Should I Use My Stimulus Check to Buy Bitcoin?
Bitcoin
‘Congratulations, You’ve Only Lost 13 percent!’
When the first Financial Crisis hit, we discovered the brilliant Australian satirists Clarke & Dawe. Their take on the European Debt Crisis is worth a watch.
The perspective from Clarke’s character is a propos for today’s post: only losing 13% on a portfolio of crypto assets is, with all that is going on, not too bad.
The Balance Portfolio is Kinda Sorta Hanging in There
We created our Balance Portfolio as an alternative to the BRED Portfolio (more on the 2020 version of that below). We didn’t create it as a panacea to cure market woes from the Coronavirus, though; as we discussed yesterday, we think it may very well get worse before it gets better.
Given all of what is going on, 13 percent isn’t bad, right?
Balance Portfolio as of Today
Granted, lots of green numbers appear on the screen today, so had we done this yesterday, it would possibly have looked 5 to 7 percent worse.
(One of my personal faves is VeChain (VET); note that it’s also the worst performer in our portfolio. Still bullish on this one, though.)
But, for a pleasant surprise, check the BRED performance so far this year:
BRED Portfolio as of Today
DASH is slightly ahead of BSV as the winner here; though, with all of the noise that accompanied BSV and its founder — who claims that he’s Satoshi or something — BSV could drop any second now. Plus, the percentage at stake is tiny when compared to DASH, which started at 25% of the portfolio and is now more than one-third.
What Can We Make of This?
Probably not too much, yet. There’s a chance for more of a pullback, or there’s that possibility that the “flight to safety” will happen, still.
The question that remains: are crypto investors whistling past the graveyard, or — like the guy who did the webinar I watched who thinks he can make you rich; maybe he can, maybe he can’t, we don’t know — are there gems that will still pop (just not immediately)?
If You’re Bullish, Here Are a Couple Picks
We made the bearish case yesterday — just for Bitcoin which, possibly, will drag the rest of the market downward with it — and it’s time to make a bullish case for a couple coins that we’ve picked up recently.
- We still like VeChain. In fact, we *think* it was one of the “high market cap/under a penny each” coins that was touted by the same investor guru referenced above;
- We also like Harmony — ONE is its ticker — and this one has a low market cap (around $10m at last check).
- Don’t forget about PAXG, which is tied to the price of gold; each coin is backed by an ounce of gold. (AFFILIATE LINK: You can get it on Crypto.com and we may be compensated if you make a qualifying purchase.)
Here’s to strapping in for the very choppy waters.
Loving Bitcoin in the Time of Coronavirus
Gabriel Garcia Marquez wrote Love in the Time of Cholera in 1985; it’s a book whose title format will be used and overused during the next several months. We shall do the same here, in the interest of being clever, of course, but also because it does lead us to a question that needs to be asked.
(It should also be noted that I have never read this book but I do remember that it figured prominently in the film “Serendipity.”)
Here, the question at hand:
“Should you love Bitcoin with *everything* that’s going on?”
And that leads us to another question:
“Why love an asset now if it’s probably going to drop by 50% or more in the next couple months anyway?”
Good questions, these. Let’s dive in.
ONE THING BEFORE WE PROCEED: Sites like these rely in no small part on AFFILIATE LINKS — and, given the goofiness that’s out there, if you’re so inclined, folks like us appreciate the assistance.
- Here’s an AFFILIATE LINK to Crypto.com <— we can get compensated if you sign up for an account and make a qualifying purchase.
- And here’s an AFFILIATE LINK for Coinbase, same deal there.
- 3HqMK9T2Xzy6CnLeJ5sx1xDgGcqz4Qtmj6 <— that’s our BTC address if you want to send a tip.
Loving Bitcoin…But at a Distance
Here’s a theory: the ride will continue to be wild as heck, based mostly on the fact that Bitcoin is an unproven asset.
