Forget the handful of tiny publicly traded cryptocurrency miners and blockchain plays, whose recent price dips may entice you. Your money is better spent on bitcoin itself, because it's still in rally mode despite a sub-$10,000 price tag.
Even if you don't know the first thing about cryptocurrencies, it's been impossible to miss the rampaging rally in bitcoin so far in 2017.
Since the calendar flipped to 2017, bitcoin is up 871% as of this writing -- though, at this rate, that number is sure to change dramatically before the end of November. Wednesday, bitcoin prices hit a new milestone, breaking through $11,000 briefly before dipping back to around the $9,700 level Wednesday afternoon.
Compounding things, major crypto exchanges Coinbase and Gemini both crashed on Wednesday, making it impossible for many bitcoin investors to buy or sell the cryptocurrency.
The question that's sure to be asked is whether Wednesday's dip in bitcoin prices is a buying opportunity -- or whether it's a last chance to get out before bitcoin prices totally collapse.
Likewise, there's the question of crypto stocks.
It's not just bitcoin that's benefitting from its rally in 2017 -- the explosive upside in bitcoin year-to-date has also driven interest in crypto-related stocks. Do those stocks make more sense than buying bitcoin itself?
To answer both questions, we're turning to the charts for a technical look.
Just as it's been hard to miss news about bitcoin's meteoric rally in 2017, it's been impossible to miss the opinion that bitcoin is a bubble. And that may even be true. The thing about bubbles, though, is that they rarely burst when the crowd consensus is that the asset is in a bubble. In other words, bubbles burst when market participants don't care whether the asset is in a bubble anymore.
And that's certainly not the case with bitcoin right now.
The price action also gives some hints at bitcoin's price trajectory as we round the corner to 2018:
Despite the sheer scale of the bitcoin rally in 2017, the parabolic uptrend in bitcoin's value has been extremely orderly. In other words, while the uptrend has been accelerating, it's been accelerating at a relatively constant pace. The 50-day moving average has acted like a reasonably decent proxy for the bottom of bitcoin's parabolic uptrend year-to-date -- that makes it a logical place for risk-averse crypto investors to park a protective stop below, as well as the spot more aggressive investors should think about adding to bitcoin positions.
Simply put, bitcoin's rally isn't showing any signs of fatigue. A dip to the 50-day looks like a major buy signal in bitcoin.
On the other hand, the same can't be said of crypto stocks.
From a relative strength standpoint, just about every publicly traded stock with bitcoin or cryptocurrency-focused is underperforming bitcoin in both short and long-term time frames. If you want to participate in the bitcoin rally this fall, it makes sense to buy actual bitcoin, not some poor proxy that trades on the stock market.
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