Bitcoin has exploded with a new interest from the masses and new reporting from the mainstream media. The saturation of new users and traders has the price rising hitting as high as $17,414 on the dinbits index before calming down to a still extraordinary high of $15,500 (give or take a few hundred).
To both: "Welcome to the party!"
It took bitcoin 4 years to first reach $1000 which was short lived due to, in part, the epic implosion of the now defunct Mt. Gox exchange in 2014. The fall of Gox cost investors in bitcoin millions and some still await compensation.
Bitcoin fell to just under $200 about after a slow year long drop before it began another journey to $1000 again which it hit in January of this year, 2017. That trip was a bit shorter, about 3 years but this time there was an industry and substance to support the price.
7 years total from $0 to $1000 (2nd time). From there it took just under 1 year to reach $10,000 and about 2 weeks to hit $15,000.
Now attention from the "moon" which had been thought to be $10,000 for years has shifted to "Mars" which is arguably the next milestone of $100,000 (what does that make Venus?) and with the explosion of interest it's easy to get carried away. Here's a few tips for investing smart.
Careful, Smart Investing
This is about the time you might expect an "I told you so" but that won't be the case here. This is about the time we'll say "Invest with caution".
Unless you are an exceeding good day trader, the name of the game with bitcoin is "slow and steady" and "long-term" investing. The volatility swing lately has been thousands rather than hundreds or smaller. This means you can lose allot of money just as fast you can earn it.
There will be allot of day traders making a fortune this way and anyone can join in, but it's not for the weak stomach. You can literally watch thousands flush down the toilet in minutes and without the stomach to keep your feet in the water, you might as well just quit while you're ahead.
If you're not a day trader, then you need to stick with a long-term investment. Bitcoin will rise over time just as it has over the past many years so buy as low as you can get and put it someplace safe and forget about it.
Come back in a year or whatever price mark you'll be happy with and cash-out then because trying to trade with the professionals will land you with a loss and accomplish nothing more than feed the wallets of those day traders skimming points off the dips and buying back in at the floor.
CorrectionsThere may well be a correction on the horizon which could lead to a drop of thousands of dollars. If this were to happen, that's when you would want to buy. The price is a bit inflated right now due to the explosion of interest and this will die down eventually. However, the price may well stay over $10,000 and we may never see it below that mark again. We said this exact same thing about the $1000 mark less than 12 months ago.
If you do buy now, don't worry about a "correction" if it were to happen, just hold and you'll be fine. Some estimates peg bitcoin at over $100,000 USD within the next 3-5 years which is a reasonable time for a long-term investment hold and also saves you on allot of TAX in the United States.
Short-term trading of less than 1 year is taxed at your regular income bracket whereas there are significant tax break for income earned from investments held for a year or more so it not only makes sense to hold long-term (going long) but it'll save you nearly half the taxes you'll pay if you cash out in less than a year.
That said, bitcoin could utterly explode on December 18th. That's when CME will begin trading bitcoin futures with CMO and Nasdaq joining in soon.
At the end of the day, never invest more than you're willing to lose and no matter what you do, never sell at a loss.
Hard disciplines to perfect, but serve you well ... they will.
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Image Credits: Banner Image by dinbits.com staff