Most investment professionals we’re following are looking for analogous events to try to figure out what might happen next. Two examples that come up the most often — remember the cognitive biases, though, that are driving people’s thinking here — are the Financial Crisis of 2008-09 and Sept. 11, 2001.
If you follow that financial markets got worse, then much worse, then better right after that, then you can apply this same logic to Bitcoin (which we’ll use broadly as an example of the crypto markets).
So, let’s look at the 52 weeks that just passed for some price history — this will give us at least a basis for making some sort of prediction.
Let’s assume this was an average year for Bitcoin: wild swings and a price that tripled in less than four months, then dropped back to Earth, then dropped even more, and is now at near its 52-week low. And this was with nothing really crazy going on in the world: no financial crises, no major shocking events like Sept. 11, and certainly no global pandemic.
When *I* look at the chart, and being totally honest (and paranoid) here, I look at the high from July and where we are today; then I assume that today is going to be the 52-week high for the next 52 weeks.
That’s Right. I Could See a Huge Drop.
If you do the math on my little theory, here’s what that means: a drop of 60.5% (from $13,073.24 to $5163.92), or all the way to $2039.75.
I’m not alone: one foreign friend who takes advantage of Bitcoin options trading has loaded up the “stink bids” that will profit from huge price drops. (I can’t trade Bitcoin options since I’m an American.)
But Why the Drop? Shouldn’t It Just Be a Bull Market from Here?
I honestly don’t think so…
- We’re in completely uncharted territory
- The US is considering sending every American adult a check for $1000
- And the average American is going to use that on things like food, the mortgage, rent, car payments, diapers…you name it.
BUT if you’re already in the game, here’s a recommendation — NOT FINANCIAL ADVICE, DO YOUR OWN RESEARCH, NOT RESPONSIBLE FOR FUTURE SUCCESS OR FAILURE — to do the dollar-cost-averaging thing.
Wait, a Bitcoin “Pundit” Saying We’ll See a Price Drop?
Yes. That’s what I think. Uncertainty, coupled with an un-tested asset that isn’t yet “digital gold,” and we’re in for a bumpy ride.
Et Tu, Crypto?
It’s March 15, 2020. I’m trying to answer a whole host of questions. Some are serious:
- Are we going to stay away from this virus?
- How will bloggers, writers, and entrepreneurs like me make a slowdown work financially?
Some are less than serious:
- What is the best recipe for a “Quarantini?”
While everyone should take precaution during these times we do not recommend having a ‘Quarantini’ or any alcohol if you’re feeling under the weather.
If you’re feeling fine and of legal drinking age, a little extra Vitamin C consumption doesn’t hurt.
– Aviation Gin PR https://t.co/c97ZQaxJKV— Aviation American Gin (@AviationGin) March 13, 2020
- And what about a “Cryptotini?”
But, in the spirit of this blog (“making sense of crypto” is kinda the mantra), the questions we’ll ask today — and attempt to answer — are all Bitcoin and crypto in nature. Here goes:
Have We Hit “Bitcoin Bottom?”
Well, to answer the question in the caption, it WAS that bad. Like REALLY bad, actually. THAT IS A 43.3% DROP.
But to answer the bigger question…
Nobody knows. $4185.21 might appear to be a bottom — FOR NOW — because, as of this writing, we’re at $5373.35. We’re bouncing around in the $5100-$5500 range for the past day. There’s some stability. But there’s also that “flight to safety” question that we asked forever ago: Is Bitcoin Digital Gold? (And yeah, forever ago was two weeks back.)
Is What’s Happening Outside Really Impacting Crypto Prices?
One theory — not my theory, had been espoused elsewhere, most notably by vagabond entrepreneur and crisis investor Doug Casey — is that prices aren’t impacted by anything other than rogue traders (Chinese? North Koreans? Both?) who are dumping their ill-gotten gains for cash.
