deployment of Lightning Network. These upgrades will give Litecoin the kind of utility which I believe Bitcoin needs. I am not sold on Bitcoin is a store of value without utility and 90 minute transaction times are too long (don’t shoot me but I am starting to see some advantages for Bitcoin Cash over Bitcoin because of this).
As Litecoin continues to innovate, I believe its price will continue to grow. Transaction speeds are great, and I don’t understand why its price is down 41% from its ATH while Bitcoin is only down 21%.
I have increased my position in Litecoin by 56% as the price is growing in a solid range.
Augur
This has been one of my most reliable stable growth coins, and I sold my entire position at £15.17 for a profit of 286%. Looking at the charts for Augur it tracks within a reliable range, and as such, I have brought it back into my portfolio.
It is close to its support price of around $16 but 49% down from its ATH. I feel like this only has an upwards momentum if the market continues to grow.
Blocknet
Sadly this is one which I bought in at a higher price than I sold. This is the market, and this happens at times. Blocknet has been a great investment this year, 144% profit for something I bought in June just before the previous market crash.
The chart shows steady growth, so it is back in my portfolio, but I purchased a larger amount this time. This will likely stay as a hold through any future crash. As of right now, the market cap is under $100m, but this could quickly become a +$1bn coin.
No Further Investment in Monero
I noted to my Facebook Group that I was considering a further investment in Monero, but I have skipped for now. While I love the coin, the price is still on a downward trajectory. It appears to be finding support at $90, if this continues then I will make a further investment.
What Next?
I am still holding 30% fiat against within my portfolio and am going to hold steady over the next week to see what the market does. A +$4k Bitcoin will make me optimistic, we have dropped just back under for now, and a +$5k Bitcoin will make me extremely bullish, and I will be looking for further investments.
Right now I am considering the following types of coins:
- Decentralised exchanges — protect against government interference
- Privacy coins — transaction privacy
- Platforms — the backbone to the next wave of Internet applications
Any questions, please shout. Just as a note, I always say don’t copy me, I might have picked a good point to exit the market last week, but I completely missed my reentry by being ultra cautious. I may now have entered back at a bad time. Time will tell.