By Andrew Keene
This post Crypto: The Key to Retiring 20 Years Early appeared first on Daily Reckoning.
The stock market’s been down these past couple of days, but the new year has basically been an extension of the run higher in U.S. equities.
But what should you think about the recent correction in cryptocurrencies?
Bitcoin, for example, is trading at around $10,000 this morning after peaking around $20,000 last month.
This market moves awfully fast. But let’s review what’s been happening in the crypto space so far this year…
Bitcoin – down 17.8% in January
Litecoin – down 37.3% in January
Ripple – down 20.4% in January
What happened?
This selloff was accelerated by an announcement from the South Korean government related to regulation in the cryptocurrency space.
The regulations announced include:
A ban on minors and foreigners opening a new account.
Real name verification – All cryptocurrency exchange account holders will have to verify their name and will only be allowed to trade under a name that matches the name on their bank account exactly.
Increased pressure on banks to report “suspicious” cryptocurrency related transactions.
A ban on new crypto offerings, known as ICO’s.
Where does the crypto market go from here?
This shift from a completely unregulated marketplace to one that more resembles traditional financial markets has caught a lot of investors off guard, but the reaction in markets is very much overdone.
When prices begin to fall, it shakes a lot of newcomers out of the tree, so you can see a lot of action like this.
Use that to your advantage!
In the short term, headlines may continue to contribute to crypto market volatility. But the long term reasons for holding bitcoin and other cryptos are as valid as ever.
I see this recent sell off as a golden opportunity to enter the crypto market at a deep discount.
Every significant pullback over the past year has seen buyers aggressively enter the market. That means that you should consider cryptos as being “on sale” right now. Major cryptocurrencies are trading at a serious discount relative to the 2018 open.
Bitcoin is holding around $10,000, and litecoin appears to be finding strong support. This means that they might not be at these levels for much longer.
Ripple may continue to see heightened volatility, however, as it has not yet established a strong base of support. You should look for support to be established before entering Ripple.
Just keep in mind that average volatility in these markets is much higher than equities or indices, so crypto investors must be prepared for large intraday moves, even on the way up. They should be prepared for further volatility, as headline risk is still very much present. But that’s not a reason to stay away.
No, you won’t see this type of volatility in blue chip stocks like a Coca-Cola or Boeing. But you won’t make fortunes in them, either.
Having said that, with crypto markets in their early stages it is extremely easy for inexperienced investors to get involved in a crypto offering that isn’t innovative, unique or offering any value proposition to speak …read more
Source:: Daily Reckoning feed
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