Over recent weeks, I have been suggesting to readers that buying BTC on a scaled-down basis could prove fruitful. Over the same period, most people have been bearish on crypto, and many have preferred ETH to BTC. And possibly, the majority of pundits might well be proven correct.
However, it might be a good time to discuss how I came to my opinion and why I became bullish on BTC for the first time in almost a year.
Firstly, the market has come down a long way from the crazy highs we reached last year. Since June, we have seen a reasonable amount of sideways action, representing a consolidation period, which is normal after a significant collapse.
If I look at the market technically, there is the potential for further losses. But if we see a collapse towards the 10,000 level that many are suggesting, such a move could signal the complete failure of BTC, which I dearly hope will not happen. Such an event will be disastrous for the whole Crypto industry. The other consideration was that most weak players are now out of the market.
HODL’ers seem willing to hold on come hell or high water, and the large investment houses, who bought over recent months, will not sell out down here unless an absolute disaster happens. Also, most financial disasters, of which there are many, are outside of the crypto arena.
Then there is the view of the short-term players. Although they have buying interest, they seem reluctant to come into the market now and are looking for new lows, i.e., this means many buyers are nervously waiting to buy at what they consider the optimum level. Considering these shorter-term players are waiting to buy, we know there is good support under the market and that these players might rush in on any small rally because they do not want to miss the boat.
I considered the massive amount of advertising for ETH, with its change from POW to POS, and concluded that a move towards complying with the wishes of the government, whilst on the face of it a good thing, might not be attractive for those crypto or BTC purists (read people looking to protect themselves from economic collapses caused by politicians and central bankers).
I am not suggesting that ETH and other altcoins are wrong for moving towards POS. I am just suggesting that what made BTC a success is still attractive to many investors. In contrast, the utility of ETH and other coins is much more interesting to developers and innovators. I might be wrong in this conclusion, but it is how I look at it and why I opted to start buying BTC rather than an alternative coin.
That is the reason I have suggested buying BTC. If it proves correct, only time will tell.
As for a target, I am currently looking at $30-32,000 and will consider starting to sell between $28-30,000. Things might change, but that’s how I am approaching the market.
I have a bit, and I will only add if we see new lows. I also consider my upside target as not outrageous. I am encouraged by the recent multiple bottoms under the $20,000 level and recall that my bearish view began last year when I saw a double top occur. Others will have different views and reasons to trade, but I thought I would share some thoughts behind my decisions.
As a footnote, I write these reports one or two days before they are published, so I do not give trading recommendations in real time through this outlet. Also, because my views are more about trends and not for short-term traders, I hope this delay does not detract from their value. I suggested buying BTC last week and said it on my LinkedIn timeline at the beginning of the month.
In Other News ...
I continue to hold physical precious metals, which I bought in Euro, so that’s not doing too bad, and I am delighted that the long wheat/short aluminum position I have held for a couple of months is doing very well.
Few people gave the Wheat/Aluminum suggestion any time, but wheat is currently up 100, whilst Aluminium is down 200 since I made the suggestion.
I cannot stress how much importance I put on diversification and looking for opportunities across the different sectors. You can sit in one asset class on one product and watch the clock or be proactive and try to make a few bucks wherever the opportunity appears.
The name of the game is not to be a superstar; the name is to make money or preserve what you have. Advice is readily available, but you cannot rely on the opinion of others. Do your research and be flexible. Think things through, and never be afraid to go against the views of the masses.
Just remember, always place a stop. There is nothing clever about running losses; if you get the market wrong, that is nothing to be ashamed of. We all lose money!
Until next time.