Sell Your Bitcoins Right Now
I’ve been a cryptocurrency fan for a long time. I even wrote a book extolling my passionate enthusiasm for Bitcoin and blockchain technology. So take it from me, I’m a big, big fan of Bitcoin, Blockchain, the CryptoRevolution, you name it.
But you should sell your crypto holdings, particularly Bitcoin, right away, even if you are long-term bullish on the crypto space.
- This is a bubble. The price is not stable at this level. A month ago the price was $4000 USD/BTC. Now it’s $9600. Yes that’s great growth. But what has really changed in that span of time? Has the underlying value proposition changed? Does Bitcoin really offer any more value now than it did… a month ago? Surely it does not.
- The level of greed and euphoria in cryptomarkets right now is absolutely unprecedented, even in so tumultuous a space as Crypto. This is exactly the right time to exit. When the mood is like this; this is when the smart money leaves. You could not pick a better time to exit.
- Bitcoin was fun to hold when it came with high risk and mass upside. At current prices, it is now just high risk. When Bitcoin was relatively unknown, it was this incredible new technology that was hugely underpriced. Now it is a known quantity. The upside has been fully priced in. If you know about and are excited about Blockchain tech, buying Bitcoin is no longer a clever or niche investment. It’s what everyone is doing. Which means it is too late.
- The price is going up because it is going up. Yes you heard that right. People are buying on momentum alone. The exact same forces work in reverse. When the momentum swings the other way, as it must eventually, fear and panic will set in. People who bought internet tokens (yes technologically amazing internet tokens, but still internet tokens) at ~$10,000 are going to start wondering what they can do with them. When the price goes into a structural downtrend, as it probably will soon, the excitement of making paper profits will go away; people will ask themselves whether they really want to be part of this high-risk experiment after all. All doubts are buoyed today by rising prices. When prices recede, all the old concerns will resurface.
- Bitcoin still has problems. Let’s be honest. Scalability is not solved. Strife within the community is much worse than earlier in its history. Mining is highly centralized. The ubiquity of Bitcoin hard-fork variants raises profound doubts about the centrality of network effects. The multiple near-flippenings we’ve had, first with Ethereum, then with Bitcoin Cash, should raise big red flags about how these things can remain a scarce store of value in the long term. None of these problems have been solved. Bitcoin’s value proposition is the same as before. It’s high. But it’s probably not $200 billion high.
Dissect your own emotionality. If you are still holding now, it is because you:
- A) You aren’t actively buying, but you aren’t selling either. This is illogical. Make up your mind independent of where you happen to be now. If you had $100,000 USD, would you buy 10 BTC right now? If not, you should not sit on 10 BTC either.
- B) You think you will get out in time. You’d prefer to ride the wave a little longer. This is highly dangerous. The downside risk is asymmetrically large at these price levels. You’ve already made huge returns. Take some money off the table.
- C) You don’t think we’ll ever revisit older price levels. Please look at every past Bitcoin bubble. We pretty much always revisited old price levels. These moods are cyclical. Panic and Euphoria are two sides to the same coin. There is little support at any of the price points we’ve just zoomed past.
- D) You “don’t mind” if BTC drops back to $3–5k. You are a long term holder. This is not logical either. If you agree that the price is asymmetrically likely to plummet, you can pick up more coins later by moving to USD now.
Don’t HODL because of inertia, passivity, or wishful thinking. Don’t be utopian. Don’t get greedy. Take your profits off the table and pat yourself on the back.
Selling doesn’t mean you’ve given up on crypto or blockchain. The price of these assets in the short term, and your involvement or support for the technology, are completely orthogonal concepts.
I’m still a believer and a big fan of the space. But current price levels are reminiscent of the (several) bubble / crash cycles Bitcoin has been through before. Regardless of your passion for the Blockchain, the smart move right now is to sell.
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