5 Reasons Why I think Bitcoin Will Hit $100,000
“Buy and hold” isn’t a trading strategy.
For the entirety of my trading career I have tried to avoid buying and holding. Every time I put on a trade I do so with a clear exit plan in mind. I NEVER go into positions with the intention to hold them for an undetermined amount of time.
There’s one market and one investment that has made me completely change my attitude about “buy and hold” as a trading strategy…
That’s the bitcoin market.
I know, bitcoin has come down a lot this past week (it’s since stabilized). But to me, that’s perfectly fine. I’m happy about it, in fact. You should be too. It just gives you the opportunity to buy cheaper before bitcoin rises again.
And it will rise again…
My trading career was built on my ability to spot and follow trends. While some traders can find success trading counter-trend setups, I have always focused on riding momentum and chasing prevailing market trends.
I keep all of this in mind when considering an exit plan for my bitcoin position. And because I see no major reversals in the trend I cannot develop a solid exit plan.
The move higher in bitcoin is one of the most amazing things I have seen in my career.
Every major pullback last year saw buying interest. And we saw new highs minted on a regular basis.
This is the type of trend that I cannot step away from. I know about the pullback. But upside momentum is unlike anything we’ve ever seen before. So for now, I need to hold my position as long as this momentum lasts.
You’ve heard plenty of people say “It’s too late to get into bitcoin.” Odds are those people don’t have a position in bitcoin nor have they ever.
I understand why some people feel this way. Looking at bitcoin’s chart over the past year or so can make someone feel skeptical about further upside. When I look at that chart however, I can only think of reasons I think bitcoin will move higher.
With that in mind I want to share five of the biggest reasons why I think bitcoin still has massive potential upside and could go to $100,000 — 10x higher than today…
Bitcoin $100k Reason #1:
There’s Plenty of Money on the Sidelines. When stock market bears talk about the reasons they think the market is heading lower they often cite a lack of “new” capital to be invested.
This argument assumes that most investors are fully invested in the market and have no more cash to deploy.
This couldn’t be further from the truth when it comes to bitcoin markets. Due to the fragmented exchange and platform options in the crypto market, many investors have forgone entering these markets. As ease of access increases so will investment.
That could mean a serious leg higher for bitcoin.
Bitcoin $100k Reason #2:
Institutional Money HAS to Buy Bitcoin Now. Even though you can’t yet use bitcoin to pay your credit card bill there has been some serious movement from institutional players in the past few months.
While these institutions have yet to fully “buy in” to the idea of bitcoin we have seen some clear signals that this might be just around the corner…
A number of major financial exchanges have recently listed or announced plans to list bitcoin derivatives for public trading.
Most people fail to realize that institutions that plan on trading in or making markets will HAVE to buy bitcoins to hedge their positions.
This means that new institutional money will have to come into the market as volume in these derivatives increases.
Again, this brings a wave of new capital into the market.
Now, while there has been some interest in bitcoin ETF’s the SEC has made it difficult for these funds to get past the proposal stage citing concerns over volatility.
This might be a roadblock for now, but trust me it won’t be for long.
Once the first bitcoin ETF is listed investors will be given unprecedented access to these markets and that would be a huge benefit to those long bitcoin.
Bitcoin $100k Reason #3:
Increased Adoption. A huge number of businesses now accept bitcoin as a legitimate form of payment (more than 100,000 worldwide). As more companies do this it increases the practicality of bitcoin and it’s inherent value.
A number of large publicly traded companies now also accept bitcoin. Companies like Microsoft and Expedia now accept bitcoin as payment for certain products and services.
While this is a MASSIVE development for these markets there is still huge growth potential for bitcoin based on the fact they have barely penetrated the payments market.
Bitcoin $100k Reason #4:
Increased Attention in the Media. I’m sure that over the past month you’ve been bombarded with bitcoin related news on pretty much every media outlet you can think of.
I hate the phrase “there’s no such thing as bad press…” but in this case it’s absolutely true. The amount of new money brought into the market by these stories has pushed a number of cryptos, bitcoin included, to new highs, despite the recent pullback.
The move people exposed to these markets the more interest there will be, this can only be a good thing for the market.
Bitcoin $100k Reason #5:
The Bitcoin Trend is Unprecedented. The last year of trading in bitcoin has been one of the most impressive things I have seen in my trading career.
As a momentum trader there has never been a more intriguing market. When there are more buyers than sellers markets go higher, that’s been the case for a long time in bitcoin.
Despite the recent slip, there hasn’t been any major events or developments to change that so there’s no reason for me to expect it won’t bounce back. And then it could be off to the races again. It might not make sense to some but think about this old trading adage…
“Markets can be irrational longer than I can stay solvent.”
In short, this means don’t fight the larger trend. I couldn’t agree more when it comes to bitcoin.
There are actually way more than 5 reasons I think this market is moving higher. With this many reasons for it to go higher why wouldn’t you want a position?
If you don’t have a position now, I would recommend getting one now that prices have pulled back.
But before you do, you should realize that bitcoin, like everything else in your portfolio, should be managed with strict risk management rules.
What’s my exit plan?
There will be a day that I sell some of my bitcoin position but for the time being there is absolutely no reason for me to even consider selling.
If any one of the scenarios above plays out the market will take a huge leg higher. As I’ve said I see this as inevitable.
I need to stay on the side of the greatest trend in my career so for now, this AlphaShark is long and staying long.
for The Daily Reckoning