From all-time high prices to yet more all-time highs, keeping in tune with the future is very important - especially if you have skin in the game
Hopping from high to high - how to spot the top
Bitcoin is blowing through records with its 1900$ + USD price. With this new crazy high (what would have been called crazy just years ago) spotting the "top" is going to be hard. Knowing when to cash out into another currency (doesn't have to be USD) is the million dollar question. This said, keep in mind that today, no matter when you bought your Bitcoin, you are in the green. Unless you chickened out and sold at the bottom, you have made money in USD.
Bitcoin is at a new high. It will retrace somewhere. Just like it has done time and time again in the past; each explosion reaching yet another all-time high. How high will it get? That is something I don't regard a topic worth debating deeply today. The next "all time high" will probably be somewhere in a range that evokes similar emotions as 1200$ did to those intimate with the technology back in 2013. This said, an argument can be made about a different, more educated, market landscape today - less willing to sink too deeply too quickly.
The mainstream media is going to be an interesting indicator. When they start blabbing about altcoins all over CNN and FOX - college kids and their 4000% returns - that is when the unsustainable FOMO kicks in. When your grandmother asks you about Bitcoin again, this time mentioning these "altcoins" too, that might be a good indication of some trouble in the water. Not that the ultimate goal of your grandma and Bitcoin is not a priority, this is going to take a few years; not this time around I'd say.
When the price gets nuts
How high is nuts? Well, looking at history, this bull run could very well take us to prices that are tremendously unstable for the current market. Just like 1200$ was outrageous for 2013, the next all-time high is going to be just as crazy. Tens of thousands would not surprise me in the short term.
When we get there - the elusive "nuts high" prices - there will be volatility. There will be times where it looks like it is going to take off again and again; with the irrationality of the market, there is going to be a solid month of downtrend before the new peak is established.
This new low, after all the dust settles, will most likely be modest compared with the out of proportion high. It will almost certainly be higher than the last bottom of ~200$. I would expect somewhere in the 500-2000 dollar range is a reasonable assertion today. Who really knows...
What can you do?
Okay, Joe Shmoe. What can I do? Well, I would recommend against trading. I don't think I can beat this irrational market, try at your own risk. Only play with what you are willing to loose yadda yadda yadda. In the long run, I truly feel that blockchains will solve many problems - there will be many casualties along the way to mass adoption.
Cost dollar averaging is the way to go. If you use this strategy, had used this strategy, with Bitcoin... there is not much better you'd be able to do. See the Wikipedia page for more info on this method.
-Kyle
