Bitcoin – Plan Your Exit Strategy Now – Maybe With Gold

Bitcoin - Plan Your Exit Strategy Now - Maybe With Gold

Made money in bitcoin? Well done. Don’t wait until the stampede starts. Here’s what you must do now.

by Dominic Frisby in Money Week

So there I was on Sunday afternoon, doing what it is one does on a Sunday – very little in my case – and a notification comes up on my phone:

“Bitcoin rises over 10% to $11,800”.


Bitcoin in USD (1 Year). Source: CoinDesk

On a Sunday. When every other market is closed.

It’s bad enough that bitcoin is making every other market in the world look like a dirge when they’re open. But to carry on rising even when they’re closed!

What is happening is almost incredible…

I wrote the book on bitcoin – I understand why it’s a big deal. But…

I get all the bitcoin arguments.

It’s the money of the future. There’s a finite supply in the face of increasing demand, a demand which is global. The technology goes far beyond alternative cash systems. This is about the “S curve” adoption of a new tech – like TVs or mobile phones – a tech, which also happens to be money.

I get all of that. I wrote a book about it, the first by a recognised publisher.

All that stuff is true and more besides. The arguments for bitcoin get stronger and stronger as the narrative of the bull market evolves.

But this is now a mania. All the messages I’m getting about it – and having written that book a lot of people contact me with questions – are not from people who are interested in the new tech.

They’re from people who want in on what is proving to be the most epic bull market in history. They do not want to miss out. FOMO is rife.

One arrived just as I was writing this article. The title read “Urgent Advice Please!” Note the exclamation mark.

It was from an old school friend.

Want to go into Bitcoin big right now. I have started small using Coinbase. What are your views on this and what exchange(s) would you recommend?

Many thanks and hope to catch up properly before long!

This guy is intelligent, experienced financier with 20 years experience in the private banking department at HSBC in Zurich, now working freelance in other fields. Is now, with the mania this evolved, the time to be going big? He clearly thinks so. How much research has he done?

I’m not calling the top. There is a bubble of people calling bitcoin a bubble. Normally bubbles end when the shoe shine boy gets in. This one is the other way round. The shoe shine boys got in early. This one will pop when the institutions get in.

That’s the remarkable reversed psychology of this story. The idea of an alternative money system, a money without governments, appealed first to anyone on the outside. It was especially appealing to those for whom, perhaps, life hadn’t worked out quite as well as they hoped (which is, let’s face it, most of us). Anyone who feels even slightly overlooked, alienated, left out or discontent.

Playing this bull market, a bit like voting for Brexit or even Trump, is a bit like getting one back. There was a similar trait common amongst gold bugs in that bull market. “Haha! Screw you, establishment! Your money system’s going to die. We are the new millionaires!” The more bitcoin has risen, the more this narrative has taken hold.

The mania has caught the zeitgeist of dissatisfaction that is currently sweeping the world.

I’ve made the bullish case for bitcoin many times. I’ve shown how bitcoin could go to $100,000. But I’m no permabull either (although ultimately perma-bullish buy and hold, or HODL as it’s known in bitcoin circles, has been the best investment strategy so far – it always is in bull markets).

In my book back in 2014, I said get familiar with the tech, try it out with small amounts of money, but as an investment the timing is not quite right.

I was right with the call. Bitcoin was in a bear market. When I was writing the book, bitcoin was trading above $500, the bear market took it below $200 a coin. In spring 2016, with bitcoin around $450, I said it’s time to buy.

I’ve made both bullish and bearish cases at different times. But there is something about now – and maybe it’s that email from my friend that did it – that has made me start thinking about what happens when this mania ends.

Plan your exit strategy now. Don’t wait until the stampede starts

When manias end, what is currently euphoria turns to pain. Another person emailed yesterday happily saying they’ve made $2,000 in two weeks, smiley face. How will they feel when they start losing $2,000 in two weeks?

Such pain will be spread among the hordes – and I mean hordes – of inexperienced investors who have only recently got into Bitcoin. Many of these people are kids who've never lived through bear markets before. The pain will turn to panic.

The Achilles heel in the whole crypto infrastructure is the point of transfer between fiat and crypto – getting your money in and getting it out. It's got better, but it is still not easy. One reason so many people have not invested as much as they would have liked has been the simple practical difficulty of actually buying the coins in the first place.

