So Bitcoin is worth over $6500? Yes, that was the price traders are bidding for Bitcoin at the time this article was written.
Fundamental oriented stock traders tend to use ratios like Price to Book, Price to Sales Price to Earnings or Price to Earnings to value stocks. If you attempt to apply any of the above mentioned methods, you will quickly realize that you are missing values to insert to your formula, because assets, earnings, cash-flow don’t exist. So, basically, you’re out of luck.
But you will argue that Bitcoin is not a security but a currency so what if we analyze it as a currency. Current accounts of sovereigns, balance of payments interest rate differentials are all methods we read about and yet they are all useless here.
Next up to bat would of course be the popular behavioral economics. So we have to ask does bitcoin have ‘utility’, that abstract concept that gives an good or asset a value? This is subjective.
We submit to you that since there is no means by which to value bitcoin, or any other crypto currency, it is possibly the most purely sentiment driven market in existence. While investors may give subjective reasons for its value, there is no valuation model that is widely accepted. There are analysts attempting to do this, but even if accepted, would they work? We don’t think so.
While there is currently no objective means of valuing crypto currencies, there are no shortage people calling for bubble bursts and of course claims that the crypto mania is akin to the tulip mania of 1636-1637. Furthermore there is no shortage of of analysts saying that bitcoin will one day reach astronomical values. John MacAfee claims it will reach US$500,000 or he’ll make a spectacle of himself on TV. Yet he uses subjective arguments to make his claims.
How is it possible for one to trade something purely sentiment driven, with no means to valuation? FM Wealth Management wave analysis, coupled with our Fibonacci method, is proving reliable in determining price ranges, targets and supports for sentiment driven markets.
We start by looking at the history of bitcoin and its boom and bust cycles. We’ve ‘color coded’ past corrections with red, signifying 80%+ price corrections. Orange signifies 50-79% corrections, and yellow are corrections that are 25-49%.
If history is a guide, those people calling for Bitcoin to reach six or even seven figures in the future must expect brutal corrections. In fact the corrections in the Bitcoin market makes a stock market correction look like a walk in the park. On the other side, those calling for the bitcoin bubble to burst should not make the assumption that even if bitcoin gets a 90% haircut it is the beginning of its demise.
Booms and busts cycles equity markets are normal, but those in crypto can be extremely volatile, and you should expect it to happen again. The real question is when? The retail investor would do well to avoid these large drops, which can sometimes be prolonged. Likewise, they would do well to take profit at times of high risk to lock in gains.
Fundamental oriented stock traders tend to use ratios like Price to Book, Price to Sales Price to Earnings or Price to Earnings to value stocks. If you attempt to apply any of the above mentioned methods, you will quickly realize that you are missing values to insert to your formula, because assets, earnings, cash-flow don’t exist. So, basically, you’re out of luck.
But you will argue that Bitcoin is not a security but a currency so what if we analyze it as a currency. Current accounts of sovereigns, balance of payments interest rate differentials are all methods we read about and yet they are all useless here.
Next up to bat would of course be the popular behavioral economics. So we have to ask does bitcoin have ‘utility’, that abstract concept that gives an good or asset a value? This is subjective.
We submit to you that since there is no means by which to value bitcoin, or any other crypto currency, it is possibly the most purely sentiment driven market in existence. While investors may give subjective reasons for its value, there is no valuation model that is widely accepted. There are analysts attempting to do this, but even if accepted, would they work? We don’t think so.
While there is currently no objective means of valuing crypto currencies, there are no shortage people calling for bubble bursts and of course claims that the crypto mania is akin to the tulip mania of 1636-1637. Furthermore there is no shortage of of analysts saying that bitcoin will one day reach astronomical values. John MacAfee claims it will reach US$500,000 or he’ll make a spectacle of himself on TV. Yet he uses subjective arguments to make his claims.
How is it possible for one to trade something purely sentiment driven, with no means to valuation? FM Wealth Management wave analysis, coupled with our Fibonacci method, is proving reliable in determining price ranges, targets and supports for sentiment driven markets.
We start by looking at the history of bitcoin and its boom and bust cycles. We’ve ‘color coded’ past corrections with red, signifying 80%+ price corrections. Orange signifies 50-79% corrections, and yellow are corrections that are 25-49%.
If history is a guide, those people calling for Bitcoin to reach six or even seven figures in the future must expect brutal corrections. In fact the corrections in the Bitcoin market makes a stock market correction look like a walk in the park. On the other side, those calling for the bitcoin bubble to burst should not make the assumption that even if bitcoin gets a 90% haircut it is the beginning of its demise.
Booms and busts cycles equity markets are normal, but those in crypto can be extremely volatile, and you should expect it to happen again. The real question is when? The retail investor would do well to avoid these large drops, which can sometimes be prolonged. Likewise, they would do well to take profit at times of high risk to lock in gains.
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