Experiencing these cryptos in the last few months has been quit a ride. It's like nothing I have ever experienced before (and I love playing in volatile markets). About a week or two ago, I was feeling a bit nervous on the "too far, too fast" and all the mainstream attention that bitcoin and even Eth was getting. That coupled with the problems the exchanges were having and the general sense you get at times that the exits in this world are very tight had me feeling very edgy. When I get this feeling in the stock market whether its gold, oil, housing, or what ever... I generally calm my nerves by covering myself with a small short of the industry (usually 10-15%). So I set out to try and figure out how to cover bets here and discovered a few options. But before I could execute the market got slammed, and it was too late. I did however liquidate some positions prior and was sitting on a workable cash position (25%). Everything seemed to go down at once, zero shelter! My experience as a trader made me take notice of this, and tattoo it in my brain. For in the near future, greed will bubble back in......Then I watched Bitcoin hit a concrete floor at around 2000USD, and it shot up from there.....Strong demand! I bought in right there, as I have done many times. Later that week Bitcoin returned and I reinforced to myself why cash is king. I always have to remind myself when things get hot, take a little cream off the top for a rainy day!
So now everyone is calling this a bubble, and it could be, there are many risks here, as there are everywhere! But for now I'm not buying into the bubble theory. It has not gotten even close to mainstream. In the last week several people I know to be risk takers are just starting to ask questions about it. In 2000, my barber was telling me about all the great tech stocks to buy, and in 2005 my Aunt was mortgaging house 1 and 2, to buy number 3. And nobody was talking "bubble".
Generally, bubbles surprise people. People get extremely greedy and do outlandish things. Every bubble I have seen, I have had an inclination way too early and I've missed a lot of the opportunity in the 3rd and 4th legs.
A few things I see here that intrigue me:
Most Americans don't understand cryptos (I'd guess 90%??)
Most Amercians don't realize how much Asia likes cryptos and the wealth that resides in Asia.
The fear of missing out factor has not shown up here at all in terms of large numbers (tens of millions of people)
Corporate dollars have struggled to find an avenue in.
Be smart, diversify, raise cash when you can, to take advantage of opportunities. I believe we are in the early innings of a larger trend.