Just now I sold all my bitcoin (BTC) and ether (ETH), bar some bits and bobs to play in the DeFi pool while I collect my wits. It has been a wild ride.
The weekend was crazy, in a good way, and as someone who collected most of their crypto sub-$10,000 both highly profitable and extremely stressful. Donâ€™t believe for one minute Iâ€™m a cool cucumber that can see huge sums flicker past without the merest flutter of an eyebrow. I would not a great poker player make.
Do I think that this is it for this boom? My answer is: this is enough for me. I donâ€™t want to try and get the top.
I feel there is a possibility of bitcoin running to $40,000-$60,000 during this move but my crypto was breaking my golden rule of diversification by miles.
I prefer now to sit back and lament my missed opportunity than face the prospect of a crash wiping out a huge chunk of paper profits. My utter confidence in the next BTC rally upwards has melted away, so now is the time to say farewell.
Yesterday I closed all my leery DeFi leveraged ether I had planned to capture at $750. At $1,050 the profit is even sweeter. I pocketed the balance and left the tokens parked yield farming away on Aave and Compound, ready for another campaign. Iâ€™ll miss the 6% interest from Blockfi on the Ethereum but when the market goes ape, 6% a year is just noise. Iâ€™ll be back there if I return to accumulation. Sites like blockfi.com are the future of saving and financial services. While the regulators and the banks will do everything possible to slow them down, the march of crypto-finance is unstoppable
Bulls get feed, bears get feed, pigs get slaughtered, so I keep reminding myself. To me it makes sense for bitcoin to go to twice its previous high, which would mean a peak of $40,000. Likewise I think it makes sense for ether to pass its previous high and power on to perhaps $1,800 and as I write I am having sellersâ€™ remorse, but that is to be expected.
Bitcoin and ether have been great lovers and it pains me to sail away from their golden shores. Hanging on for the last vertical move kills the speculator time and time again. As they become more and more greedy for that final killing, they risk catastrophic losses as aptly shown yesterday (January 4, 2021) with BTCâ€™s precipitate fall to under $28,000 before a strong recovery. My intestines say â€œNo, stop the music.â€�
Bitcoin will be worth $1 trillion but perhaps not this halvening.
I can draw these charts and you have seen them:
…and this is where I think the likely top is.
But I also predicted this one which now says, SELL as it has come to pass:
And the chart to $28,000 I posted is sobering because it paused there before roaring on:
But voodoo charting aside, the law of diversification is the key one. You should never hold a single position that you cannot bear to go sour. Anything above 5% of your net wealth is getting too large, and anything over 10% needs a very careful look. As it spirals above that you donâ€™t need financial advice, you need psychotherapy.
Having been acquiring BTC and ETH for two years at a fairly good tempo, the move from $8,000 to $32,000 has forced me to leave the field to others. Good luck and $40,000 to those more stalwart than me.
I will now shift my focus to DeFi where projects will grow like weeds and some will become Sequoia. I will be able to spread my exposure out from there and be diversified within the crypto universe and ride the next decade of amazing crypto-developments without bearing the risk of one instrument carrying all the exposure.
Good luck hodlers, I wish you 1 satoshi = 1c and if BTC ever gets back to $10,000-$15,000 Iâ€™ll join you again, meanwhile Iâ€™ll be romping with the DeFi Degens. If bitcoin does fall back sometime in the future, Iâ€™ll be back because bitcoin will see much higher highs but for me now, the medium-term risk reward is wrong.
Meanwhile gold is on the move and more games are afoot in these crazy times. By the way, I hope you made a packet with the help of my crypto columns â€“ it isnâ€™t over, its just the beginning.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.