Selling Discipline

Unless you’ve been living under a rock you knew bitcoin passed the magical $10K mark. I find the best form of greed/angst control is to sell a little: I sold a little BTC and BCH at BTC = $9980 on the way up. After passing the $10K mark, BTC got as high as $11.5K before dropping close to 20%. It’s been oscillating around that round number since (all basis Gdax).

Above is a record of my crypto accounts. Note “100” is a scaled number that represented about 0.6% of my total portfolio at the time — a sum I was willing to take a flier on. That was almost nine months ago. My risk appetite has not changed much, “100” is still about the max I’d be willing to risk on a gamble, but crypto prices have zoomed by. With the latest sale, I’m at 75% across the board of my max coin holdings (BTC/BCH/ETH/LTC). I’ve withdrawn 113% of the initial deposit and still left with coins 7.5 times that amount for an IRR of over 2500% (calculated at BTC=$9930). My bigger concern now is to limit the crypto allocation to no more than 5-6% if the futures listing doesn’t temper its volatility. It’s common for BTC to lose 40% in days and I want to limit the downside from any portfolio segment to no more than 2% in a month.

Frankly prices have advanced further than I had been expecting. Previously I had a target of around $25K, I may have to reconsider. There are more potential buyers out there since there still isn’t a convenient investment vehicle; however, signs of excesses are everywhere. I was on a flight recently, one of the first things I noticed a fellow passenger did after landing was opening his CoinBase app — I have to admit having done the same.

Below are two amazing charts I want to share. The first is from AllStarCharts, an update of a Fibonacci extension shared before. The second was posted to the EliteTrader forum, of unknown authorship but amazingly accurate in predicting the date of $10K BTC. Enjoy!

Remember, as great and important as the internet is, it led to the mal-investment, mis-pricing, and collapse of the dot com bubble. All the promises of blockchain from the most ardent devotees amount to a fraction of the impact of the internet. High crypto prices can create huge distortions in the world economy, not just in electricity consumption. If a tree can’t grow to the sky, then it won’t. This too shall pass. I’ll never catch the peak; I’ll never make as much money as I could have in theory; there are lots of people who make a lot more than me; and that’s all OK.

None of the above is investment advice, the standard disclaimer applies.