My Thoughts On The Crypto Currency Crash Before Christmas

I was very lucky with my portfolio rebalancing decision 5 days ago when I sold my BTC at 20.000 USD. I thought that I have to stay responsible with my portfolio and keep the capital involvement in crypto currencies at a very low level. So I reopened a trade at a fraction of the original capital invested into BTC and look at the prices of BTC today. BTC crashed down to 13.000 USD. The only person I know who was more lucky than me recently was my friend I learned at Etoro, Gordon Roth. He was invested into Ripple and shot up in his performance like a rocket in the last few days. After his dramatic success with Ripple he immediately attracted some copiers and lots of followers at Etoro which tells me a whole lot of a story. It looks like people hunger more and more for the fast and even faster success to become rich over night. I found an even more extreme example with aromesa7 who is copied by my friend Gordon Roth. He has achieved 3218.39% in one year and currently holds only crypto currencies in his portfolio. To me that is playing a casino game like the daily lottery. It is pure speculation and has nothing to do with the investment principles I learned from the books of Benjamin Graham.

Why I am not buying BTC right now

I decided 5 days ago to rebalance the portfolio for less BTC. At 13.000 USD there would be a great chance to buy lower more into BTC right now. However I will not buy any additional BTC right now because I am still unsure if the whole crypto currency market is a similar bubble like the tulip fever of the 17th century. I currently think that BTC is mainly used for pure speculation at the moment and not for daily payments as a currency. As such it is more a speculative commodity than a currency. I do think however that the blockchain technology will become interesting for the broader market. Perhaps there will be a blockchain technology based currency that is regulated and locked to the EUR or USD Prices so it serves the purpose of daily payments better. With the current volatility in the crypto currencies I do not think that crypto currencies will be used for the purpose of daily payments. If we can learn one thing from the tulip fever and that crash of the 17th century then it will be the following. If the prices go up just because they went up in the past they can similarily continue to go down because they went down so fast. In my view there is no underlying value because BTC cannot be used for daily purchases in the current unregulated price situation.

Because of these reasons I am currently very satisfied with my small trade into BTC that is down 34,91% from the point where I repurchased a smaller amount of BTC to rebalance the portfolio. If BTC goes back up to 20.000 the rally can continue and I will take some profits at 50.000 USD and rebalance the portfolio again. If the tulip fever of the current century has become BTC and BTC continues to decline I did not loose a lot of money because of the portfolio rebalancing.

However I would not sell BTC at current prices with a loss that's for sure! I either loose the whole capital on BTC and it becomes the tulip fever crash of our century or it goes back up again. With a small amount of capital allocation towards the crypto currencies that is the way I look at BTC and other crypto currencies like ETHEREUM at the moment. 

With these final thoughts on what is going on in the crypto currency markets I wish you all the best, Merry Christmas and a Happy New Year!