Was Omicron a factor in the Crypto Crash and is there a Buy Opportunity in Bitcoin?
Bitcoin was up in the 52,000 range last week and then plunged all the way down to the 42,000 range for a 20% dip in just a couple of days.
This article from Joanna Osinger and Bloomberg in Economic Times
talks about a few of the reasons for the big drop.
She talks about the spiking inflation forcing central bank to tighten policy as well as Omicron and concerns for a global economic shutdown.
We don’t have a crystal ball, however we don’t really think that is going to happen! However, we do need to wait and see about how many cases we have and how effective the vaccines seem to be against this new strain. We should know more this week and into next week.
Unlike the original Covid strain, we do think that we are much better equipped to handle this new strain. Everyone has now been through this before and we can take the lessons learned and apply them. We are also able to come out with a vaccine much quicker. Additionally, the big pharmas are saying that if the current vaccines can’t handle Omicron they can make some tweaks and have a vaccine that can in about 6 weeks or so. So that is comforting and good to know.
Another reason for the big drop in crypto is that there were some leveraged buyers that were flushed out in the crash on Saturday.
This is one of the exact reasons that leverage should not be used to buy Crytpo! It is already volatile enough on its own!
Do we think crypto will continue to go higher?
Well, there are a lot of articles and videos out there right now on why some of the top experts think crypto will continue to head higher.
Paul Todor Jones believes crypto will continue to move higher.
Bloomberg put out an article on Nov 20 talking about Paul Tudor Jones, who founded Tudor Investment Corp and manages about $11B in assets, and how he is using crypto as a hedge against inflation.
He states that inflation is the biggest threat right now to the financial markets and that as we move into a digitized world there is clearly a place for crypto and it’s winning the race against gold.
He even goes so far as to say that the inflation genie is out of the bottle which is absolute death for the traditional portfolio of 60% stocks 40% bonds. Paul also states that Jerome Powell’s monetary policy is the most inappropriate in his lifetime and he may not be the best person to run the central bank right now.
Wow! That’s an opinion!
Cathy Wood is a believer in crypto!
Cathy Wood is known for making bold predictions and she is the founder and CEO of Ark. She like to invests in market disruptors like self-driving cars and genomics. Her Ark Innovation fund has returned an average of nearly 45% annually over the past 5 years.
Cathy is very bullish in Bitcoin right now, and this article in marketwatch
talks about how she makes a case for Bitcoin reaching 500,000 by 2026.
Cathy states that if institutional investors move into Bitcoin and allocate 5% of their portfolios, the value of a Bitcoin will reach $560,000 by 2026. That is a huge return!
Will Elon Musk accept crypto as payment for Tesla’s?
On November 16th, Keith Spates from The Motley Fool wrote an article that covered some of the crypto currencies that Elon Musk owns.
Elon Musk has been a long time fan of the digital currencies. He said in an ARK Investment Podcast in 2019 that paper money is going away and that crypto is a far better way to transfer value than pieces of paper.
Tesla boughT $1.5B of Bitcoin and Elon was accepting Bitcoin as payment for his electric cars. However he discontinued it due to concerns about energy consumption (which is bull by the way!). Later he said that Tesla will likely resume accepting crypto.
What are we doing to take advantage and set ourselves up to profit from the drop in Crypto?
We utilize the Tastyworks platform for trading options as well as for purchasing crypto. It’s a great platform that is really easy to use. There are always promotions where you can get free crypto or something for free (like money!) if you open an account. Right now you can get $500 if you join Tastyworks.
https://start.tastyworks.com/#/login?referralCode=MB9KEHV4RK
The great thing about Tastyworks is that they also provide free training. Their companion website Tastytrade.com that teaches all of the options trading strategies that we use here at OptionsFinanceProfits.com. We highly recommend that you hop onto their live feed to learn about options trading basics.
Here is how to place a buy trade in crypto.
First log into the Tastyworks platform and go to the trade page. Bitcoin and Etherium are the two main digital currencies that we trade. They are both very widely held, popular and the ones that are expected to be around for the long term and not go away. So we think they are the safest bets.
Simply click on Crypto in the left center of the trade page and then make sure to pick BTC for Bitcoin or ETH for Etherium from the drop downs. Then move down the page and make sure to set to Buy and not Sell.
The Tastyworks platform is the best since it allows you to purchase a specific dollar amount.
It is really nice feature on the Tastyworks platform. The platform is super easy to use. Just enter $100 or any amount it is that you want to buy. Click the review and send, then you will hear the ding and you are done. It’s that easy!
It is also very inexpensive as it cost just 1% or a single dollar to buy $100 worth of crypto. The max trade cost is $10. In other words, if you want to buy several thousand dollars the cost from Tastyworks is just $10.
What is our long term outlook and our strategy for crypto and when are we exiting and selling?
Crypto is one of the highest volatility plays in the market right now. It has one of the biggest upside potentials for gains. When risk versus reward is factored in, we believe the associated reward is extremely high versus the potential downside risk!
So we are definitely crypto bulls right now due to many of the same factors that many of these other top stock pickers, hedge fund managers and investors refer to today. We will continue to have a portion of our aggressive portfolio (at least 10%) invested in crypto at all times right now and we will buy the dips and sell the upswings.
Do we believe that Omicron was a factor in the Crypto Crash over the weekend?
The short answer is No. We believe these were two separate unrelated events.
Is there a Buy Opportunity in Bitcoin at this time in the market?
We believe that anywhere below the $50,000 range, definitely signals a Buy Opportunity in Bitcoin.
Please do your own research as we are not investment advisors are are only letting you know what we are doing. Please let us know your thoughts and where you think Crypto is going. Also, how you are investing in crypto or why you aren’t you? Do you think it is risky and if so why do you think so? Also if you have any questions please let us know as we love to hear your comments!
If you liked this post, please be sure and share it with your friends. If you don’t like the post, that is okay too, just let us know why.
We post every week to let you know about the best opportunities based on the current market conditions. Thank you for taking the time to read this article and provide your feedback.
Sincerely,
Darren
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