Bitcoin is making headlines again, this time for smashing through the old highs. But anyone who’s been reading this site knew this breakout was coming.
Back in October, I commented on the cryptocurrency’s noteworthy bounce off of $10k support:
I’m not a big fan of virtual currencies by any stretch, but as long as this holds above $10k, it is doing everything it needs to do to earn our respect.
And then a couple of weeks ago when Bitcoin first challenged $19k, I said:
These huge rebounds almost never touch the old high and then simply give up. Even if the bubble eventually bursts, we are going to smash through the old highs before that happens. Maybe the top is $25k or maybe it is $30k. Either way, this latest buying frenzy is far from over.
As I write this, BTC is already $3k higher and pushing toward $22k. So far everything is going according to plan.
I don’t expect this buying frenzy to cool off anytime soon. As I said a few weeks ago, maybe the top is $25k, maybe it is $30k. Or maybe we keep going to $40k. Who knows. But when something moves this fast, the only choice we have is to grab ahold and see how far it goes.
This is a strongly directional move and we can (and should) follow this higher with a trailing stop. Right now $20k is a good level to protect our profits. When prices get up to $25k, we move our stops up again. $30k, ditto.
We let the price-action tell us when it is time to lock-in profits. And if we get stopped out prematurely, no big deal, we just jump back in when the dip proves to be a false alarm.
This is easy money and the only people who will screw it up are the ones that hold too long. Don’t let greed cause you to make that mistake. Come to this with a plan and then follow that plan.