There's a lot of market euphoria right now and usually that means a lot of high octane greedy traders riding on paper profits telling everybody to buy in and take a slice of the pie.
Here are some of my thoughts about the market at it's current state. Do not take it as investment advice. Just some extra things to think about.
Competition on all fronts.
Although Bitcoin is on a tear, it is not the only public chain that has real utility. There are viable alternatives that in many different use cases, are actually better than Bitcoin, those may in the near future return to form against Bitcoin as the value proposition in buying Bitcoin flips back to viable alternatives.
Micro transactions
There is a growing number of unicorn blockchains (ie market cap over 1 Billion) that offer tangible advantages over BTC.
Some of them are better suited for things that people are trying to use BTC for. One example is microtransactions - something that BTC currenty is awful at due to the exorbitant fees. For this, we have plenty of alternatives which are faster, and cheaper. LTC, IOTA and STEEM / SBD.
The situation with Bitcoin is so severe that a significant number of bitcoin holders are simply unable to transact because the fees incurred would be more than the amount they are trying to spend.
Obviously Segwit has reduced the fees some what, and with off chain scaling solutions such as lightening, the fees have some room to fall. Yet, it is not entirely clear that Bitcoin will ever be most suited for micro transactions.
Smart future
In 2014, I told my friends that Smart Contracts would be the future, and in 2017, that has become very close to the truth with projects like ETH and soon, QTUM, EOS. These blockchains offer a different value proposition in that they are able to effectively act as the middleman in a trustless way. Something that Bitcoin has difficulty (but not impossible ) achieving.
Achieving Turing Complete scripting on a decentralised set of interpreters remains challenging for production ready releases, but the compromises are to necessitate the one thing that matters most, and that is censorship resistance. This is the reason why decentralised solutions are almost always slower than their centralised counterparts, but inherently have less counter party risk or centralised attack vectors.
Limited use case as a currency
Bitcoin functions poorly as a currency. For starters, the emission schedule is defined and widely known. It has a maximum cap and therefore is deflationary by design. This means it is prone to being hoarded because the finite and ever decreasing supply means price goes up.
Of course, we know that if the price goes up tomorrow, why sell today.. and so forth. This is not ideal if we want people to spend their money and keep the eco-system revolving. In that sense, an inflationary coin such as STEEM assuming we have a constant growth of users will have a much more utilised coin. Already we can see evidence of STEEM and SBD being used for microtransactions in the Indonesian community. They have their own coffee shop community which operates completely in Steem / SBD.
Price is over extended and due for a pull back.
In later posts, I will discuss price in more detail, but I must stress that the more sentiment swings heavily in favour of one side, the more likely the market will turn. In the long run, markets don't facilitate the majority of participants to get rich. It can front run the pump on the premise or projection that future money coming in will justify the initial cost. In this case, the entire ecosystem has expanded and thus new money coming in essentially pays the exit for the 'old' money.
In any case, the price needs time to consolidate to build strong support zones. Going up by 4k in a single day leaves a lot of price gaps, all of which are untested and will likely be targets on the way down.
As a previous note, the last ATH before this recent run was not tested and so a pullback all the way back to 1.1k is still on the table. Unlikely but possible.