With the latest appreciation in the price of Bitcoin our social media feeds are once again filling up with posts reading ‘to the moon’ & ‘new hyperbolic phase’. This may be true, or it could be a bull trap, Technical Analysis shows the path of least resistance, it does not predict where the price will go.
Markets are not made of stocks, commodities and currencies but people trading them.* The same applies to Bitcoin. If you’re an experienced trader with your risk management system, and price alerts, in place then you can consider trading in and out of bitcoin.
However, if you’re not an experienced trader then you’llbe losing not just money, but bitcoins. Your fiat currency is designed to lose value over time, bitcoin isn’t. If you lose 0.1Bitcoin today that’s a US$1,000 loss. Had you held on then potentially that 0.1Bitcoin could be worth anywhere from US$2,000 to US$10,000. (This is not a prophecy, just an opinion.)
Have your core position of bitcoin that you add to and avoid trading in and out. This happens to the best of us, see the example below of how Isaac Newton, one of the smartest men of his time, got caught in crowd fever and eventually went broke.
However unlike the South Sea stock, Bitcoin is not a bubble but it has undergone the four stages of a bubble and bust several times, only to come out stronger.
*Not our original quote, trying to find the source