Reasons I like Bitcoin
1. There is a finite amount that can ever be in existence. There are currently a little over 13 million Bitcoin in circulation, and the maximum amount of Bitcoin that can ever be mined is 21 million. The last Bitcoin block is projected to be mined in the year 2140.
2. The price of Bitcoin has pulled back significantly (over %72 from peak to trough). The All Time High of $1,242/coin was established on November 29th of 2013. We hit a 52 week low of $344/coin in April of 2014.
3. There is currently a higher low being established on the $Bitcoin chart. As you can see on the daily chart below, we look to have established a higher low right around the $500/coin mark. RSI is very oversold as of the time of this post. This doesn't necessarily mean we can't stay oversold, but from a risk reward perspective now is a good time to buy a few $Bitcoin.
5. The price of Bitcoin is easily track able. There are tons of tools in existence that track the price of $Bitcoin, but my favorite is the Winklevoss Twins website called the "Winkdex."
6. Security is a big worry when it comes to the uninformed Bitcoin investor. The exchange I use is called Coinbase, which is backed by the infamous Mark Andressen. Coinbase has created an extra security feature for their customers (specifically long term holders) called The Vault. How does it work? Coinbase holds 97% of all it's Bitcoin held in the vault offline; therefore, being immune to hackers.
7. The Winklevoss Twins laid out an argument that the total Bitcoin market cap would be worth at least $400 Billion (this equates to about $32,000/coin). What was this based off of you might ask? They simply took the market caps of Visa ($V) $128 billion, Mastercard ($MA) $85 billion, American Express ($AXP)$92 billion, and Discover ($DFS) $27 billion. These companies simply won't be able to compete when mass adoption occurs.
7/11/15 Update: I wanted to revisit some of my long term investment calls from last summer. We'll start with Bitcoin. My analysis/call from last summer was both right and wrong. From a shorter term trading perspective, I was right. If you took heed of my call to buy some Bitcoin around $500, then you would have enjoyed a month-long run-up near $700 per coin, or approximately 30%. That beats digging ditches! We failed to overcome the $700 resistance on the daily chart & went through a multi-month breakdown with what looks like a capitulation event in January, 2015. We touched $177.28 per coin in January intraday & bounced back violently to above $200. Since this capitulation event we have traded between $200 - $300 per coin. We currently are about to test the $300 resistance mark. If we can get past the $300 resistance, the price should rocket higher. We are sitting above both the 50 day & 200 day simple moving averages. If we can get a Golden Cross on the daily chart, this will provide further evidence that the trend has changed. All other indicators (RSI, MACD, Stochastics) are pointing up & look very bullish. I've held onto my entire position that I started around $500 & continued to dollar cost average down. Since I have a longer term thesis on Bitcoin, I prefer to build to my position when below my average cost around $350 per coin.
7/8/17 Update - Bitcoin has had quite the turnaround from my last update 2 years ago & is currently trading around $2524. Bitcoin is up approximately 1000% since my last update. Hopefully you read my post and bought a few before the massive rise. That said, I still feel confident in this investment for the longer term. Simply put, there is no other technology that possesses more upside than Bitcoin. It has the potential to become the world's reserve currency, which is a scenario that cannot be ignored in my opinion. Fundamentally, there is a scaling debate going on that is keeping the price suppressed even at current elevated levels. Depending upon the outcome of that debate, which is scheduled to be settled on August 1st, 2017, we will likely see a major correction or spike in the price. Bitcoin's market cap still remains around ~42 billion. I don't recommend going all in on such a volatile and risky investment, but 5-10% of your investment portfolio would be wise even at current levels. I look forward to updating this post again in a year.
The Big Banks
The big banks haven't been acting well as of late, which I view as a great buying opportunity from a long term perspective. Why? The banks do well in a rising interest rate environment, which is coming right around the corner. The Federal Reserve is planning on finally finishing it's quantitative easing (QE) this fall. What's next after QE you may ask? Rising Interest Rates. The stock market normally reacts inversely to the news of rising rates (this isn't to say the bull market can't continue since normally rates are rising in conjunction with very good economic environments/data); however, banks look to profit when rates rise. Why does it help the banks? Simple, they raise the rate they charge their customers to borrow money (credit card rates, mortgage rates, etc.). My pick out of the banking sector is Bank of America ($BAC). Bank of America is getting close to being oversold again on the weekly chart below. If you want to wait for a better entry, I think it can get down to the low $14's again and possibly even $13's. That being said, I personally wouldn't mind starting a position right here for the long term. This is one of those that you buy and just stick in a drawer for a year+ before looking at again.
