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Bitcoin: Buy, Sell or HODL?

As Bitcoin sets new All Time Highs, what’s the right move?

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As Bitcoin sets new All Time Highs, what’s the right move?

Image: Licensed Adobe Stock by F8studio

I’ve been writing and talking about Bitcoin for some years now and I can always tell what stage of a market cycle we’re in by the questions I’m asked and how frequently I’m asked them.

Most of the time, for example, if I’m out with a group of friends or colleagues (back in the days when you could actually do this) Bitcoin will not be mentioned for fear that I should “go off on one” for a solid ten minutes or so. Even all these years later, although I have gotten better, I have to admit that this still happens occasionally.

However, when something is going on, that situation could not be more different from — literally — the moment I arrive. If the price is rising, I am inundated with questions about whether to buy and how much, and, conversely, if the price is falling I am grilled about selling and “when to get out.”

Experienced traders and investors will, of course, have noticed that these two questions are entirely the wrong way round. You buy when it feels exactly like you shouldn’t — especially if confidence is low and the press is negative — and you sell according to your own plan, not necessarily when price dictates.

The fact that this is so hard for us humans to do is exactly why the markets — literally a collective summary of individual decisions— move as they do. It is also why simply understanding this gives you such a head start in the first place.

Be that as it may, this holiday season I have been asked the “buy” question by those who do not already hold Bitcoin and the “sell” question by those who do. In fact, a casual asking around of my Bitcoin colleagues has revealed a similar pattern.

Bitcoin is in the news and the price rising quickly. Institutions are greedily hoovering up every spare coin they can lay their hands on, but retail activity has been lack luster so far.

And, it seems, those who are thinking about dipping their toe are looking to people like myself to make the decision for them.

That’s a terrifying responsibility and not one I am prepared to take on directly. I am, however, happy to discuss the options and help anyone who wants to hear them work out what’s best for them … and that’s what this article is about.

So, if you don’t hold Bitcoin and wonder if you should or if you hold Bitcoin and are wondering if you should sell now the price is at an all time high, then here’s a few things to think about.

It’s quite the question isn’t it? You’ve probably watched the price head forever upwards over the last couple of years and find yourself in the classic “holding on to a rope attached to a rising balloon” conundrum. At what point do you take the plunge? Do you even try? Is it simply too late?

Looking back and thinking “if only” won’t help you and, to give you some reassurance, everyone who holds Bitcoin wishes they’d bought more and bought earlier, myself included. But, in reality, the whole thing is an illusion designed to chip away at your confidence.

For example, by the time I’d really got proper skin in the game, Bitcoin was already getting close to $1000. However, I’d stumbled across it in late 2013/early 2014 and actually had the chance to buy it at around $100 but decided against it. I simply wasn’t ready. It seemed a bit, well, “iffy.”

That was an expensive mistake and it would be another 3–4 years before I really understood it enough to take the plunge. Understanding it properly is the barrier that everyone experiences, so don’t beat yourself up about it.

As a result, I ended up paying what was considered top dollar at the time, but what would now be considered a very cheap price. If, for example, I offered to sell you a whole Bitcoin at $1,000 today would you take it? Of course. It’s all relative.

So think about this: if you knew — categorically — that Bitcoin would trade at $100,000 in the next 12 months would you buy it now at $31,000? With that sort of guarantee you probably would but, sadly, I can’t provide you with one. Like me, and everyone else, you’ll have to take the chance and decide on the odds of that happening through your own research.

The point here is that it is not too late, the numbers are simply different. As some of my colleagues put it “Bitcoin has no top because fiat has no bottom” and any cursory understanding of what is currently happening with our financial system reveals that to be truer than any of us would like to acknowledge.

Let’s not forget the fiat cash system we use now is only 49 years old. It’s still an experiment. It’s actually younger than me!

All of this, however, is about context and removing some of those barriers to thinking, the ultimate decision is, of course, yours.

In my own case, as someone who acquires more Bitcoin every single day and never converts it to fiat (cash), it’s pretty clear what decision I’ve made as it aligns nicely with my financial set up, belief in Bitcoin itself, objectives and plans for the future. But that doesn’t mean it’s necessarily right for you.

So, consider the following:

Do you have cash savings in the bank that are losing value due to inflation and lack of interest rates? If so, research what’s likely to happen in the future as this situation develops and then assess your appetitive to risk.

Of course, even this is not straightforward as risk itself is subjective. For example, some now consider holding cash riskier than holding Bitcoin, after observing the actions of governments in parts of the world where the economy has been under pressure.

Some even consider holding gold a risk due to governments around the world having taken it suddenly in times of financial turmoil, like those we’re experiencing now. Could it happen again? Of course, but that’s no guarantee it will. It might be a “nothing” risk.

