Chart Of The Day: How To Trade Bitcoin After $10,000

 | Nov 29, 2017 06:56AM ET


By Pinchas Cohenh2 Bitcoin – Digital Gold or "Creeptocurrency"?/h2

Bitcoin cut through $10,000 for the first time, like a knife through hot butter.

In the early 2000s, forex became “the next big thing.” In the 2010s, binary options became “the next big thing,” and now cryptocurrencies are “the next big thing.”

One glaring warning sign of a bubble is data available with Google Trends demonstrating a world-wide search for “buy Bitcoin with credit card.” A market axiom is that when the non-professional public participates in a market, it’s topping out. When people are buying past their means to max out their credit cards because they bank on making a quick profit before the month is out, it’s the cherry on top, from a contrarian perspective.

h2 Does Bitcoin Have More Room To Climb?/h2

The public stereotypically joins a market because of all the profits it has already made its investors. Non-professionals are considerate enough to come in and give their hard-earned cash as profit to early investors, letting them cash out.

Bitcoin has gained 900 percent this year, making it the poster boy for markets that attract the public after they have already climbed.

There are those, however, who believe that Bitcoin has a lot more room to climb. Fund manager Michael Novograts – whose 20 percent network in cryptocurrencies has him put his money where his mouth is – sees the possibility for Bitcoin to reach $40,000 by the end of 2018. Although past results are not indicative of future performance, he was the man who forecast Bitcoin’s rise to $10,000. Credit should be given where credit is due, but we still don’t recommend buying Bitcoin on credit.