I'm Out of Bitcoin
If you've been reading my stuff for a while you know that in the interest of full disclosure (and to avoid being accused of talking my book) I tell you guys about the moves I make in the market and what positions I buy and sell. What I don't always mention is my current trading philosophy, mostly because I feel like it's an opinion and opinions are like...well, you get where I'm going with that. In this case, however, I think it's important to note that I don't have much faith in this protracted bull market and to that end I've been trading with very tight trailing stops. There was even a time back on March 21 where I was completely flat for the first time since 2009, after my trailing stops on GOOG got hit just above $1,200.
I mention this in the hopes that you'll understand the reasoning behind my liquidating the entirety of my Bitcoin holdings last Thursday at $531.24. It's not that I no longer believe in the viability of Bitcoin. It's just that I think Bitcoin is going to cool off a bit following the recent IRS ruling and the fact that it was pretty overheated for the better part of the past year. I still believe in the technology and what it represents, and I fully plan to reinstate my position when the price drops off to a level I think is a little more reasonable (probably back in the $100-200 range).
Now, I realize I'm probably going to take some shit for this. Bitcoin was among the most successful investments of my life; I bought my very first Bitcoin for €50 cash at a Paris tech Meet Up a couple years ago (represent, nerds). I've paid as much as $812 for a Bitcoin, and I've owned them everywhere in between. Yes, I've even used them to purchase things. In a nutshell, I made good money with it.
But at the end of the day an investment is an investment, and I happen to see the popularity of this particular investment vehicle waning for the foreseeable future. I'll admit that my glass-half-full interpretation of the IRS ruling was probably a tad naive, and there's no doubt that the ruling has muddied the waters and created difficulties for those conducting business in Bitcoin. That's probably why we've seen the value drop off significantly in the past couple weeks.
Again, the reason I'm telling you all this is first and foremost just disclosure: I promised you guys I'd keep you up to date with what I'm doing so that's what I'm doing. Right or wrong, I made a huge profit on Bitcoin and I'd be foolish to leave it on the table and average down when I could just sell it, wait for it to drop, and then buy it back. As much as I believe in the technology and the need for the disruption of the government cartel on fiat currency, I'm still in it to make a buck.
For what it's worth, this was a tough call for me. I realized that I was emotionally invested in Bitcoin and that's never a good idea when you're trading. I still believe in the long term prospects and I still think it has explosive upside, I'm just on the sidelines for now waiting for it to cool off a bit.
I think the partnership with Square will give it a nice boost in the short term.
Good one, Eddie. Happy April Fool's Day to you too. ;)
Nope, for realz. If I were going to do an April Fool's prank I probably would have gone with Anshu Jain failing the CFA Level I this past December:
http://news.efinancialcareers.com/uk-en/168455/deutsche-bank-co-chef-an…
"I don't kid about money." - Paul Newman, "The Color of Money"
Damn, just noticed the price is down to $483... that blows big time. Unlike Uncle Eddie, I bought high and right now I'm sitting pretty low. I thought the IRS decision would legitimize it more so that harm the price. Guessing that Bitcoin is moving from fringe territory to mainstream, which may be detracting from it's original appeal... or something like that.
They basically complicated things by not only making every Bitcoin transaction a taxable event, but by placing the onus on individual owners to track basis, calculate gains or losses, etc.
It doesn't seem like it's in any way enforceable, which is probably good for Bitcoin long term, but it made things complicated enough in the mid term to turn a lot of people off.
Is the IRA ruling effective on only BTC or all cryptocurrencies?
When can you stop being such a beast, Eddie. @"Edmundo Braverman"
I am going to write my senior thesis on bitcoins in econometrics. What kind of factors that do you guys think can affect bitcoin price, except major news (such as the IRS ruling, close of major exchange).
This should be regulated even more, if not, laundering money just becomes easier.
Congrats for getting out before the nosedive, As much as I dislike regulations, I think for Bitcoin to be a stable viable virtual currency it has to be regulated. But with this IRS ruling, Im not even sure what the future looks like with Virtual Currency our current financial system is very old and we need new options specially in this Internet age, something that can replace the old system.
I too am stockpiling cash right now waiting for the impending Bitcoin crash. I think anything under $200 would be a great entry point. I'm not really sold on the market right now either. I've moved half of my account over to cash. Market is treading water right now and I am actually hoping for a sizable correction.
Either way, my plan is to have $20k ready to go when BTC reaches an attractive enough price. I think there is enough VC funding and practical uses for the protocol to make it a long-term viable technology but I agree that it's too frothy right now.
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