Market Analysis

You Might Be Near a Crypto-Top If …

Signs of the bitpocalypse?

For decorative purposes only. Photo by Elisabeth Dellinger.

Holy booming bitcoin, Batman! As the cryptocurrency flirts with $10,000 (that’s ¥1 million if you’re in Japan), we bring you the latest bubble chatter. No, we aren’t calling a peak—we aren’t market timers or commodity forecasters (or cryptocommodity forecasters). But it sure seems like we’re seeing a modern version of Joe Kennedy’s infamous “shoeshine boys” and Hetty Green’s “good-looking bankers.” So, in proper Jeff Foxworthy style, here are all the latest signs that bitcoin, while perhaps not peaking, is sheer speculation at this point.

If you don’t know what futures are but are sure you want to buy bitcoin ones, you might be near a top.

If you’ve quit your job to trade bitcoin and other cryptocurrencies full-time, you might be near a top.

If issues of new cryptocurrencies—aka initial coin offerings—have jumped 3,600% in less than a year, you might be near a top.

If you’re happy to buy bitcoin at a P/E of 708—even as cryptocurrency supply is skyrocketing—you might be near a top.[i]

If a guy accidentally steals and deletes $300 million in ether (a bitcoin rival), but people keep buying anyway, you might be near a top.

If everyone knows initial coin offerings are really an end-run around securities laws, but people keep buying anyway, you might be near a top.

If hip-hoppers, Bjork and Paris Hilton are driving the bandwagon, you might be near a top.

If retail investors have an epic case of bitcoin FOMO, you might be near a top.

If bitcoin soars after a hackers stole $31 million worth of tokens from Tether (a crypto peer)—which also boasted its tokens were “dollar-backed” while admitting in the fine print that they “were neither money, nor stored value, nor currency” and didn’t guarantee redemption—you might be near a top.

If speculators happily buy $370,000 worth of new cryptocurrency from a start-up so flimsy it could literally disappear off the face of the earth days later, you might be near a top.

If “the average investor” says they won’t sell bitcoin until it rises thirtyfold, you might be near a top.

If bitcoin jumps 11% because a mobile payments system is testing support for people who want to buy stuff in bitcoin (which they’d probably do only if it stops zooming), you might be near a top.

If one bitcoin trading platform adds 100,000 users in a single day over Thanksgiving weekend (no doubt seeing dollar signs after hot tips from young family members), you might be near a top. 

If major financial publications spill a few hundred words arguing bitcoin is “safe” even though it is quite hackable and capable of falling 30% in a single day, you might be near a top.

If people are making new economy-type arguments about bitcoin, you might be near a top.

If you’re desperate to buy bitcoin in your IRA, you might be near a top.

If “buy bitcoin with credit card” is trending on Google, you might be near a top.

Or not! Markets are fickle, funny things. Prices always rise until they don’t. In a bubble, the breaking point is often just as illogical as the run up. That’s the problem, though. If something isn’t rising for fundamental reasons, then anything can make it go bust, making your only timing tool sheer luck. If you’re feeling lucky, great—but maybe go to Vegas instead. There, at least you can have fun whether or not you win.[ii] Or, alternatively, you can forget gambling and invest in diversified portfolios targeting your long run goals. Boring, we know! But not nearly so speculative as guessing the future of a crypto-asset enveloped in crypto-froth.

[i] Even the “E” cited here is dodgy. It is transaction fees.

[ii] This is not investment or life advice.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.