Crytpo Coaster

Cryptocurrencies have been on a roller coaster ride lately. I bought my first Bitcoin late last year, and have since diversified to Etherum and a couple other coins. Although I know better than to try to time the market, it’s hard to ignore when there are 20-30% single day fluctuations in either direction.

Yesterday evening, California time, Bitcoin and Etherum started tumbling, and continued a slower downward trend overnight, drooping from ~$3000 to as low as $2100 in about 48 hours. Of course, it helps to keep things in perspective.

Even so, by morning, I was sick of watching Bitcoin drop and decided I wanted to get out until things calmed down. I wasn’t the only one with that idea, and found the exchange I use was experiencing problems, presumably due to overwhelming traffic/demand. There were comments on Twitter and Reddit about a number of other exchanges facing similar issues.

I’m still long Bitcoin, and cryptocurrencies in general, and I know to expect high volatility for a long time to come. As much as I don’t believe currency can be in a bubble the same way as a stock due to there be no intrinsic value, this experience has left me thinking I’d feel a lot better with some stop-losses in place, should things turn quickly.  My typical preference is for trailing stop-losses, especially when momentum is playing such a big factor in the price, as it in Bitcoin.

Not all exchanges offer trailing stop-losses, including the one I originally used, so I spent some time today looking at a few different exchanges. It was amazing to learn how many exchanges are in existence, and I’m sure many won’t survive. Cryptocurrencies aren’t going away, and there’s a lot of potential, but it’s going be a wild ride. Prepare accordingly.

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