Image source : cointelegraph.com
I'm a huge proponent of cryptocurrencies and firmly believe that the most profitable investment opportunity in human history - Bitcoin - will continue to provide returns unattainable in traditional financial markets for years to come. I also think that alt coins, i.e. all cryptocurrencies other than Bitcoin will provide even higher returns, but more on that later.
That being said, many people get overexcited by rapid returns but cannot stomach the merciless and brutal downswings that accompany them. I know this all too well from my early days as an aspiring professional poker player.
I don't think Bitcoin will drop by 90% again (see picture above), in fact I'd be surprised if it drops by 50% if that, given how much more established the market in regards to institutional investors, but don't delude yourself into thinking this price surge is sustainable.
My personal prediction is that Bitcoin will stay within the 6850 to 7850 range before dropping 15-40% from it's peak. I'm also generally bearish on btc for the short term so I believe that btc will likely stay closer to the $6850 mark and likely correct by closer to 40% from it's peak within the coming month or so.
For those with folios heavily overweighted in btc, congrats on your recent gains, but save yourself the pain that so many newbies to investing inevitably go through - build up your fiat to crypto ratio (i.e. your USD/EUR/other fiat reserve) for the inevitable downswing to come. After that you can either reinvest that fiat into btc at lower prices, saving yourself a bunch of money, or alternatively start looking at the other half of the crypto market, derogatively named alternative coins.
I'm personally heavily extended into alts coins at the moment with a relatively small fiat reserve but this is a more aggressive strategy which I justify based on my risk tolerance and the fact that I monitor the markets and read news daily. I also have a whole host of reasons for why my folio is heavily weighted in alts which you can read about in my next post.
My goal with this blog to connect with other crypto investors and traders but also to help inform newcomers to the crypto sphere. So I’d be delighted to hear your opinions, questions and substantiated counter arguments in the comment section below.