Monday, July 31, 2017

Beware The Blowoff In CryptoCurrencies 7-31-17

Currently there is much buzz regarding the major gains in cryptocurrencies like Bitcoin and Ethereum.  I have noted a significant email buzz and ad buzz recently marketing the hype and gains of these digital currencies.

In short, please understand that by the time this is occurring, the easy money has been made, and the unaware last buyers/suckers are going to be drawn in.

I have no expertise in this area of cryptocurrencies, so my comment here is not in regard to that.  My comment is in regard to the herd mentality and recognition of what is occurring on a investment/trading psychology level.

I recall back in 2011 as gold was really nearing its peak, that I began to see a quick change an uptick in the marketing of gold buying.  I specifically remember one video marketing piece hit my inbox laying out about how to buy physical gold, and all this stuff with the idea that you can do this and make money.

And I remember seeing it and making some commentary of it in a post or video here on the blog with the suggestion that this alone, despite all indicators and technical analysis, was a great sign that the bull market was peaking.  And in fact the timing was great, as the bull market was right near its peak in retrospect.

And currently, the change and uptick in the cryptocurrency marketing I think is a similar level of mass psychology at work, and shows a trend near its end and bubble ready to pop.

In fact, in the years that I have been following markets and the few "bubbles" I have seen in oil, gold, commodities, housing, and (more recently I think in bonds), it seems like the "public", which may well include you and me, often become aware of and take action in the market AFTER the peak already occurs.  So they/we are not just late with little gains left, we don't even get in until all the gains have been made, and there is only down to go.

So just keep this post in mind if you are part of the investment crowd and are seeing or continue to see emails and headlines hit you about the digital currencies.

Probably better to wait and watch this deflate for a couple years, and then consider whether to now buy low, or not.


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