What is it you could afford to lose if it went wrong? What is it you want to do with this Bitcoin thing? Is it to get out of the fiat system completely, or to make a few bucks with a quick buy and sell? Or is it somewhere in between? Do you just want to be part of whatever this thing turns out to be?

All key questions designed to make you ask that most important of questions:

What is your objective?

Once you have that, you have everything you need. None of us can know the future, this is all about assessing likely outcomes and matching it with your own beliefs. Literally no-one can make that decision for you, least of all me.

But I will add one more point.

Bitcoin used to be very difficult to buy, hold and sell “back in the day” and no-one was sure if it was even legal, but things have changed massively and continue to improve daily.

In most countries Bitcoin is now legal, has a clear tax framework and is as easy to buy and sell as anything else on the internet. Those physical barriers of it being “too hard” to do are long gone, all that remains are the psychological barriers linked to your own objectives and risks.

Therefore, you can feel free to explore exactly what it is you want to do, rather than worrying about how to do it.

And for some of us, that’s sometimes just as important.

Since Bitcoin is at an all time high as I’m writing this, it’s a given that you’ll be showing a profit (in fiat cash terms) regardless of the price you paid for it. Congratulations!

But the decision making doesn’t end there, does it? Should you lock it in and realize the cash gain even though this removes you from however this plays out going forward? Or hold and hope you got the decision right for the long term? Perhaps you should add to it as you’ve done so well? What’s the right call?

Again, this all comes down to what your objectives are. If it’s to make a few quid, then there’s no shame in taking that profit and enjoying it and, since Bitcoin’s price can fluctuate quite significantly at times, it might be possible to make another trade at a lower price later on.

But then again it might not. I know as much as you do.

If you need the cash for any reason (for example, you’re under financial pressure) then by all means take it out and use the cash to make that pressure go away. Find a way to get there later on. Well, if you want to that is.

But let’s say you don’t need the cash and you think Bitcoin happens to be a cool thing that might go even higher. In that case, you’re probably made up your mind to hold already, but you might also be thinking about adding to your stash.

But if you’re already in the game, you already have an advantage over an above the fact that you’ve already got a lower entry point that your new possible exit point. In my view, it’s essential you maximize your position.

Many people, for example, don’t realize that you can get interest on your Bitcoin holdings, paid in more Bitcoin. Most wallets and exchanges now offer this as standard and I often recommend checking out Blockchain.com and Luno. The interest rates on these are 4.4% and 4% respectively, both calculated daily and compounded monthly, the latter having the advantage of being extremely user friendly and ideal for beginners.

But there are other options too. For example, Nexo and Celsius offer higher rates, running as high as 12% compounded daily, with the added bonus of $100million insurance policy. That last point is important, especially as most banks don’t offer that level of guarantee. Even better, it’s possible to borrow against your assets at any time, as long as you have enough value to cover what you’d like to borrow.

Make no mistake, a whole new world is here and developing very quickly. We might still need banks for various payment mechanisms, but no longer for saving and borrowing. It’s quite the change in mindset.

This list is not designed to be exclusive and there are yet more options out there, but in my view, any of these are ideal if you’re looking to maximize your existing Bitcoin position without committing more fiat capital.

But if you are looking to commit more funds, wallets like Luno also allow you to Dollar Cost Average (DCA) assets like Bitcoin. In other words, you can set a fixed amount each day/week/month to be swapped to Bitcoin automatically which is an historically proven and lowest risk way of doing it over a long period.

However, this still doesn’t answer the question of whether you should be doing it and, while you may read this article looking for that single instruction, you won’t find it. That part of the decision firmly lies with you.

At the end of the day, to quote that old adage:

You pays your money and you takes your choice.

Source: https://medium.com/original-crypto-guy/bitcoin-buy-sell-or-hodl-fa19023c98b6?source=rss——-8—————–cryptocurrency

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The past, present and future of AI in gaming

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Artificial Intelligence is surely one of the greatest buzzwords – or buzz phrases – of modern times. It inspires as much trepidation as excitement as we try to work out whether it will turn out to be a boon or a threat to our existence. After all, the idea of the machines taking over has long been fear and, today, we seem to be reaching a tipping point where it may become a realistic question to address.

Away from these doom-laden predictions that we may be architects of our own destruction, there’s no denying the fact that the use of Artificial Intelligence is proving to be an invaluable asset. This is particularly true of the gaming world in which it’s starting to play an increasingly important role.

But, while one might assume that AI in gaming is a relatively recent arrival, it has a longer history than many might imagine.

Early days

As long ago as 1952 programmers were experimenting with AI in a game called Nim, named after the computer, called Nimrod on which it was played. The game itself was like a virtual version of Jenga in which players had to remove matchsticks, one by one. It was undoubtedly basic, but it was here that the foundations for future developments in AI were laid.