Selling them for fiat, when everybody is trying to do the same thing, and getting your money out, will be harder.
The deeper you're into crypto – perhaps you're into monero or dash or some other altcoin – the harder it will be to get out into fiat. The diehards will tell you you never need to leave crypto. That may be so, but many will not feel the same way in a bear market. If there is a rush into the arms of fiat, the point of transfer from crypto to fiat is where the issues are going to be.

At present there is a plethora of buyers. There won't be when sentiment changes. When Bitcoin comes down, they will all come down. The sector moves as one. The very liquidity issues that have driven the Bitcoin price so high so quickly could work in reverse.

So if you are long Bitcoin or any other crypto, my first bit of advice is this: sell a small amount now. Practise selling. Identify the obstacles in moving your money from crypto to fiat, and learn how to deal with them.
Have your escape strategy clearly mapped out so that, when there is a rush for the exit – and there will be one day – you know exactly what you're doing and you won't get caught out.

When liquidity dries up and the tide goes out, that's the point at which you realise who has been swimming naked. That's when the scams emerge, the frauds, the excessive debt and margin.

Do the exchanges you use have the wherewithal to deal with an 80% crash (there have been five of these in Bitcoin's history) and the overwhelming traffic that accompanies a stampede for the exit? Which of these ICOs and altcoins are the genuine article and which are just hype and BS? Which are the ones people will hold onto and which will they drop?

These are the questions you need to be asking now, during the euphoria stage of a bull market. Like I say, I'm not calling the top. I'm saying prepare for the top.

What happens in the aftermath of a bubble such as this bursting? A lot of pain, a lot of recrimination, a lot of new demands for new laws and regulations to make it impossible for such a thing to happen again.

And maybe that forgotten asset will start to look shiny and attractive once again: gold.

Read the full article by Dominic Frisby on MoneyWeek here

News and Commentary

Gold little changed amid firm dollar (Reuters.com)

Bitcoin Futures Trading Brings Crypto Into Mainstream (Reuters.com)

Bitcoin exchange warns customers of system collapse if prices crash (CityAM.com)

Investors Told to Brace for Steepest Rate Hikes Since 2006 (Bloomberg.com)

Malaysia 'ready' to send military to Jerusalem if needed (CNBC.com)

US forces could potentially lose next war to Russia or China, warns sobering Rand report (CNBC.com)

Gold’s Time Is Nigh (Bloomberg.com)

Could gold do a bitcoin and hit $10,000 an ounce in 2018? (TheNational.ae)

Finally, Gold Speculators Start To Bail, Setting Up A Big Q1 2018 (DollarCollapse.com)

Saxo Bank predicts Bitcoin at $60,000 before collapse to $1,000 in 2018 (CryptoCoinsNews.com)

Bitcoin Futures Trading Brings Crypto Into Mainstream (Bloomberg.com)

Gold Prices (LBMA AM)

11 Dec: USD 1,251.40, GBP 935.80 & EUR 1,061.19 per ounce
08 Dec: USD 1,245.85, GBP 924.42 & EUR 1,061.09 per ounce
07 Dec: USD 1,256.80, GBP 937.57 & EUR 1,066.77 per ounce
06 Dec: USD 1,268.55, GBP 948.37 & EUR 1,072.31 per ounce
05 Dec: USD 1,275.90, GBP 950.29 & EUR 1,075.71 per ounce
04 Dec: USD 1,279.10, GBP 952.67 & EUR 1,079.43 per ounce
01 Dec: USD 1,277.25, GBP 946.57 & EUR 1,072.51 per ounce

Silver Prices (LBMA)

11 Dec: USD 15.84, GBP 11.84 & EUR 13.43 per ounce
08 Dec: USD 15.83, GBP 11.76 & EUR 13.48 per ounce
07 Dec: USD 15.91, GBP 11.94 & EUR 13.49 per ounce
06 Dec: USD 16.12, GBP 12.06 & EUR 13.64 per ounce
05 Dec: USD 16.29, GBP 12.14 & EUR 13.72 per ounce
04 Dec: USD 16.33, GBP 12.09 & EUR 13.77 per ounce
01 Dec: USD 16.42, GBP 12.16 & EUR 13.80 per ounce


Recent Market Updates

- Gold Demand Increases Along with Uncertainty Thanks to Trump, Brexit and North Korea
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- Geopolitical Risk Highest “In Four Decades” – Gold Demand in Germany and Globally to Remain Robust

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

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Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

Comments

BobEore Mon, 12/11/2017 - 08:07 Permalink

Gold / Gal / Two Fresh Mounts/
No assembly required. It's all ya need for the 'exit strategy' of champions.

