Call it a speculative mania…
Call it madness fueled by the Federal Reserve…
Heck, call it the biggest investment bubble of all time, if you want.
If we could jump forward 10 years and look back, we’d probably nod our heads in agreement.
Whatever we end up calling it in the future, though, the present moment still offers incredible moneymaking opportunities right now. And as long as you’re thoughtful about the risks, we strongly recommend you participate.
Stocks have seen big gains, of course. The benchmark S&P 500 Index is up 588% from its March 2009 low… And the tech-heavy Nasdaq Composite Index is up nearly twice that – an incredible 1,140%.
But the real poster child for this boom/mania/bubble is uncontested…
Cryptocurrencies didn’t exist in 2009. Bitcoin started trading in July 2010. Yet it now has a market value in excess of $1.2 trillion. And the entire cryptocurrency space – which now includes more than 10,000 “coins” – has about $3 trillion in combined value.
A lot of folks have already seen breathtaking gains. And as we’ll show you today, the price action in bitcoin and Ethereum – the top two “blue chip” cryptocurrencies – suggests that cryptos could still have a lot of room to run.
So please, be skeptical, be cautious… and participate.
Let’s first look at the price action in bitcoin…
Bitcoin is still the largest cryptocurrency by a wide margin. As we noted above, it has a $1.2 trillion market value. That’s more than double Ethereum’s $560 billion market value. (These two account for about 60% of the value of the entire cryptocurrency universe.)
In the chart below, you can see that bitcoin jumped above its 200-day moving average (200-DMA) – a popular measure of the long-term trend – in September. Then, bitcoin soared up to its former all-time high from April – which was an important “resistance” level – and paused for the past few weeks.
Over the weekend, bitcoin turned higher again and is now trading within a hair of fresh all-time highs…
Bitcoin is above its 200-DMA. And it’s now pushing back above its prior all-time high from April. It’s OK if you aren’t familiar with these technical signals… The important thing to know is, these are very bullish signs for bitcoin and the cryptocurrency sector, in general.
With that in mind, let’s consider the price action in Ethereum…
In the chart below, you can see that Ethereum has followed a similar path to bitcoin. It dipped to its 200-DMA in September. Then, it hooked higher and blasted through its old all-time highs. Again, that was a key resistance level. Over the past few days, Ethereum has soared…
There’s a lot to like about the recent price action in Ethereum. It has been stronger than bitcoin lately. And it’s already trading at new all-time highs.
With the top two “blue chips” of crypto near or at all-time highs, we’re bullish… We expect more gains to come.
Now, anything in this still-new asset class is far from certain. So consider the money you allocate to bitcoin and other cryptocurrencies as purely speculative.
How you manage risk in this space depends on a few factors…
- If you’re already in, have you already taken your initial cryptocurrency investment “off the table”?
- How big is your allocation to cryptocurrencies in terms of your total net worth? Can you handle a 50% to 75% drop in cryptos?
- Can you sleep well at night? Are you checking the cryptocurrency market at all times of the day and night?
We can’t tell you how little is too little or how much is too much for your personal finances. We can only say that we suggest you own some cryptocurrencies… and that you be comfortable with your answers to the questions above.
Cryptocurrencies are at or near all-time highs… And there could be much bigger gains to come.
Good trading,
— Ben Morris and Drew McConnell
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Source: Daily Wealth