Bitcoin is currently 60% of my portfolio with an average appreciation of 90%, and cost basis of 7,000. This is both awesome and scary. I made a call in March to start buying when I noticed the digital mentions of Bitcoin starting to creep up again, and started buying and then aggressively buying.
I have a lot of money on the line here, and deciding when and if to sell will likely be some of the most important financial decisions dollar wise I have ever made.
The thesis is pretty simple. I believe in the utility that bitcoin brings to the world, especially in emerging economies. I believe it is fairly likely Bitcoin will will remain as the gold standard of cryptocurrencies. I believe there is a chance for Bitcoin to be become digital gold, which means by compassion to gold, it could be worth many multiples of what it is today.
And that's it. Besides gold which is an iffy compassion, there is no real sense of value, which means you are only really left with trend to try to predict where Bitcoin might be going.
Right now the trend looks pretty strong, the question is how can I tell if we are in another speculative bubble? (of course there is always a certain amount of speculation with Bitcoin)
I believe the best way to measure the madness is with digital mentions.
I offer you a few charts from data platform Sentieo which aggregates google, social, and Alexa mentions.
90 Day Moving Average
30 Day Moving Average
7 Day Moving Average
As you can see, it is quite remarkable how closely Bitcoin's price is correlated with digital mentions. It is also interesting to see that this rally has less activity than the previous rally, suggesting that there is likely a stronger base of holders today than their was in 2017. This likely means Bitcoin may have more room to run before we get to euphoric levels.
I think it is probably best to use the the 30 or 7 day moving average. If we start getting toward 2017 levels, I am going to consider selling off some of my position. Also if we see any significant spikes on the daily chart, like December 2017, then it may be time to sell.
I hope you find this helpful. Be safe out there!