It should be no surprise that when I first heard of Bitcoin, which was in the middle of April 2013, I thought the news was out, move had been made or a common trader term “missed it”. And I’m sure I heard about it a lot later than the other experts who write about Bitcoin for Forex Magnates and most other people/investors for that matter. In truth, I wouldn’t have been in it at the ground floor even with a minimal investment as I had mixed feelings from the beginning.

At first, I was furious and felt left behind. Mainly because in my younger years I would have heard about this sooner through some medium or even in trader “pop-culture” conversation(s); still keeping in mind that I wouldn’t have acted upon Bitcoin but I would’ve like to have an early opinion. A colleague of mine at Tradeview Markets wrote how his delivery guy (pizza) knew about Bitcoin before he did. And I understand his feeling that the conversation was the “buy the rumor and sell the news” mentality and to date his opinion has been correct. No disrespect to the delivery guy….

Then Bitcoin became a social topic. Everyone from Warren Buffett to Mark Cuban suddenly had opinions on Bitcoin. But the anonymity of transactions was/is a driving concern for many. Additionally, I believe that the gap between what the press and mass of regular people believe and what investors believe in is a very wide one. Even as of today, the price of Bitcoin and any material news coming out has been few and far between these days, which can work both ways and I think this is a negative.

The major move of Bitcoin was between November of 2013-March of 2014. Plenty of time to trade with some decent volatility and I will equate this move to a stock, but only few, if any, make those types of moves. Only a handful of Biotechs who may have a promising cancer drug in the pipeline but have no earnings, a small float and the attention of traders and the general population make these kinds of moves and they are based on speculation and promise. I understand that. But in Bitcoin’s case the moves were with limited supply and baseless news. Case in point, if you look the greatest volatility in Bitcoin between the above time periods, there was little or no news. Just speculation…. which I LOVE when I enter a stock position.

Chinese demand for Bitcoins cooled significantly since the November ‘13 high after the Chinese government announced a crackdown. Later, China’s central bank barred banks from handling Bitcoin transactions. But many still believe this Cryto-currency market is in its infancy stages and to be quiet honest with so much publicized scrutiny and I’m sure every aspect of the Bitcoin culture has been dissected so those looking to trade or invest, it is a good sign, for lack of a better term, that the Bitcoin price is still in $300. But there needs to be a catalyst. For example, news out 12/11/14…just couple of weeks ago… Microsoft announced that they would accept Bitcoins thru Bitpay.

Now if that endorsement were to be announced last year at this time, even with the parabolic move, I believe the price of Bitcoins would be more stable and built a better base. One questions what would be a/the catalyst for a move in ANY direction? But until then, as I compared the above Bitcoin craze/move etc. to that of a promising drug in a Bio-tech/Pharmaceutical pipeline, I will wait for the next “phase of development” whether even more promising or not, then trade accordingly. But this time I am prepared and am watching. I am relegated to the fact that the big money has been made and I’m fine with that. But any position in Bitcoin at this time, in my opinion, is a gamble and risk at best. The risk may be worth the reward to take a position now for some but I look at it that the volatility is so great that there is almost as much money to be made by trading Bitcoins instead of investing in Bitcoins.

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michael_venezia_2
MICHAEL VENEZIA
Trader
mvenezia@tradeviewforex.com