Tommy Lee had an interesting perspective this week in that the continued down trend may be based on many that owe taxes on previous years having to sell bitcoin. Now if this is true or not we do not know, but I am sure there are many who owe taxes that bought a lot less and sold much higher and are now having to give that to Uncle Sam. Regardless Tommy maintains his 20-25k call on bitcoin for the end of the year and the charts say the same (Long term).
So the future may look bright but we are in the present and it is painful. I see many comments why not sell now and buy lower. These are the same people that were calling for 30k at 19000. As an investor does it really matter what the short term price is? If you are in this for 3,5-10 years down the road would it matter if we are at 5k or 15k right now? NO you are not selling regardless. Now pure traders are different, but most of those claiming to be "traders" are merely new to the game and feel they have to be in the market every day. I'll give you some experience here, this WILL eventually be a painful move and you will get caught on the wrong side of a trade and it will be devistating.
What I have found over the years is as long as you do not sell and can ride out the downturns, the market will continue up in the longer term. Warren Buffet said it best "I do not know where the market will be 3-6-12 months from now, but in 20 years it will be up". I may have misquoted this but the statement is clear. We buy when the markets are beaten up, just like the restaurant we bought in late 2013. You know how many people told us were were nuts. OK in fairness they were right, but today the restaurant is worth much more than it was back then, and because of the market conditions in 2013 we bought it cheap. It was not easy, but here we are 4.5 years later and it finally makes money. Believe me there were days and weeks we wanted to cut our losses and run!
My point is you do not buy when the market is hot, you buy when the market is not. If you think life is easy you have a wake up call coming, and you need to stick to your 9-5 job.
Perseverance + Pain = Profits
Technically speaking the 6425 level is a critical level to hold and we are at a level were we may get a reversal. Yes we were looking for a reversal above 6820 but this never evolved so we just continue to exercise patience. If 6245 does not hold then the next level we will look for a reversal is the 5800-6100 level. Now there are lower levels like the 4400 area which are significant from a broad perspective but this is like looking 2 miles down the road on the interstate and ignoring the traffic your in.
Even though this is painful in many eyes in my opinion it does not matter if we are at 6000 or 16000. I'm long term and would not be selling my core holdings either way. I believe in the technology and that we move higher in the future. My eye is on the prize and though there are many that believe cryptos is dead, I could not disagree more.
Bottom line, if you can not handle the pain, get out of the game! Whether you are an investor or entrepreneur profits do not come easy. Profits are for those that can persevere through the pain no matter how dire it looks.
The best time to buy is when no one else is. I am loving this market right now beacause I can buy free of fear. Dollar cost averageing into the bottom will pay far more than buying into a rising market. How do I know that? Do the math. Start at $1 value. Buy $1 worth every 10 cent drop down to 10 cents. Then it goes up to 40 cents. Boom, mega profits. If your goal is to acquire dollars during this market you picked the wrong time to acquire them. If your goal is to amass large quantities of BTC, you picked the right time. I will wait to acquire dollars at new ATH's. This is exactly what this market needed to set up another longterm bull. Clean out all weak hands from pump and dump groups to scam coins. Im loving this, but my vision is not 3-6 months from now. My vision is years from now and thats who is doing all the buying right now. See this where bears are the bulls friends. Millionaires are made in bear markets. KEEP SELLING BEARS!! Loving it
@jlhequities, Looking at your example, I'm kinda struggling to see the "boom mega profits".
First of all, it actually HAS to go up to 40 cents from 10 cents, which is +300%. Not impossible, but at current levels we would find ourselves at about 26k BTC. But we could also lose another 300% at 10 cents, which is kinda hard to calculate because mathematically we would be at -0.2, but anyway, to keep it simple, the probability is always the same, ie 0.5. At any given level you have 50% chance that the price goes up, and a 50% chance that the price goes down.
Of course you could start to argue that historically if a stock is 10 days down in a row, the chances it is up the 11th day is XY, ie higher than 50%. Unfortunately all the models in finance are based on historical data, but there is no guarantee, that historical data are right in predicting the future. In fact, I have evaluated hundreds of hedge funds, and never seen a historical model predicting a future price movement accurately. Some models are better than others, but there is no holy grail in modeling financial markets. Or I haven't found it yet :-)
Anyway, regarding the "boom mega profit"; doing the math, in a 300% bull run, you are looking at +17%. In a 300% Bull market.
(You invested 10 USD all the way down, bought 29.28 Shares, worth 2.92 USD at 0.1 (-71% on your investment). Once the share price rises to 0.4, your 10 USD investment would be worth 11.71 USD.)
Looking at these figures I am pretty far away of buying free of fear, in fact, buying in a falling market is like catching a falling knife, we simply don't know where the bottom is.
All I am trying to say is, in a bear market like this, either hedge, or step aside. Wait for the market to correct, massively. Even if you miss the first 100% of the bull run, until all signals are green, you will still do 200% compared to your averaging down model returning +17%. Averaging down is a nice approach in a moderate correction, but very dangerous in a steep decline.
jlhequities
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@marco8484, sorry brother, not seeing your point. I just used a 90% drop as an example. So lets go with your example and hold $10. Since we don't know where the bottom is we wait and hold with our $10. Price goes to 10 cents, bounces up to 40 cents. Now we wait for a pull back to set higher low. it does that and takes out the 40 cent high and touches 60 cents. so you now have confirmed uptrend in green as you suggest. so I buy all $10 worth at 50 cents. that means you have 20 shares and I have 29.28 shares for the same $10. I will always out perform you.
marco8484
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@jlhequities, That is a different strategy than what you mentioned in your first post. You said you want to buy in a falling market and average down, not hold and wait. Your point was buying into a falling market would be preferential to buying into a rising market. Now you write the opposite, you don't buy into a falling market, but wait for reversal and buy into a rising market.
In your first post you said start with 1 USD, and buy 1 USD worth every 10 cents drop down to 10 cents. So you buy 1 USD @ Share price 1 = 1 Share, then 1 USD @ Share price 0.9 = 1.11 Shares, 1 USD @ Share price 0.8 = 1.25 Shares and so on, all the way down to Share price 0.1. This is averaging down as you mentioned. At the end, you invested 10 USD, you are holding 29.28 Shares, Share price 0.1 = 2.92 USD value.
In your second post you are actually using my method, not buying in a falling market, but stay at the sideline, and once the market corrects, buy. IMHO this makes more sense as averaging down is a risky method.
jlhequities
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@marco8484, yes its 2 different strategies, Your strategy is preserving dollars. I don't want to preserve a depreciating asset. I want to acquire as much appreciating assets as I can. so the name of the game is accumulation for me. the largest quantities I can. Dollar cost averaging into a bottom will always give you more quantity than waiting and buying into a rising market. the second example I gave showed that. More quantity was acquired buying into lows vs. buying a rising market. Its only risk if your perception is dollars are worth more than BTC
jlhequities
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@marco8484, The part about "Mega Profits' is this, at 40 cents is I'm already in profit while holding dollars waiting for higher lows means my dollars are acquiring less of the asset I'm wanting to buy.
marco8484
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@jlhequities, "Buy $1 worth every 10 cent drop down to 10 cents. Then it goes up to 40 cents. Boom, mega profits." is not exactly holding USD waiting for higher lows, it is buying into a falling market averaging down. But fair enough, I think we are both on the same page now.
Kevin098
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Warren Buffet also said that the stock market is a wonderfully efficient machine for transferring wealth from the impatient to the patient. Some principle applies for crypto.