Bitcoin Silliness: Ignore the Roller Coaster, Never Sell

Mish

If bitcoin’s price plunges 70%, it is only back to its 200-day moving average near $4,473.

The latest wisdom of the day from true believer Naeem Aslam is Ignore a 20% to 30% drop in bitcoin because the longer trend is up

If you dive into the article Aslam states "If the price drops by 70% now, it only will be touching its 200-day moving average, which is near $4,473. "

Apparently, one should ignore a 70% plunge as well. Then what?

Suppose you were one of those who bought at $18,000 or so. You would be down about 75%.

OK no problem. Since "the trend is up" so you buy on the moving average. Or simply keep buying down. You get a nice bounce off the moving average and you load the boat as any true believer in JDSU would tell you to do. Excuse me, I meant to say Enron, no I meant Bitcoin. Sorry for the confusion.

Now let's suppose the bounce dies. It goes back to the moving average. Are you getting a little nervous or not?

Aslam supposedly won't be. The trend is still up. Then something unexpected happens: The trend breaks and Bitcoin falls to $2000.

This is entirely hypothetical of course. Yet, the trend will break at some point. So here you are, you had a brief profit on the buy at $18,000 you bought more and more on the way down. You had a profit on that too. Then the trend broke.

Now what?

Will you sell? Will true believers ever tell you to sell?

I can tell you in advance what they will tell you: "It's too late to sell".

Mike "Mish" Shedlock

Comments (11)
No. 1-11
Onni4me
Onni4me

" Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds

JonSellers
JonSellers

Mr. Aslam's thesis is that bitcoin represents a new and valuable ecosystem similar to the Internet in its infancy. People don't yet see its full value, so it is still a great investment opportunity. But he is wrong. Tim Berners Lee created the www in 1989 and by 1999 it was exploding. Amazon and Google were already things. Bitcoin was invented in 2007, and by 2017, it is actually used by essentially nobody and actually getting worse. Hype does not equal value. Bitcoin and the blockchain bring nothing to the table that isn't already being done without them and better without them. Jet packs and flying cars are cool. But just because you can imagine something doesn't mean it is really valuable to the marketplace.

ReadyKilowatt
ReadyKilowatt

Had an interesting conversation with the brother in law who thinks he's a day trader (who also mentioned he's flat for the year). He's trying to figure out how to trade (buy) bitcoin. I told him to look at gold instead, since it's been down off the peak for a while now. We'll see what happens. At least his teacher pension will keep coming in in perpetuity.

Irondoor
Irondoor

Other than a means to have your account hacked and your money stolen (as has happened to two of the largest Bitcoin exchanges), or the loss of your secret password and access to your Bitcoin, what does Bitcoin and the ledger bring to the world that isn't already in place? Answer; money laundering and the excessive consumption of electrical energy. Nobody selling any good or service who is in their right mind will accept payment in a "currency" with this volatility.

Blacklisted
Blacklisted

In response to your post from 2 days ago, "Bitcoin Bust Resumes: Is the Top In?", I stated the following below, and you still have not answered my basic questions - why would anyone outside of the establishment be against cyptos? What's the alternative when the current system implodes?

"Bitcoin has had at least a 30% "crash" every quarter since 2010. Why would the most recent "crash" be nothing more than another pullback? I don't understand why you are so negative on crypto's, when they are the ultimate anti-establishment tool, born out of the financial crisis, and meant to disintermediate the banksters and other inefficient enterprises.
Most people don't understand the difference between money and currency, much less how Google and a smart phone works, or the semiconductors that are in most all electronic devices. Does that mean you don't use a credit card, or invest in Apple or Google? Thankfully, technological advancement does not depend on the masses to "get it", and the blockchain will move forward as the next logical global currency no matter how ignorant some choose to remain. What I don't understand is why would anyone outside of the establishment be against cyptos? What's the alternative when the current system implodes?"

All of the coins have bounced back just like they have the 40 previous times over the last 10 years when they dropped at least 30%. The ignorant statements by you and most of your readers demonstrates no one has yet done their homework. What are you going to do when bail-ins occur and they confiscate the gold in your safety deposit box, accusing you of laundering money? How are you going to get your gold out of the country? What are you going to say when Amazon starts accepting cryptos?

MorrisWR
MorrisWR

When in a bubble of an “asset” that is not needed, 30% drops will revert and probably go higher until the greater fool is no more. Read historical books on manias and your questions will be answered. Those of us who have traded for 40+ years have seen this movie many times. Gold is true money and has been for as long as documents have been written (and probably longer). Early adopters are the winners or those who get out before people realize cryptos can easily be created (as we have already witnessed). Jump on the bandwagon and do not listen to experience if you wish. We still have a semi-free country. I would suggest listening to what everyone is saying, study history books on financials/manias and technical analysis.

Democritus
Democritus

I like the idea of a currency that is not controlled by central bankers, but I would rather have it started with a '100 coins for every world citizen' than the current bitcoin concept... If the world was to convert into bitcoin users, a bunch of people would become billionaire for no other reason that they gambled right or had a bunch of GPU's consuming energy for a while - why on earth would anyone contribute to that.

Blacklisted
Blacklisted

Democritus, there is work/value provided in validating crypto transactions. What value is created by printing money into existance that has an interest expense associated with it?

Democritus
Democritus

Blacklisted, (first & last reply) transactions are nothing more than a few additions and subtractions, the cost and value should be close to zero (unless you need to copy it all over the world). I don't get the 'interest expense' part. The main point I wanted to make is that I am not so fond of a currency like bitcoin because of the initial distribution of the coins. Read that about 40% is in the hands of 1000 people, they surely like it of course.

MishMash
MishMash

The puppeteers want a one world currency. Which one will be anyone's guess. I'm not interested in hurrying that along. This is just more Tulips to me.

MishMash
MishMash

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