I sure hope you've heeded my repeated warnings.
Bitcoin went into free fall before coming to a rest at $9,199.59 early last Wednesday, some 52% below its all-time high as a worldwide digital sell-off intensified – roughly 19% of which happened in less than 24 hours. To put this in perspective, you're talking about a $30 billion buzzcut that would have wiped GoPro Inc. (Nasdaq: GPRO), Fitbit Inc. (NYSE: FIT), and Twitter Inc. (NYSE: TWTR), combined, from the face of the earth.
Ethereum and Ripple – which are the second- and third-largest cryptocurrencies – fell about 30% and 27%, respectively, over the same time frame.
All three have since bounced back a bit but – mark my words – this will not be the last cryptocurrency crash. So it's important you know how to trade the next one when it happens.
South Korea continues to mull a complete shutdown of cryptocurrency exchanges. China's clamped down on digital miners, is planning to block domestic access, and will hammer anybody making a market or providing settlement and clearing services.
The situation is much the same in the United States and Europe, where central banking authorities are formulating additional regulations, not the least of which involves potential taxation.
Predictably, cryptocurrency supporters, like CryptoCompare CEO Charles Hayter, are in damage control mode. They want to maintain the illusion because they have every vested interest in doing so, not the least of which is hundreds of millions in commissions.
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I find his assertion on CNBC that a larger percentage of investors were "expecting this correction and reversion to mean" to be completely implausible. The sell-off wouldn't have made headlines if that were true, nor would the proverbial "herd" have stampeded for the exits.
Mati Greenspan, a senior market analyst at eToro, also speaking to CNBC, noted that "now that the reasons for the sell-off are more clear to everyone…. traders will most likely start focusing on the technicals."
The entire premise driving cybercurrencies is that they exist outside normal currency pairs and are completely independent of government control. By its very definition, there aren't any "technicals" because there is no real value.
To be fair, Bitcoin, Ethereum, and Ripple are still up roughly 1,000%, 10,000%, and 15,000%, respectively, over the past year. They've been one of the greatest speculative trades in history… maybe ever.
Just don't make the mistake of confusing blind luck with genius.
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.