7/11/15 Update: I updated the chart above with yellow highlighting when I made the original call. Had you heeded my advice & picked up some Bank of America around $14.75, you'd currently be sitting on over a 13% gain. Now this may not make you wealthy, but once again, it beats digging ditches! I still like $BAC, and the majority of the major banks long term. If you don't want to pick one, you can always look into buying the $XLF (financial ETF) which will diversify you across the entire sector. My argument remains the same as above, that banks will outperform in a rising interest rate environment. It has taken the Fed a lot longer than most anticipated to kick start the rate raising cycle, but it is inevitable & should happen by the end of the year.
7/8/17 Update - The arrow in the weekly chart above designates the last update I had on 7/11/15. Bank of America is now trading at $24.86 or ~49% above where it was 2 years ago. Not too shabby. I'm still bullish long term on the major banks overall & believe they still have a good deal of upside; however, I am beginning to get concerned with the overall market. The broader market is now trading at the 2nd highest valuation in history. Coupled with the fact that the US Economy is overdue for a recession, I'm starting to get a little more cautious with my long term calls. That said, until the bubble(s) pop it's best to ignore all the noise and roll with the punches. The major US banks remain one of the better looking long term investments, but if the broader market experiences a prolonged correction then it will not take any prisoners.
During the day I will tweet chart/position updates to my followers on both Twitter and Stocktwits (NCInvestor). Please follow me @NCInvestor.
Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in NC Investor Blog is often opinionated and should be considered for informational purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence.
Thanks for visiting NC Investor Blog.
Investor, Trader, Attorney, Sports Fanatic (Hokies, Tarheels & Panthers), Dog Lover, Loving Husband & Father.
The big banks haven't been acting well as of late, which I view as a great buying opportunity from a long term perspective. Why? The banks do well in a rising interest rate environment, which is coming right around the corner. The Federal Reserve is planning on finally finishing it's quantitative easing (QE) this fall. What's next after QE you may ask? Rising Interest Rates. The stock market normally reacts inversely to the news of rising rates (this isn't to say the bull market can't continue since normally rates are rising in conjunction with very good economic environments/data); however, banks look to profit when rates rise. Why does it help the banks? Simple, they raise the rate they charge their customers to borrow money (credit card rates, mortgage rates, etc.). My pick out of the banking sector is Bank of America ($BAC). Bank of America is getting close to being oversold again on the weekly chart below. If you want to wait for a better entry, I think it can get down to the low $14's again and possibly even $13's. That being said, I personally wouldn't mind starting a position right here for the long term. This is one of those that you buy and just stick in a drawer for a year+ before looking at again.
7/11/15 Update: I updated the chart above with yellow highlighting when I made the original call. Had you heeded my advice & picked up some Bank of America around $14.75, you'd currently be sitting on over a 13% gain. Now this may not make you wealthy, but once again, it beats digging ditches! I still like $BAC, and the majority of the major banks long term. If you don't want to pick one, you can always look into buying the $XLF (financial ETF) which will diversify you across the entire sector. My argument remains the same as above, that banks will outperform in a rising interest rate environment. It has taken the Fed a lot longer than most anticipated to kick start the rate raising cycle, but it is inevitable & should happen by the end of the year.
7/8/17 Update - The arrow in the weekly chart above designates the last update I had on 7/11/15. Bank of America is now trading at $24.86 or ~49% above where it was 2 years ago. Not too shabby. I'm still bullish long term on the major banks overall & believe they still have a good deal of upside; however, I am beginning to get concerned with the overall market. The broader market is now trading at the 2nd highest valuation in history. Coupled with the fact that the US Economy is overdue for a recession, I'm starting to get a little more cautious with my long term calls. That said, until the bubble(s) pop it's best to ignore all the noise and roll with the punches. The major US banks remain one of the better looking long term investments, but if the broader market experiences a prolonged correction then it will not take any prisoners.
During the day I will tweet chart/position updates to my followers on both Twitter and Stocktwits (NCInvestor). Please follow me @NCInvestor.
Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in NC Investor Blog is often opinionated and should be considered for informational purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence.
Thanks for visiting NC Investor Blog.
Investor, Trader, Attorney, Sports Fanatic (Hokies, Tarheels & Panthers), Dog Lover, Loving Husband & Father.
No comments:
Post a Comment