“Bitcoin will reach the moon,” they said. “$20,000 is only the beginning,” they pressed. The harsh reality of the recent move is that appreciation has been nowhere in sight. Harsh, that is, if you haven’t been positioned properly. Are Bitcoin traders bound to be left with their teeth clenched, watching Bitcoin fluctuate? No. There’s a possibility for some to grow the profits they already have on specific positions and for others to jump in during the next part of the move.
The magnitude of the moves in Bitcoin certainly inspires the imagination. More than that, it also evokes comparisons with past trading and with other assets. One parallel we could draw is between the dot-com bubble and the current price action in Bitcoin. In an article on CNBC, we read:
Bitcoin is behaving a lot like how the Nasdaq did during the dot-com bubble nearly 20 years ago, but the timeline is unfolding much faster, according to research published by Morgan Stanley on Monday.
The Nasdaq in 2000 and modern-day bitcoin both rallied 250 to 280 percent in their most “exuberant” periods ahead of bear markets, Morgan Stanley said in a note to clients.
“Just that the bitcoin rally was around 15 times the speed,” Sheena Shah, strategist at Morgan Stanley said.
There are points in this that we don’t agree on, there are also points which might be relevant. First of all, it is generally not very relevant that both Bitcoin and Nasdaq rallied 250-280%. It only matters that both assets went up by a lot. Secondly, comparing Bitcoin to stocks is not ideal. Severe stock market crashes notwithstanding, Bitcoin is still a lot more volatile than the stock market. This is not appreciated enough by the investment public, we believe. This segues into one of the points that might be important. Bitcon is moving at 15 times the Nasdaq’s speed, which is yet another way to address the fact that the currency is a lot wilder than the stock market. What might this mean? That any moves in the market might be a lot more volatile than moves in the stock market. For your safety, keep that in mind.
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