Cryptomania in full flight

Cryptomania in full flight

The incredible Bitcoin Bubble grew even larger last week but I fear the end is nigh.  Sentiment now appears off the scale if the many bullish articles on are anything to go by.  We know that in any rapidly-rising market, the bulls trot out all kinds of bogus reasons why the trend will not only continue, but even accelerate.

This is human nature – when you are sitting on a massive gain in your account, you tend to fall deeper and deeper in love with your position as the price rises.  It becomes a beautiful thing and former blemishes are now seen as highly attractive features.  The analogy with human love is there – beauty spots do not detract from the face but enhance its attractiveness to a lover.

How else to explain the current rationale among many Bit-Bulls that with only a maximum number of Bitcoins that can be mined (or so they say), the price has to keep going up?  Wow – I didn’t think investing/trading was that easy.  Just find a market that has a limited number of units and just buy it and sit back and watch the price go up, up, away!

But hey – isn’t that what a company share issue is – a market with a defined number of shares outstanding?  I seem to recall that the defunct Enron had a fixed number of shares – did shareholders make out like bandits?  I think not.

With bogus ideas like that, I am getting more and more certain the end  of Cryptomania is very nigh – and here is the chart I posted to VIP Traders Club members a couple of weeks ago

I have the Elliott waves as shown with the market rising up in a long and strong wave 3 of the final large wave 5.  I projected a new high in the current third wave. And this is that chart updated:

A new high was made, as I forecast and in the last few days, it appears wave 3 is in place and wave 4 down is in progress – hopefully in an A-B-C form.  I expect wave 4 to turn around the $5,000 area and then a thrust up in the final wave 5 above $6,000.

When Bitcoin starts to crash, that will be the time when the US dollar surges (it has already started).  This will be totally against mainstream thinking that has the dollar doomed.

Anyone holding Bitcoins should look to exit on the upcoming wave 5, breathe a sigh of relief and brag to your friends in the pub how you had bought low and sold high – unlike your friends!

One of the many problems in buying and selling the actual Bitcoins is that the security of many wallets appears to be an issue.  I see reports of investors not able to cash out for weeks, if at all.

There are so many negatives that could come to light as the price crashes – from the above security issue, to the discovery that there actually is no upper limit to the number of coins that can be mined, to a realisation that some of the rival cryptos offer much better value.

And when stock markets do begin their descent off Mount Everest, all assets including the cryptos will follow suit.  And years from now, Cryptomania will be seen as another Tulip Bulb episode in human folly.  One of the essential features for a bubble are in place, especially the nature of the underlying unit – a brand new intangible ‘black box’ digital concept that very few people really understand.  It is an ideal vehicle to suck in the retail crowd by relating how much it has gone up in the last week, month or year.  And ideal for scam merchants!


Is silver ready to turn?

This can be a very tough market to trade partly because of its spiky nature.  Get it right and profits aplenty await.  Often, stop losses are taken out before the market roars away in your direction without you. And that is very annoying, especially if you are unable to watch the markets much during the day. But VIP Traders Club members are long and I am looking at another entry possibility.

Here is the 2-hr chart showing the pull-back from its recent 1746 high

But before that, note the highly spiky low made on 6 October at 1633. That was the ending fifth wave of a nice five down. I was on high alert for a turn there and was not disappointed with that key reversal day that signaled the turn.  It climbed then to my target at the 1750 area and is now as I write making a Fibonacci 50% retrace on a strong momentum divergence.  This is an excellent chance to take a trade -except for my best guess scenario that calls for a B wave rally followed by a move to new low in the C wave at around the 1680 area.

But what if this scenario is wrong and the market starts to recover from here without putting in a C wave?  That is a typical dilemma traders who use the Elliott wave model face.

My own strategy is to take the initial trade using a close stop.  If stopped out, I will look to take a new trade at a lower level and use a close stop for that.  The worst case scenario is that I take two small losses (if the market continues heading south).  But if the market turns up from one of the targets, I stand to make profits.


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