Unless you're completely disconnected from reality, you've probably heard about bitcoin and the crypto currency craze by now.
To be honest, I'm not an expert on the underlying blockchain technology associated with it all. I wouldn't even be able to explain it in layman's terms. I will say that bitcoin's price action over the last year nonetheless spurs reflection, as many who once dismissed it and other cryptos are now piling into them in droves. In fact, futures trading for bitcoin launches tonight.
Bitcoin and other cryptos are traded on multiple exchanges. This is not a sophisticated marketplace akin to stocks, so prices will vary from exchange to exchange. It's established across exchanges though that bitcoin's price has surpassed the $10,000 level now and is hovering around $15,000 at the time of this blog post.
The monthly chart above clearly shows the meteoric rise of this speculative asset. When the price of something explodes from under $1000 to over $10,000 in less than a year, people take notice. Retail traders, professional investors, media outlets, hedge fund managers - you name it, the crypto craze has caught the attention of investing and trading communities worldwide.
After its initial run in with the $1000 level at the end of 2013, bitcoin prices retraced considerably and consolidated for several years. It wasn't until February 2017 that bitcoin managed to close above $1000 again on the monthly time frame. The coinciding rise in the ADX line coupled with the fact that +DMI has been above -DMI since mid-2015 essentially signaled a market trending higher and domineered by the bulls.
Bitcoin went on to achieve three consecutive monthly closes above the $1000 level before shooting up over $2000 in May 2017. It again achieved three consecutive monthly closes above the $2000 level before rising to test the $5000 level in August 2017. It finally closed above $5000 on the monthly chart in October 2017 and has since sliced through the $10,000 level like a knife through butter.
And here we find ourselves today, with bitcoin trading around $15,000 leading up to the launch of its corresponding futures market. I can't tell you what the future holds for it or any other crypto currency. But I can certainly tell you this: price action is to be respected in any scenario when it comes to trading and it is no surprise that bitcoin has drawn global interest.
Is bitcoin speculative? Of course it is. Yet we also live in a day and age where millennial market enthusiasts have witnessed stocks like GoPro and Twitter collapse in value following their Wall Street endorsed IPOs. With cryptos, there is no unhinged stock based compensation to dilute holders while enriching executives. They trade 24/7 and as long as one understands that partaking in them is akin to the Wild Wild West of investing, allocations in them should reflect that reality relative to one's financial situation and personal risk appetite.