- Sell Bitcoin (BTC) and search for alternatives with cheaper market values given these emerging realities.
- Bitcoin assets are looking old and obsolete – yesterday’s news.
- Markets are waking up to the fact that “bitcoin” and “cryptocurrency” are not precisely synonymous; there are many other options currently available for investors.
Sell Bitcoin (BTC)? What’s the real story? The recent emergence of cryptocurrency as a novel asset class is an event. It has produced one of the most significant developments in the global financial markets in quite some time.
As both investors and consumers continue to navigate the complexities of this newly emerging landscape; many have been hooked on the hype and bought in at the wrong levels.
Investors with a bullish stance on Bitcoin (BTC-USD) have been forced to delay for a lengthy time. This is to view the positions turn positive. This widespread trend belies bitcoin’s reputation as an asset that can “turn rags to riches” in a relatively short period.
Numerous investors that decided to buy bitcoin assets near the 2017 highs suffered painful losses; for years before valuations managed to recover and move back toward prior levels. This is when the term HODL (“hold on for dear life”) began to gain momentum. As loyal cryptocurrency enthusiasts were forced to endure ridicule from many of the market’s most prominent investors.
Worse Than Tulip Bulbs
Just a moment ago that Warren Buffett himself described bitcoin as being little more than “rat poison squared,”; JPMorgan CEO Jamie Dimon characterized BTC as “worse than tulip bulbs because it is a fraud.”
These two investment giants were eventually forced to acquiesce; Admit their mistakes, and give in to the market’s rising tide of cryptocurrency acceptance.
However, in both cases, the cat was already out of the bag. It was clear that the fair opinion of these widely respected investment minds was that digital assets lacked legitimacy. It shouldn’t be viewed as a viable vehicle for investors looking to build wealth over time.
Now, let’s flash forward to the end of 2020. Bullish momentum in BTC-USD was starting to build. A trading call to alert investors to the possibility of a breakout event in the history of digital assets. We were far ahead of the rest of the investment community. This is when we described bitcoin as achieving escape velocity. Market valuations in BTC-USD rose to historical highs and produced gains of nearly 250% in just over five months:
As we can see, this bullish position would have been associated with almost non-existent drawdown levels. This chart looks very different from the trades held by most of the HODLer community following the 2017 trading period.
Unfortunately, the market’s notoriously short memory has become apparent in the cryptocurrency space. Digital investors seem to be reluctant to accept that a broad array of alternatives. It is now available for digital investors who are looking for value in what are now over-extended markets.
The problem with the market analysis conducted for bitcoin is that the focus is almost always an upside.
Cryptocurrency Market Predictions
The constant market “predictions” that involve large round numbers (i.e., $100,000, $150,000, or even $1 million) have no connection; to the actual supply/demand dynamic that characterizes fundamental markets.
Besides, the use of the word “prediction” should be a cause for heightened alarm amongst the cryptocurrency investment community. When in the history of the financial market has the practice of “prediction” ever been taken seriously by conservative investors?
If anything, the market’s willingness to allow these types of practices to gain credibility should be viewed with skepticism. This places bitcoin in a very critical position if we expect a growing number of people to be attracted to the network.
Given that our position in BTC-USD has achieved incredible gains that are rarely possible (in any market environment), it seems prudent to collect profits and look for new opportunities in other areas of the market.
We have moved into Ethereum (ETH-USD) as a protective measure that allows for more reasonable valuations and increased potential for actual utility in broader markets.
After seeing a robust rally since the end of April, ETH-USD shows mild periods of consolidation in the price range that extends from just below $3,200 to just above $3,500.
Is it really time to sell Bitcoins?
Momentum readings are positive, but indicator readings in the Relative Strength Index (RSI) look relatively healthy at mid-levels. Essentially, this gives us a variety of bullish technical factors that point to continued gains even while ethereum is currently making a reasonably straightforward push toward new record highs.
Still, this is not the case for bitcoin. BTC-USD has now fallen below the critical $50,000 level on several occasions, and it now appears as though a sustained break below this area could have a significant psychological impact on the way markets view the “king of crypto.”
Remember, these are two assets that the two different objectives. This is a fact that should have a more significant influence on how the market values each purchase. Ethereum operates as a decentralized network that coders can use to build applications (and even create other cryptocurrencies).
On the other hand, Bitcoin gives the market a simple alternative to fiat currency usage in consumer markets (and perhaps as a new way of storing value that encompasses specific characteristics that might be superior to historical investment options like gold and silver).
But given the relative utility advantages of ethereum, market valuations in bitcoin assets appear to be rolling over following a period of highly bullish price action. For these reasons, I have sold all of my BTC-USD and added that money to prior long positions in ETH-USD.
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