Chess is a game that has long been beloved by mathematicians and computer scientists. So, it was not much of a surprise that one of the first high profile examples of the use of AI came in the 1990s with the chess-playing computer called Deep Blue.

It was set to challenge the world chess champion, Gary Kasparov, in 1996 over six games with the human player eventually winning 4-2. But Deep Blue became better at playing as time went on and won the rematch the next year 31/2-21/2. The fact that the computer had become better at chess without any physical human intervention was a source of great excitement.

More recently, a similar experiment was carried out by pitting a poker-playing computer against a number of professionals in a tournament format. Even though poker rules are very different from chess and there is also the need for more intuitive play, this computer also prevailed, again growing stronger and more proficient the more games that it played.

Making the random more random

Looking more specifically at video games themselves, the most common use of AI today is its role in controlling the Non-Playable Characters in games and it has started to allow them to behave in a far more random way than ever before. Using a variety of algorithms, many of which are based on one from the 1990s called the Finite State Machine, these allow for a decision tree to be used which then dictates the action.

The increasing sophistication of the algorithms being used today allows for many more options to be presented and a greater sense of randomness to be apparent in the game. One could argue that this just gives the impression of artificial intelligence being at work, however there is one area in which it is increasingly playing a part.

Because the whole purpose of a game is to be enjoyable and involving playing, AI is now being used to sense the ability of the player in question and to tailor certain games to suit. This increased “playability” is seen by many as the essential ingredient that will see players persist with a game far longer than a rigid one that doesn’t adapt in any way.

However, it’s a fine balance that needs to be struck to avoid games becoming too challenging or too simple to play. It’s perhaps this that is the biggest headache for games developers intending to introduce AI into the programming of a game.

Creating the narrative

One particularly exciting area that is currently being explored is in the field of RPG games like Dungeons and Dragons. The almost infinite nature of a game like this is the perfect format in which to explore whether AI can be used to work effectively in a collaborative, rather than a combative way.

This certainly involves taking on certain human characteristics as well as showing a level of empathic behaviour – tricky even for some people to achieve, let alone a machine. It also requires the ability to both set and follow a narrative and once a machine starts to do that it is on the verge of becoming an autonomous, creative entity.

AI-designed games

This vision of the future is taking shape even now thanks to an AI project called Angelina. This is the brainchild of a developer called Michael Cook who started working on it in 2011. By feeding a limited amount of information into the program, it can be left to its own devices to create a game across a number of genres from puzzles to adventures.

Other game companies like Ubisoft are taking it even further by experimenting how to integrate AI into producing triple-A video game design and working in collaboration with the University of Lyon.

It will obviously be quite a while until AI can be relied upon to create games that are as intricate, involved and nuanced as those designed by humans. But there’s no doubt that we are edging ever closer to that day.

So, before long, the question may not be whether a computer can beat a person, but the other way around.

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Test Hamed

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‘Spectacular bust’ for stocks: 5 things to watch in Bitcoin this week

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Bitcoin (BTC) starts a new week with $30,000 reconfirmed as support but also a fresh vote of no confidence from the mainstream.

After a more or less steady weekend, the largest cryptocurrency remains firmly in its established trading corridor — between $30,000 and $40,000. What’s next?

Cointelegraph takes a look at the factors impacting price performance this week.

Stocks face a “spectacular bust” — analyst

Stocks showed clear upward momentum on Monday, led by Hong Kong as a new favorite target for Chinese investors.

Sentiment received a major boost earlier this month after United States President Joe Biden announced a $1.9 trillion coronavirus stimulus package. While already near all-time highs, the cash injection propelled markets still higher.

“Investors see continued open-spigot monetary policy and more fiscal stimulus,” Marc Chandler, chief market strategist at Bannockburn Global Forex, told Bloomberg.

“Coupled with the vaccine’s rollout, it will generate a critical mass of more robust economic growth as the year progresses.”

That “open-spigot” money printing position is nonetheless cause for concern among both Bitcoin proponents and more critical traditional market players. Last week, Jeremy Grantham, CEO of asset management giant GMO, flatly warned that stocks were in a bubble, and that stimulus would only make it worse.

The good times, he warned, could last as little as “a few weeks.”

“We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust,” he predicted in a Bloomberg interview.

“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years.”

The impact of such a crash on Bitcoin remains open ended. Despite its increasing reputation as a non-correlated safe haven, BTC/USD continues to be influenced by macro factors, in particular the strength of the U.S. dollar. A scenario similar to last March’s cross-asset crash also looms large in traders’ memories.

Grantham, meanwhile, was no more upbeat about a post-coronavirus world than the current one.

