In this post I would like to share my view on two Cryptocurrencies, Bitcoin and Ethereum. The last time I shared my view on Bitcoin and Ethereum, mid March, both currencies crashed and I used that as an opportunity to add positions. Last couple of days, I have decreased my exposure a bit though and took some money (profits) off the table as it’s going 2 fast 2 furious in my view.
Both currencies have performed very well, especially Ethereum that rose from $18 in March 2017 to a current price of $118, a $100 (+ 550%) increase in 2 months time. Seems like the tulip mania all over again.
Don’t get me wrong, I do invest in both currencies (and others…check out here), but such price moves always makes me wonder if it’s really worth the value or just the latest tulip mania hype. The tulip mania is referring to the period where one simple tulip bulb was worth more than a house downtown Amsterdam. Those crazy Dutch 😉
This is what happened with the price of tulip bulbs….
will it happen again but now with the cryptocurrencies?
For now, I’m giving it the benefit of the doubt as I’m playing with the profits that I made on both currencies and I know some smart people that are confident these currencies are here to stay (at what price, that’s the question, I know).
Short term, price seems a bit stressed though…especially Ethereum….too fast, too furious. See chart below.
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Bitcoin on the left and Ethereum on the right.
Let’s start with Bitcoin. Once it broke above the $1300 mark, it took off to new Highs but lately volume does not support the trend of price. The Trend Trading Indicator is still on a Buy signal > $1729. RSI is strongly overbought…overbought does not automatically mean you should short it..it simply means the underlying trend is strong and there should come more upside after a period of cooling off.
Ethereum is showing a massive price increase since March 2017, from $18 to $118 as of today. Strong uptrend, often seen in the early stage of a new product or trend (early adapters bought < $18, now the crowd is slowly waking up and joining, not really mainstream yet, so could provide more upside potential if more people want to join this trend). With moves like this, and a RSI that shows bearish divergence, you should not be surprised to see wild swings to the downside too.
For now, I still think that any potential dip should be bought, even if Bitcoin drops back to $1600 to form a Higher Low and a new base for a continuation of the uptrend is formed. Even an uptrend consists of price forming Lows…just make sure those Lows are Higher Lows and secondly, do not bet the farm on cryptocurrencies. Keep it limited to 5% or 10% of your portfolio…like I do.
UPDATE MAY 22 – Tulip Mania?
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