Happy Sunday!
Bitcoin’s price keeps dropping and the overall crypto market is down to levels we haven’t seen in over a week.
While that may seem scary, it’s not unusual. You’d be surprised how often bitcoin starts and ends a week at roughly the same price, sometimes with a big pump in the middle, sometimes with a big drop in the middle, and sometimes just sideways straight through.
Over the long term, the path still points upward.
Usually, when bitcoin’s price doubles in three months like it just did, we see start to see signs the market’s starting to get ahead of itself and weakness is creeping in. These are early warnings that you should think twice about putting money in.
Remember the last time bitcoin’s price doubled in three months? That happened from September to November 2020. By the end of November, the market had already started to shift against us. But FOMO took over and new money overwhelmed massive selling from whales, miners, OGs, and institutions.
This time, we see scarcely any signs of weakness or concern in any of the data I look at. From the looks of the trading charts and on-chain data, this market is full of people who either understand how to play this market or they really believe in bitcoin and cryptocurrency.
Either way, that’s a beautiful foundation for whatever comes next—and the complete opposite of what we saw earlier this year. Sadly, it won’t last forever.
Premium subscribers, catch my most recent update for a little more on that as well as my thoughts about buying or selling at this moment.
Check the archive to get my updates from the past few weeks, you’ll see what I’m talking about in more depth.
Also, if you missed the monthly issue, read or listen to it now.
Here’s an article and video for you to enjoy. Have a good week!
Growth Bubble: Making Money on Companies that Make no Money
Bottom line: more than half of U.S. growth stocks have negative earnings, yet these stocks have dramatically outperformed the broader market in the past few years.
My take: first negative-yielding bonds, then SPACs, now passive investing into unprofitable businesses. Our modern financial system makes it so hard to find safe yields, people keep pouring money into losing bets hoping and praying that something good will happen. And we’re the crazy ones for buying crypto?
Why we care: “bubbles” are funny things. My own financial advisor told me to save cash and wait for the stock market or bond market to crash. He makes money on people taking the exact opposite approach but even he knows what’s up. When insiders think the system’s so screwed up they don’t even feel comfortable making money off of it, you might want to tread lightly, too.
Watch this video from Graham Stephen. In it, he shares some uncomfortable truths that seem counterintuitive to what you might think about where opportunities lie in this market.
Credit my reader, Bill, for sharing this one with me. I’ll let the video speak for itself.
Graham shares some cool data that backs up his findings on a few topics, e.g., the strategy for dollar-cost averaging and playing the altcoin market.
I have some other data that essentially says the same thing, except in different ways.
Regarding altcoins, Graham echoes some of the things I talked about in my advice for altseason. Tap this button to read it.
I wrote it in December 2020 but it’s still relevant today.
One take-away for the rundown—if you feel compelled to buy altcoins in the top 50, choose wisely. “Big” does not mean “safe.” Most altcoins lose value against bitcoin over the long term. Even ETH lags bitcoin since its all-time high. Check any trading chart that lists prices in bitcoin terms, you’ll see this clearly.
For that reason, I hold only a few large-cap altcoins in my portfolio and focus extensively on adding small-cap projects. With that approach, you only need to find a few winners to crush the market. Whether your favorite altcoin is big or small, you’re more likely to see your investment go to $0 than Lambo. Make sure your winners justify that risk.
Unless you just want to make fast money on altcoins, in which case you just need to wait for altseason and buy some random tokens. Or NFTs, if you’re so inclined. You don’t even need to think about it, everything goes up during altseason, even the deadest of dead projects. You’ll see when the time comes (possibly sooner than you think).
Relax and enjoy the ride!
Weekend Rundown - October 24, 2021