“You will not make a handsome 10- or 20-year return from U.S. growth stocks,” he said.

Bitcoin macro correlation chart. Source: Digital Assets Data

Dollar seen higher in short term

Equities surging ahead meanwhile spelled short-term bearishness for USD on Monday.

The U.S. dollar currency index (DXY), which pits the dollar against a basket of major trading partner currencies, came down from recent gains to test support at 90 once again.

A reversal of last week’s scenario, the dollar is now on the back foot as Bitcoin displays familiar inverse correlation to DXY and strengthens above $33,000.

U.S. dollar currency index (DXY) 1-hour candle chart. Source: TradingView

Incoming U.S. Treasury Secretary Janet Yellen will not be drawn on her plans for the currency, claiming that she wants neither an overly strong dollar, nor one which has been as weak as during the Trump administration’s tenure.

“I think this move higher that we’ve seen this week, I think it’s got some legs to it,” Dave Floyd, founder of Aspen Trading, told TD Ameritrade in a bullish short-term prognosis for DXY.

“I think we have more to run; there’ll be some dips along the way, of course — nothing moves up in a straight line — but I think we’re going to see a stronger dollar for the next month or two at the bare minimum, maybe even longer.”

Zooming out, however, analysts believe that USD is headed for sustained losses as a result of increasing debt and the economic damage wreaked by the pandemic.

JPMorgan: BTC institutional demand “not strong enough”

Also at risk of suppression is Bitcoin, traditional finance analysts claim in a familiar bearish take on the largest cryptocurrency.

In a note to investors on Friday, a team at JPMorgan led by Nikolaos Panigirtzoglou warned that declining demand for industry giant Grayscale’s Bitcoin Trust (GBTC) meant that upside is unlikely to return to the market.

“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000,” it reads, quoted by Bloomberg.

Panigirtzoglou et al. pointed to a decline in the GBTC premium — the price of the Trust over the Bitcoin spot price — as proof that uptake is slowing after a record few months. Grayscale itself, meanwhile, is busy buying more BTC than ever for its assets under management — Jan. 15 saw its biggest-ever single-day buy-in worth more than $600 million.

JPMorgan, however, is not alone. As Cointelegraph reported, analysts at QCP Capital likewise highlighted “institutional exhaustion” as a key market force at work in Bitcoin under current conditions.

“The near-term balance of risks is still skewed to the downside,” Panigirtzoglou’s note added.

Grayscale Bitcoin holdings vs. BTC/USD chart. Source: CryptoQuant

BTC/USD sees firm bounce at $31,000

After recovering from a brief dip below $30,000 last week, BTC/USD is decidedly non-volatile heading into the new week’s trading.

The calmer conditions give some welcome respite to traders, who watched as a combination of rumors and selling sparked dramatic price movements prior to the weekend.

“What’s your favourite narrative as to why bitcoin is correcting after going vertical? The answer is in the question,” popular trader filbfilb summarized to Twitter followers on Friday.

With a return to relative stability over the weekend, however, eyes are now focusing on a potential move higher within the trading corridor between $30,000 and $40,000 in which Bitcoin has resided this month after hitting new all-time highs of $42,000.

“Bitcoin saw a very strong reaction at $31k. Bearish scenario invalidated for now. Prob $36k coming, then reassess,” in-house analyst Joseph Young offered on Monday.

Young previously noted that on-chain indicators were slowly shifting to bearish, fuelling already dubious price action without clear direction.

Such a move higher would take BTC/USD to familiar levels but still without breaking the paradigm which has characterized the pair in recent weeks.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

In favor of bulls is a Jan. 29 expiry of $4 billion in Bitcoin options

Ether clips new all-time high

Bitcoin cooling and ranging after its vertical phase meanwhile provides what some consider to be the perfect conditions for an altcoin rally.

Signs that alts were waking up were already present earlier in January, but last week’s volatility in Bitcoin shook out some early gains.

In a return to form this week, however, largest altcoin Ether (ETH) outperformed with a return to all-time highs of $1,475 and daily gains of 7.8%. A breakout versus BTC was also visible.

The move clearly beats other large-cap altcoins, which were flat on Monday.

ETH/USD vs. ETH/BTC 1-day candle chart (Bitstamp). Source: TradingView

“At this point and for a while, ETH leads, Alts season follows and bitcoin still explodes higher. Everyone wins,” Raoul Pal, founder of Real Vision, predicted.

Ever the optimist, Pal appealed to Twitter followers not to listen to disparaging narratives about the crypto markets.

“Enjoy and take on board the FUD with a open mind but remember, in an exponential bull market everyone wants to spook you out of your trade. It’s really not easy,” he added.

Source: https://cointelegraph.com/news/spectacular-bust-for-stocks-5-things-to-watch-in-bitcoin-this-week

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