DO NOT BUY ANY BITCOIN – IT WILL CRASH AND YOU WILL LOSE ALL YOUR MONEY (8/12/2017)
If you already have Bitcoin and have not, like myself, sold everything weeks ago in a fit of panic – well done. But you might be wondering what to do with it. There is a very good article here,
My comment on this article is,
Thank you for a well-reasoned article. I did cash-out when Hacked called top earlier and I am sucking up the pain now. No hard feelings!
There are two possible beliefs about this “bubble”,
* it will be different this time
* it will not be different this time
Those who believe that Bitcoin will continue to soar will HODL – easy for them. This is a very low cost approach to wealth management.
Those who believe Bitcoin will crash for ever should sell everything and go to cash. Again this is a low cost approach.
Those who believe Bitcoin will crash (to 8k to 3k?) and then the market will grow in the long-term (the majority of right-thinking people 😉) have to bear the management cost of working out what to do.
Thinking aloud, in chess we say any plan is better than no plan, it certainly has the advantage of reducing anxiety.
The whole selling half thing is fine – but when should you sell half? I now think that the thing to do to manage risk is to have a plan to “sell half” at various levels all the way up to $60k. You can then set up the limit orders and go to bed. You know that however stupidly high it goes you will always both be taking profit and retaining a stake. This might not be the best plan – but at least it is a plan.
It is safe to assert, as you have done, that the market will become less volatile after a few months. That, after all, is the point of a futures market. At that point I will put 90% of my funds into index investments and trade 10% badly as a hobby.
For me the big question is what will happen to Alts? The fundamentals for all of them are weak over the next 3 years, so we are looking for speculative gains in the short term.
I like your insight that big investors have done very well from rigging the market for Bitcoin and when they are unable to continue to do this will move to Alts. Rigging markets is a business plan that works. If you have a plan that works you keep doing it until it stops working. Therefore over the medium-term (3 years) there is another good reason to believe that Alts will out-perform Bitcoin after a terrifying crash when money leaves the market.
So my plan for January (ie after the crash)
70% Top 20 Alts
Re-balanced weekly (say)