Another theory — probably works in parallel to the above — is that whales are using the drop to dump their Bitcoin and Ethereum on unsuspecting noobs. Then they’ll buy the same coins back at lower prices, with a plan to lather, rinse, and repeat as the days go by. (And as people get less and less certain of what’s to come.)
What’s a Crypto Investor — or ANY Investor — to Do?
Hey, here’s where we can go back to the basics. And these basics make sense for ANY investment — you are entering an uncertain time. You don’t know what will happen next, none of us do, and that’s okay. Consider the following as advice that is worth the paper it is printed on.
- Remain calm. It’s a dog-eat-dog world out there — and, if you’re Norm Peterson from Cheers, you’re wearing Milk-Bone underwear — and having a steady hand is going to help a ton.
- Assess where you are and where you’re going. Some may need money immediately and don’t have time to play the game of market timing (as has been said often, nobody rings a bell when you hit the bottom). Some may have a little extra to set aside for crypto projects. It all depends on where you plan on being in a month, in six months, in six years.
- And, if you can, play the long game. We wrote about that a while ago and we’re still there: playing the long game is going to get you farther than anything else.
Links to Help You…
These are of course AFFILIATE LINKS and if you use them to open an account and make a qualifying purchase, we’ll get a commission. But two long-game tools we’ve been using are…
- Coinbase. Dave’s Affiliate Link. They have recently started letting you make regular purchases to “dollar-cost average” your way into crypto. 50 bucks or so, a couple times a month might be all you need to get your feet wet.
- Crypto.com. Dave’s Affiliate Link. We have more in this account of late than in our Coinbase account, partly because of the nifty debit card option.
In any event — prices up, prices down, rock bottom, Moon, etc. — we’re here to help. Stay Sanitized.
Time for Discount Bitcoin
It’s been a long, long, LONG week on the financial markets. Coronavirus fears plus an oil price drop made for a one-two punch that has left quite a few people scratching their heads. Trading was halted for a bit, and the Dow dropped 2000-plus points. That was MONDAY…
Tuesday was meh and now Wednesday brings talks of a bear market having finally arrived. You name it, it’s in the red.
Crypto people thought this could mean a flight to safety for BTC and other names in the space. Wrong. Bitcoin is really not digital gold (yet) and also doesn’t have a hundred-year track record of results.
SO…we thought we’d take a look at the year-to-date charts and try to get a handle on what the first ten weeks of the year — and what the coronavirus crisis — can tell us about what the heck is going on.
Headline 1: 11.5% Up from the Low
Okay, that’s one way of looking at it. Had you timed the market exactly right and bought at the low of $6994.28 AND held to today, you’d be up 11.5%.
The low wasn’t too far from the opening price in 2020: $7203, so an 8% gain if you bought on New Year’s Day. (Compare to a volatile stock, I guess.)
Headline 2: Had You Called the Top…
Let’s use the scenario above — you buy at the low because you are really really really smart and you “called the bottom” and “bought the dip” — to show you just how you could have done: a 48.7% gain!
Headline 3: What If You’re Bad at This?
Ah, let’s say you’re not so good at calling the market. You buy at the top and sell today because you think you’re calling a bottom.
You lose: to the tune of 33.4%.
HEADLINE 4: DON’T TIME THE MARKET
If there’s one thing that people who trade stocks for a living will tell you it’s this: “DON’T TIME THE MARKET.”
And if there’s one thing that we’ve told you here a few times, it’s this: “PLAY THE LONG GAME.”
Listen, We Don’t Have the Answers…
But — and we’re not financial advisors, do you your own research, etc., etc. — it probably makes sense right now to look at your own situation before doing anything rash like buying or selling tons of $BTC. Do you need the money for something else? What about your own long-term view? Do you feel like playing the market?
It’s a crazy world — made crazier by the fact that no one really knows what will happen to Bitcoin and crypto — so you’re best to stay grounded. Don’t watch too much news. And don’t go batty trying to time any market.