Sirwin
Sirwin

If I own 100 Ethereum, should I hold until the price of ether prices goes to $10,000?

By TMod_Marco | TMod_Marco | 18 Dec 2020


This is an interesting question I spotted elsewhere, and my answer would be: No. I would not wait and hold until the price of ether goes to $10,000 each. However, it partially depends on your investing strategy, mindset and financial situation.

Why would I not hold 100 ETH all the way until $10,000? Or better said, why is profit taking important?

Taking profits it as important as placing a stop-loss on your positions. The take-profit and stop-loss orders are a part of your reward:risk ratio, which determines (together with your total portfolio size) how much money you should put in a position.

Trading psychology is incredibly interesting, it’s especially interesting to see how people deal with positions that are underwater (refusing to sell something that’s currently at a loss, even when better opportunities might appear and taking a loss is better). As well as it’s interesting to see how winning positions involve fear of missing out, greed and impatience.

That said, it’s important to have a plan in advance you stick to to reduce the chances of emotional trading. If you bought ETH at $80 and manage to hold it without selling anything until $10,000 per ETH, kudos to you but most people do not have the steel balls to do so.

What would I do in this situation?

Your game plan should be based on your personal financial situation and knowledge. I’m very involved in the cryptocurrency space, follow the markets on a daily basis and follow the Ethereum developments.

I’d in this case look at historic price action and expect future valuations.

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Looking at the (very simply drawn) weekly chart, I would take (10%) profits at the previous resistance levels: $732, $784, $905, $1118, $1224, $1365.

Because I’m a long-term believer of ETH I would want to keep part of my holdings long-term. I would sell 10 ETH at each of these price points giving me an average price of $1021 per ETH. Assuming I bought below $500, this would enable me to take my initial investment out and some profit.

The 40 ETH I still hold would basically be a ‘free’ long-term position, which I would would be able to hold as a ‘moonbag’ (gamble) towards an ETH price of $10,000 without getting frustrated or anxious about possibly losing money or losing out on profits.

The reason I would play it this way is because there are no guarantees each cryptocurrency maintains value over a long time period. I believe in ETH/Ethereum, but also believe there’ll be better R:R opportunities which I’d then invest in with the partial profits I took along the way to further grow my portfolio.

What would you do? Let me know in the comments :)

This post is for informative purposes only, I’m not a financial advisor and I currently do have a position in ETH. I have not been paid for this post, this post is out of personal interest. If you enjoy reading my content, then consider following me on Twitter.

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TMod_Marco
TMod_Marco

@TMod_Marco on Twitter < Follow me. Dutch blockchain, marketing & strategy consultant. Head of Community at Presearch.org.


TMod_Marco
TMod_Marco

https://www.quora.com/profile/Marco-Van-den-Heuvel

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