(now sit back an watch the gender-bent weirdos of zheeplelandia/gulagistan make hay with (category three)!!

Dat's OK. My guys will EAT your hay...
and WE will eat your porridge.... crypto-bugs.

Ol-skool...and luvin it~!

PumpherDumper Mon, 12/11/2017 - 11:15 Permalink

Did gold go up over 10x this past year?Do we even know the REAL amount of mined ounces of gold?We do agree that the gold spot price is easily manipulated, right?So tell me again.  Why is Gold the defacto store of wealth and don't say that it is because it has been.  Give me a real reason.

Michigander malek Mon, 12/11/2017 - 16:23 Permalink

As much as I want to believe in bullion ( I own lots) I am truly afraid for the oldbugs because this time, I think, is different. Yes gold has been money for 5,000 years. Horse's and whips were transportation for 7,000. Then came the automobile. You can have all the theoretical discussions you want, but at the end of the day, given a choice,  money is what people think it is, and today that is crypto currencies. The blockchain technology has value and I can see the argument that BTC has no intrinsic value. If this were happening during a period of sound money, I don’t think crypto’s would be performing as they are, and gold would be doing exactly what it’s doing now. But the fiat of every nation is imploding and the folks are running to cryptos as their store of wealth. So will my more than 10 and less than 60 BTC get snookered? I may, but Oldbugs currently are. That’s the difference when you view things as you wish they were rather than as what they are.

In reply to by malek

rphb The Forecast C… Mon, 12/11/2017 - 14:27 Permalink

Idiot, I really can't say anything else. Gold is a commodity for crying out loud. We don't want the price to go up, that will make it harder to get, and that will mean that a calamity have taken place, that the fiat system is collapsing, and believe me it wont be a picnic when that happens, it will be the end of the world as we know it.Life will become a lot harder and will stay that way for hundreds of years.Bitcoin on the other hand is insignificant, it is not what the entire financial market is resting upon. And what's more, it is a pyramid scheme. The entire reason for its price rise is increased demand, demand that comes only from a rising price. It offers no value, but you are going to learn that soon enogh.

In reply to by The Forecast C…

maxblockm rphb Mon, 12/11/2017 - 16:05 Permalink

1. It's not a pyramid scheme, and2. if it offers no value, why will dealers give you gold for it?Bullion for Bitcoin:https://apmex.comhttps://jmbullion.comhttps://providentmetals.comhttps://moneymetals.comhttps://amagimetals.comhttps://schiffgold.comhttps://suissegold.comhttps://veldtgold.comhttps://bullionstar.comhttps://americanbullion.com If Bitcoin is not worthless, why don't you own any?

In reply to by rphb

rphb maxblockm Mon, 12/11/2017 - 19:24 Permalink

Why do people accept dollars or any other fiat, despite them also being unbacked? Beacuse people use them, but unlike government fiat, Bitcoin don't have an element of force behind them.Look I hate that I actually have to defend something like the dollar, but while it is a very big scam, and do include elements of both pyramid and ponzi schemes it is first and foremost a racket.Bitcoin is a lot simpler in nature, it is a pure pyramid scheme.It starts with one person, codenamed: satoshi nakamotoAnd continues to the first adopters and the early adopters, and miners all the way down the pyramid to where we are now.It does not offer value, as I said, because there is nothing we can do with Bitcoin, other then to trade it. And why would anyone else want it, when all they can do with it is to trade it to someone else? Why because they expect the price to go up. And they expect the price to go up, because more and more people will want to buy and hold it as the price goes up and up. But there is nothing sustaining that price, and it is dependent on having an exponentially larger number of people wanting to buy and hold it. 

