Time to Sell?

Posted on: February 5th, 2018 by jms No Comments

 

I did it… I pulled the trigger and sold my entire position in Bitcoin, Bitcoin Cash, and Ethereum.

 

I was holding off for a while as I watched the price of cryptocurrencies fluctuate a few hundred every day. But I just couldn’t ignore the steady decline over time, so I decided to gamble on the fact that ongoing government regulations and consistent shorting on futures funds is prompting a big sell-off.

 

What’s even worse, the days of using credit as leverage to buy into cryptocurrencies are dying, resulting in a smaller pool of buyers, which can drive prices down even further.

 


 

There is a lot of news circulating that has a lot of bias, and it’s bias on both sides of the spectrum. What I’ve always tried to do when writing my own personal opinions on this topic is to offer a more balanced view. Granted, I am very bias towards favoring Bitcoin and other cryptocurrencies, but I do make a concerned effort to put my personal bias aside for a more balanced look at things. This will not only benefit anyone who reads this, but myself as well, since it forces me to ignore the noise and formulate my own opinions that will ultimately dictate my own actions. And my own opinions say it’s time to sell, especially if you got in early and saw a significant gain over time.

 

I thought about selling when the price was making a push towards $20,000, but I let my cognitive bias get the best of me then. I decided to not let that happen again, since the idea of losing more would border on stupidity in my opinion. If I can walk away with a decent profit, why not? I may have missed an opportunity to sell higher, but I can still sell high, and that’s a good thing.

 

There are many forms of cognitive bias, but the one at play with Bitcoin I think is the idea that we tend to seek out or favor the information that supports what we want to believe, or confirmation bias. In this case I want to believe that the price of Bitcoin will keep going up even as it’s falling, so I’ll trick myself into believing that this is actually the case.

 

I’ll convince myself that tweets from “experts” on the topic telling me to “hodl” (hold) is the right thing to do, even though other experts, like Warren Buffet and Ray Dalio, who I should probably trust more, say that Bitcoin is in a big bubble.

 

I’ll convince myself that news I read from sources like bitcoin.com, or other popular crypto-news sites, have a valid point and aren’t just putting a creative spin on the negative news from other sources.

 

I’ll convince myself that governments starting to crack down on cryptocurrencies won’t really have a significant impact because of a funny meme I saw online like this one…

 

 

(It turns out that some countries can make a significant impact)

 

 

It’s time to get real. Bitcoin is dropping fast and for a number of reasons. All the wishing and positive spins in the world won’t change what’s actually happening. Don’t get me wrong. I’m still a big believer in the technology and ideology, and I’m still long on Bitcoin. But while it’s dropping I’ll take a profit while I can. I’m sure I’ll buy again when prices bottom out, but for now I’ll cash out and cover my gains.

 

My advise to anyone who can sell at a gain is to sell now. Unfortunately, this isn’t the case for everyone. For anyone who can’t sell at a gain I only see 2 options.

 

1) Hold if you can afford to and hope for the best. I do think there will always be value tied to Bitcoin in some way, even if it never climbs back to where it was. Remember that Bitcoin and blockchain technology is still relatively new and evolving, and so it still has a lot of potential. Holding if can afford to is probably not a terrible strategy.

 

2) Cash out and accept your loses. Despite what we may read, cryptocurrencies are a gamble right now. When we place bets we have to be willing to lose sometimes, otherwise we shouldn’t be placing bets. The good news is that most people (governments included) agree that blockchain technology is here to stay and cryptocurrencies, in one way or another, are likely to have a place in the future of trade. So even if you decide to sell at a loss now, there is a good chance you can buy back in later when things level off, and hopefully make a profit then.

 

 

Bitcoin is Coming to Robinhood!!!

Posted on: January 26th, 2018 by jms No Comments

Robinhood

 

If you haven’t already heard, you might want to pay attention to this…

 

Robinhood recently announced that they will be offering the option to trade Bitcoin and Ethereum in February, with other cryptocurrencies coming soon!

 

Robinhood is a stock trading app that, in many ways, has really disrupted the brokerage trading market with it’s free options trading platform. With Robinhood you can buy and sell stocks on a regular basis without incurring any brokerage fees. Now, Robinhood has set out to disrupt another market, the crypto-market, by offering the option to trade cryptocurrencies without any transaction fees.

 

This is big news and here’s why…

 

A volatile market is arguably one of the best markets for making quick returns on your investment. Using technical analysis, it is possible to find trends that will show you the best buy and sell points for a given asset. I can’t think of a more volatile market with higher price swings than the cryptocurrency market. But when it comes to day trading cryptocurrencies, the problem for me has been the exorbitant fees tied to transactions using a trusted exchanges like Coinbase.

 

There is a great opportunity to make decent money day trading cryptocurrencies, even for average or passive investors. But I’ve done the math and, for me, the risk is too high when you account for the transaction fees.  Of course it is still possible to make money on a day to day basis when price swings are a few hundred at any given moment. However, the fees alone can also add up to a few hundred when you’re dealing with a worthwhile trade that can earn you a decent return, at least on Coinbase. I haven’t tried using other exchanges mostly because I place more trust the security of Coinbase.

 

And now enters Robinhood with their free trading options, which they want to introduce to the cryptocurrencies world.  This will allow us passive investors to play around with cryptocurrency day trading without having to worry about those nasty fees that always eat away at any potential gains. Robinhood is effectively reducing the risk of cryptocurrency trading in a big way for anyone who is paying attention to the market lately. And best of all, Robinhood is very secure and FDIC insured, although I’m not sure if cryptocurrencies fall under their FDIC protection.  I’ll also point out that one of the venture capital investors in Robinhood happens to be Marc Andreessen, who is also invested in Coinbase.

 

Unfortunately, Robinhood will only be introducing cryptocurrency trading to 5 states for now, California, Massachusetts, Missouri, Montana, and New Hampshire. I assume this is due to state-by-state regulations, but they do promise that “Robinhood Crypto”, as they call it, will be available in more states soon. When it comes to New York, I hope to be among the first to jump in!