In the past few days, Bitcoin surpassed the $12K milestone. Most people are here for the obvious buying vs selling recommandations. Things are however a bit more complicated. These decisions mainly depend on your goals: are a day trader prepared to short BTC betting on the "exhaustion" of the bull run, or do you have more long term objectives.
First let me tell you a bit about me. I'm a self-taught investor who started looking into finance these past few years. Personally, I own some BTC and some Ethereum stored on a Nexo wallet. I also own a few bleu chip stocks on Revolut. From my experience, you should never try any Financial instrument you don't understand. Personally, I have a rough idea down the encryption algorithm of how Bitcoin (and other crypto) work. Same with dividend stocks. Enough about me.
Let's look at the recent Bitcoin chart:
After the $12,4K mark, we have a failed break and we go back below the resistance level. The direct explanation for this is the weakening of the buying pressure especially among wales. From what it looks to me, this is a bullish exhaustion,ie I don't expect BTC to go up again especially for a while. In all likelihood, the price should consolidate around $10K.
So this begs the question, should I buy or sell right now? Well this is the eternal dilemma. For me it is entirely dependent on your mindset/strategy. Personally,at least for now, I look at my crypto possession as mainly gambling. To expand on that, I am physiologically prepared to a big devaluation of my crypto portfolio. In the future, if my investment portfolio becomes larger, crypto(and gold) will become a from of hedge against the fluctuations of the market.
If you want to buy BTC right now,you should think of it as a long term investment. For instance, set an arbitrary target say ($20K). For the few years to come, you should wait as much as possible. You should keep in mind that markets never follow a straight line. So you should anticipate cyclical over-corrections form the market whenever you see a bull run. These may last few weeks. I had a hard time fighting with this simple concept myself. Seeing a 20/30% dip in the few days after I bought some BTC,I was irresistibly tempted to cut my losses.
A cool trick actually used by professional traders is the 2% rule: Never trade more then say 2% or 5% or 10% of your capital at risk in any given transactions. I personally, preallocate 3 "shots" of my capital to those trades. This segmentation is comes in pretty handy especially if you loose money on the first trade. From personal drama, I can't insist enough on the benefit of introducing some arbitrary /fixed rule for trading crypto( like the 10% of you capital at risk and no more! and the exactly 3 "shots" per month for exemple). These will come in handy ex post, where the hype fueled by blogs like these. As eloquently put by Nassim Taleb, in some situations(like when BTC begins to skyrocket), more information (found in blogs on the news etc) becomes noise that you should just ignore.
Finally, let me reiterate that crypto are somewhat of wild west right now so risk are usually hidden and are substantial for beginners(myself included). Use this at you won peril. I'm eager to hear your suggestions.