By Samuel Taube
Transcript:
Samuel Taube: Joining us today is Adam Sharp, the co-founder of Early Investing and the First Stage Investor service. Today we’re talking about bitcoin and other cryptocurrencies.
Adam, thanks for joining us.
Adam Sharp: Thanks for having me, Sam.
ST: Bitcoin is down about 20% from its high at the beginning of the month. So my first question for you: What happened there?
AS: First and foremost, I think this was just a normal correction. There are catalysts that people are blaming, but really we’d just gone up from $1,000 at the beginning of this year to as high as $5,000 recently.
So it’s just natural and normal for a market to have a correction after a run like that. Historically, bitcoin corrects anywhere from 30% to 50%.
But the long-term trend is still strongly bullish. We’re up from $0.0033 in 2009 in the very early days to close to $4,000 today.
It’s a little bit nauseating if you’re a holder to sit through days and weeks like this. But I’ve been in bitcoin and other cryptocurrencies since 2013, and after a while you just get used to it, kind of. You realize that this is just extremely volatile – it’s something you don’t want to check every day.
It’s a roller coaster – an emotional roller coaster as well. If you just try to realize, “This is a speculative investment; I’m not going to look at it every day.” That’s kind of the mantra that I try to repeat to myself during corrections – which are, like I said, natural and necessary.
ST: Right. And you brought up volatility in other cryptocurrencies, and I wanted to bring that up as well.
It seems like Litecoin and Ethereum and some of the other altcoins also sold off during the same time period earlier this month. How much are their prices related to each other?
AS: Yeah, that’s a really interesting question. Because cryptocurrencies are kind of this asset on their own, they’re not really correlated with any other asset. But they do follow each other.
So if bitcoin catches a cold, the more speculative alternative coins catch the flu.
So yeah – Litecoin was as high as $90 recently. Now it’s back down to around $60. But Litecoin has moved up from around $5 a year ago to $60, and then to $90, and back down to $60. So if you hold for long enough, you’re still doing really well; it’s just an extremely volatile ride.
ST: I see. So I assume you see this sell-off as an opportunity to “buy the dip.” Do you think there could be a bigger correction ahead? Or do you think the worst is over at this point?
AS: Yeah, good question – and I kind of want to get back to your first question as well. I didn’t really get into too much about what’s causing this current sell-off.
There are a couple of things in the market right now. China is eyeing more regulation on the cryptocurrency space. Honestly, I don’t think it’s that big of …read more
Source:: Investment You
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