In reply to by maxblockm

Silver Savior rphb Mon, 12/11/2017 - 20:13 Permalink

I think there needs to be hard times to put everything into perspective. People have it too good and a lot of them don't even deserve it. We need to get back to the times of hunkering down and canning food in the basement to store for winter. Humble shit. So gold and silver to the moon!

In reply to by rphb

JibjeResearch Mon, 12/11/2017 - 12:47 Permalink

When Russia creates a state crypto and allow the majority of current cryptos to stake a claim..., the West economies will run for cover....I'm sure Putin can see this..., it's a harsh condition living under the USD lolz .......Imagine.. Russia having the total fund of the cryptos maket cap... around $400 billions and rising...lolz.... even China will want to relook at the crypto currency.

Slomotrainwreck Rhal Mon, 12/11/2017 - 20:13 Permalink

It seems that BTC/LTC are doing what the manipulated Gold/Silver "should" be doing by now. As long as the precious metals manipulation continues, their 2 cyber cousins will maintain a natural coincident/value ratio. When the precious metal manipulation breaks down, the tables will turn and the pairs [Gold/BTC and Silver/LTC ] will become as brothers in arms with their cyber cousins. The new family will arise. BTC & Gold will coincide and LTC/Silver will reach the natural ratio of 10:1 until the Silver market disappears whereby neither LTC nor Silver will be on the market.Makes sense to me. It is what it is.

In reply to by Rhal

Boing_Snap Mon, 12/11/2017 - 17:00 Permalink

 Bitcoin has some very real limits, and they're not that far away.The known problem of transactions is a glaring one. Currently there is a hard cap of 604 thousand transactions a day for BC. The average transaction rate is now about 420 thousand, just under 70% capacity. In terms of present day scale 420K transactions/day wouldn't even handle a city of 1 million's needs for the day.When looking at the ability to handle transaction loads systems need to be able to handle the highest load days, for retail that is the Christmas buying season. Visa handles an average of 150 million transactions a day, but is designed to handle more than 30 times that number.The scaling required to match Visa for BC is notable, BC has to scale 7500 times its currently design capacity. It really isn't a fair fight though, a centralized database behind a firewall can easily handle large amounts of transactions. A decentralized and distributed database will always have problems matching transaction rates with a centralized system. Costs per transaction will also easily land in Visa's favour.Bitcoin also has a size issue, currently the size of the blockchain is about 140 gigabites. As you divide the blockchain into ever smaller chunks you increase the size of it. So when you increase the amount in the BC price the portions of BC grow, and when you increase the amount of users you will grow exponentially the size of the blockchain.Any attempts at reducing the size only take away from security and give only marginal decreases in size. Reduction also creates a lot of issues within the community and the Segwit2 rebuff was understandable from those that want to retain the security and transparency of the blockchain. SW2 also would have caused problems for miners and their ability to continue mining.In any event the size and transaction rate issues that drove the SW2 changes to BC remain a very real issue. Keeping a copy of a blockchain on your computer will take up more of your hard drive in the coming days, and keeping an up to date version will also cost in terms of bandwidth, and the number of hoops the BC gang will have to jump through to keep this technically limited system together.Well this Christmas season I'll be keeping an eye on the transaction rate and size of the BC blockchain, it should be rather interesting.Transaction Rate https://blockchain.info/P.S.The Swamp creatures are all over crypto.Segwit2 and its attempt at reducing the security and transparency of the blockchain were fronted by the Digital Currency Group, a private company that controls the majority of the exchanges and miners of crypto. DCG is directly consulted by elitist economist Larry Summers and has a NY Fed board member on its BOD, Mullins.http://dcg.co/who-we-are/The mad rush to get some means of shorting BC might just be because of the upcoming limit.http://www.altcointoday.com/bitcoin-ethereum-vs-visa-paypal-transactions-per-second/https://www.quora.com/Bitcoin-is-limited-to-7-transactions-per-second-O…  

maxblockm Mon, 12/11/2017 - 17:24 Permalink

Also, probably a good idea to open accounts on multiple exchanges, max out your limits with a few wash trades, then request to have them increased until they are 10x higher than what you think you would need to cash out.

Silver Savior Mon, 12/11/2017 - 20:04 Permalink

You don't have to remind me. The only reason I even considered crypto was to get gains to buy gold. I sit on the fence and try to make a dollar out of 15 cents.