Daily market update - market is rallying (6th August, 2017)
Hey there, sorry I haven't posted anything for a few days, I have been working on taking the content from Facebook to my blog, setting up social and email channels. Probably quite a big week to be so quiet, anyway, I am going to try and post a daily market update from now on.
So it feels like we are out of the correction. The signs were there on June 15th after we saw quite a drop across the board, while the market bounced back for a few days, the rest of June and all of July were pretty painful. At one point my portfolio dropped over 50%, and while it wasn't fun to watch, we know a market can't move up in a straight line.
With any market, there are winners and losers, but keeping to a solid strategy helped prevent against wider losses:
- Taking money off the table - it isn't a bad thing to convert coins back to cash, cash you can keep in the bank and spend. Cash you can reinvest when the market drops.
- Being self-aware of a bubbly market - sometimes you have to be cautious, I was lucky enough to get into Ethereum sub £10 and bought more as it was going up. I also got caught in the excitement of the Flippening. The reality was that it was easy to see it was overbought near $400 and there were plenty of signs to come out. I exited 2/3 of my Ethereum at around $320. The same happened with Ripple, the same with Digibyte and the same with Bitshares. When something flies up parabolically, it almost always retraces back.
- Being patient - when the market turns, as long as you are following a good strategy you need just to be patient. If you have invested wisely in good coins and the market grows long term, you will be fine. Remember you only lose money when you sell.
- Don't be emotional - if you are over invested and scared of losses you can become too emotional about your trades, this, in turn, can lead to bad decisions. Don't over invest and try and keep calm.
- Don't chase parabolic moves - the biggest gains tend to come from buying in sideways movements. When something shoots up, say Ethereum, when it first hit $50 you were good, when it hit $400 you were at risk. Nobody can tell what will happen, but I find that when you chase the market, this is when you are at most risk. If you get caught out but believe in your investment then just hold tight.
- Right coins for the right cycle - when the market is going up you can make really good returns from smart altcoin investments, as they tend to have the biggest moves. Equally when the market drops you can see really big dips. As such, if the market is correcting you are better in strong coins such as Bitcoin, Dash, Litecoin and Monero, but as the market recovers you can diversify out into alts again.
Moving on, it is nice to see the market in good health again. The most frustrating thing I found about the recent correction was how the market moved together in unison. With the odd exception everything would be up, and then everything would be down. The movements were different, and you could reduce your losses with good trades.
With the Bitcoin fork issue mainly over, we are left with a couple of things to think about, where will Bitcoin go next? What to do about Bitcoin Cash? Firstly I am cool with the split; I think it is a real shame that the community was at each other's throats so much but I guess this is what can happen with a decentralised currency. I tried as best to stay out of the politics and pick a side as I could see and appreciate both arguments. Some of the slagging matches on Twitter and Reddit were just childish. Anyway, we are left with two coins with both having an opportunity to do what they believe is right.
I came out of Bitcoin earlier in the year as I was so frustrated with what was happening. As the Segwit activation became more likely, I went back in. I am going to hold Bitcoin long term as I see a $5k target this year a strong possibility. I am also going to hold my Bitcoin Cash. While I expect the price to crash and thought of selling, I feel like I should hold and allow them to do what they want to do and be supportive. They were arguably free anyway.
With regards to the rest of my portfolio, I am not trading too heavily at the moment. I am giving the market a couple of weeks to prove whether we are out of the correction and see what happens. In terms of specifics though:
- Litecoin - I am nervous for Litecoin, the Bitcoin issues gave it an opportunity to do some cool and interesting things. I like what Charlie Lee is trying to achieve, but I worry it may go sideways for a while. Maybe even drop as it runs out of steam.
- Antshares/Neo - loving the movements, I am a long term holder of this, having got in quite early and re-bought twice. It is now a top 10 coin on CoinMarketCap, and I can see it being top 5 within a year.
- Monero - I think this is significantly underpriced and am confident of it reaching $1bn cap, as long as the market does not crash.
- Iconomi - while 24th of CoinMarketCap it is a Tier 1 investment for me. A solid business. I am going to spend some time playing with the platform soon.
- Ethereum - nice that the price is recovering and I think we will see some solid growth, though likely volatile.
- Dash - my fav though I understand there are detractors. I think it will go above and hold +$200 quite soon.
- Ripple - I am not a fan of Ripple for a number of reasons but the charts indicate that it could move upwards again. I think the price retracement is nearly complete. I may invest a bit here.
All these thoughts are market dependent though.
Anyway, as I said, I am going to hold out for the next couple of weeks and see whether we are out of the correction and how things plays out. We are close to setting a new all time high global market cap. If we breach and hold then I will likely start pushing investments around more regularly.
Any questions then give me a shout.