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Bitcoin breaks $10,000

February 12, 2020

Bitcoin . Latest $10,320.

Subscribers will know that I am quite a fan of bitcoin although I am not sure how well it sits in a growth share portfolio. The fundamentals are a mystery except in two crucial respects. There is a strictly limited supply and no rational basis for saying the coins are cheap or dear. Fans think the price has hardly begun its climb; sceptics think the whole thing is an insane bubble.

For me bitcoin is a pure chart play, a number that is volatile but also seems to go up and down in longish swings and which could go much higher given the finite supply, huge global liquidity and the fact that bitcoin is very much a global phenomenon with buyers and sellers in every continent (well, maybe not Antartica).

A simple strategy for bitcoin could be to take a position while the moving averages are rising and step aside when they are falling. This would have been hugely profitable in the past though as we know the past is a very uncertain guide to the future. Nevertheless it is worth noting that after a period of decline the moving averages look to be heading higher, at least the ones I use and I use them because they often give good signals.

So, there is a respectable case, based on the price action, for taking a position in bitcoin at the current price. If t you do there is no point in setting a tight stop less. You need to do it as though you mean it and give the price a chance to deliver on the promise of the chart. At the moment they are wobbling around $10,350 and because they trade 24 hours a day there is plenty of movement. You can wake up significantly richer or poorer; if you like a bit of a gamble, bitcoin is perfect and at least with the charts you can base your approach on something vaguely rational rather than pure emotion.

What I like about bitcoin apart from the fact that the charts do seem to help is the ridiculously open-ended potential. They are a speculators’ dream so owning say one coin or less (on IG you can now place a bet on 0.26pc of a coin) can be a fun think to do; like a bet on a horse but with a much better chance of winning.

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