The post I had for today was hijacked by Bitcoin. I wrote previously about my skepticism over the future of Bitcoin as an investment vehicle. When it comes to long term investing, I can’t say I’ve changed my mind much. Honestly the $4000 dollars of intra-day movement and distance of $2100 from daily high to closing price does not make me a fan of the long-term value of the currency as tender, however…well I’ll let the rest say my peace.

I came from the school that says I want my dollar to be worth a dollar today and tomorrow, not $40 one hour and $.40 the next. It may seem like a silly comparison, but think about it, if you follow the chart of Bitcoin it is all over the map over the long term. We have seen massive climbs in the currency over the years, but it always crashes and stays lower before pushing high, hitting new record and then crashing again.

However, I must acknowledge now that Bitcoin is likely to be worth more in 10 years than it is today. This belief is part of the steps I take when evaluating a potential investment. There is a somewhat ridiculous market cap of Bitcoin today at what I believe was $430 billion, for something you cannot touch or see other than on the screen of your computer. Money in your bank you can go pull out, deeds to houses you can touch and you have the keys, stocks you can actually get physical certificates of, but cryptocurrency is as of yet just a series of ones and zeros on a screen.

That being said, more and more financial institutions are accepting cryptocurrencies as part of their systems of savings, investments, transfers of goods, etc., and wouldn’t you know it, Bitcoin is the preferred cryptocurrency on a whole. That acceptance within the past year I believe cements it as the pre-eminent digital asset moving forward. There will be other important ones for sure, but it has staked it’s claim as kind of the rock!

Here was what finally sold me on there being a case to own some Bitcoin as an investor, while not making it enough of your portfolio to suffer from the ups and downs it will experience. Today, I threw a Fibonacci extension on the chart of Bitcoin and realized with a little bit of amazement, what we have seen happen today was predictable.

What I mean is that on or about the 13^th of December Bitcoin passed the previous level of resistance and I will be danged if it did not take a quick retest and then start pushing for the next extension. If I had looked at that I could have reasonably bought at $20,000 and when it bypassed the next extension level intra day and THEN HIT THE NEXT EXTENSION and immediately making a retracement sold at or around $24000 making a cool 20% on a few days position before it settled today at around $21,900 and rebought or waited for a retest of support at $20,000 to take the ride again.

Look eventually Bitcoin WILL pass its next fib extension and continue to climb. It may retrace or have mini-crashes but I will be significantly surprised at this point if it drops much below the Fib line at 1.0 for any real amount of time and definitely will not return to flirting with $10,000 when I sold mine previously. Yep, I’ll call myself out on that, I needed the funds for other non-investing uses so you can imagine it hurts now and I am looking for good opportunities to pick up as close to 1 as I can manage at least.

SO, you say, “Daddicus, you just said it’s not part of a long term investment plan. So how are you going to say that you are going to buy some and tell us it WILL go up.” I’ll tell you, I believe it is pure gambling. However, when I see a game that I believe the odds are highly stacked in my favor, I am the type that will take a small part of my cash and give it a shot. The difference between that and investing is that I treat that money as if it is gone. Poof! I would also never suggest to anyone to gamble on anything I don’t believe is a 100% guaranteed to work. That is why I will not tell you in this to buy Bitcoin, I also won’t say don’t buy it. I will only pass along what I have stumbled upon by simply looking at a chart and doing something any of you are capable of doing on the internet.

I wish I could say that I could sink $20K on a full Bitcoin and count it as gone and hope for the best while believing it is stacked in my favor, however, Daddicus don’t got that kind of money. I will instead hoard the risky business money I have and buy in little by little. It might not exactly fit in with the school of dollar cost averaging at the end, but it will be incremental. Why? The same people who have been saying it will grow to over $100K a Bitcoin and that it would break it’s record highs this year suddenly don’t sound so crazy to me.

If you are not schooled in reading Fibonacci levels, I suggest you learn. Fibonacci’s in and of themselves are fascinating at worst, but their usefulness to a trader is not in the Fibonacci itself, but the psychology that goes along with it.

I won’t go too far into this today as I have already gone further than I intended and want to write a separate post on my take on this, so stay tuned in the near future. This I think has piqued my interest enough to get started on that post. It’s a fascinating subject to me so I hope you will find some enjoyment too. Till next time, happy hunting, and happy holidays!

-Daddicus Rex

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