JP Morgan is my friend, not the bank, but the Victorian banker. He said, “I’ve made a fortune selling too early” and as a bitcoin seller at $32,000 I invoke him as justification. Having said that, and I have stated this tactic in previous columns, I have done at least as well with about half the VAR (value at risk) by playing with the fire that is DeFi.
If you are using decentralized exchanges or keeping tokens or passing them through your wallet, it is often hard to keep track of it all. It is even easy to forget what you have and where. However, there is a great app to keep tags on your ethereum and DeFi positions and it’s called Zerion. It is a tremendous tool for keeping a tally of what you have in the wild game of token trading and it’s free and you can log in using your wallet so there is no painful registration process. I am finding it indispensable.
Meanwhile I am now back in the same position as I was before I sold the bitcoin, of hanging onto my positions by my cuticles with a wildly undiversified and unbalanced portfolio that morphs by the day into a gloriously profitable but unmanageable series of extremely volatile positions. Leaving good investing and/or trading practice at the door is an extremely hazardous approach but it seems unavoidable to capture this rapture.
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In a matter of days I’ve gone from “buying all the things” to wanting to flee but that is purely because pretty much all DeFi, credible or otherwise, has gone on a massive vertical that dwarfs the performance of bitcoin and ethereum.
Here is one of my favorites that I hold and you can see why an old school equity guy, a value investor to boot, gets a nose bleed from this kind of price ascent:
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Matic, previously called polygon, is not a one-off, it is just a good example. The “why” of it is simple: Matic is a solution to many of the difficulties facing ethereum and its congestion: it is a seasoned project, it is linked to a lot of major players in Silicon Valley by investment, and it has a market cap of about $1 billion, 10% of a Bumble. In the current hepped up investment environment this is chump change and the winners in DeFi will go on to be worth $10-$100 billion, even without the printing press shifting the decimal point with inflation. Chainlink, the leader of the gang, is already nearing a $10 billion valuation. So this is not a ridiculous valuation if you grok that DeFi really is a revolutionary tech that will change everything, it’s just the price performance that makes an old investor’s nerve endings start shorting out.
All that aside, the key question once again is, is the market going up or down? Bitcoin down, all crypto down; bitcoin up, all crypto up. To me, I believe these price levels are the upper faces of this mountainous cycle, but many still consider them the foothills.
So what can help us know where we are? The all-seeing eye of Google can help. Here is a chart from Google Trends:
You can see how diagnostic Google trends is when you see the progress in search of the crypto hero of the day, doge, and can judge the rise and fall of the stock hoard of Reddit’s WallStreetBets.
Bitcoin is the leader and definer of this cycle and its performance will direct the performance of all the other cryptos. Musk’s bitcoin tweets are in the data for all to see.
Whether you are a BTC $1 million by Christmas prophet or a doubter expecting an imminent correction, this is a chart to watch because the price of bitcoin and ethereum is FOMO-driven and when that impulse passes, that will be the top for this cycle. FOMO, and we are now seeing corporate FOMO, is a powerful force but it is a acute one not a chronic one, so crypto will not ride the FOMO wave indefinitely.
There are a lot of extremely strong technical charts out there, so for now I’m hanging tough, but as we have seen before, as bitcoin gyrated between $30,000 and $40,000, these markets are fragile.
Volatility is liable to shake me out soon, but it could be days or weeks, perhaps even months before it does – but a week is now a long time in crypto and that in itself is a signal which one can choose to pay attention to.
The final indicator is transaction fees. These are now exorbitant. When they start to fall it will be a signal that the FOMO is falling and for now the only way transaction fees are going is skywards.
While I have to rise at 6:00 a.m. to get reasonable transaction fees before the rest of the world wakes up, I’m going to be holding on.
Good luck everyone. Enjoy the vertical.
Clem Chambers is the CEO of private investors website ADVFN.com and author of 101 Ways to Pick Stock Market Winners and Trading Cryptocurrencies: A Beginner’s Guide.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018. Follow me on Twitter or LinkedIn. Check out my website.
I am the CEO of stocks and investment website ADVFN . As well as running Europe and South America’s leading financial market website I am a prolific financial writer. I wrote a stock column for WIRED – which described me as a ‘Market Maven’ – and am a regular columnist for numerous financial publications around the world. I have written for titles including: Working Money, Active Trader, SFO and Technical Analysis of Stocks & Commodities in the US and have written for pretty much every UK national newspaper. In the last few years I have become a financial thriller writer and have just had my first non-fiction title published: 101 ways to pick stock market winners. Find me here on US Amazon. You’ll also see me regularly on CNBC, CNN, SKY, Business News Network and the BBC giving my take on the markets.
The Winklevoss Twins have doubled down on their $500,000 dollar Bitcoin prediction. Banking giant, Citi, has said they believe the Bitcoin price is heading toward $318,000 by the end of this year. JP Morgan says $650k is possible. The stock to flow chart for Bitcoin shows a $290,000 dollar Bitcoin. There are a ton of predictions out there and it’s hard to make sense of these numbers. It’s hard to know who is talking about the price a year from now and who is talking about a price 10 years from now.
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