Bitcoin: This Time Ain't Different

Daily Reckoning . Archives . Unsubscribe

The Rude Awakening Wednesday, April 10, 2013 |0930 Hours Bitcoin: This Time Ain't Different Bitcoin keeps on truckin' higher What to expect when charts go parabolic Plus: Don't ignore "front page" warnings... Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner Bitcoin has taken the world by storm. The invasion was quick and mesmerizing. Blog posts and news articles with headlines screaming "Bitcoin $200!" are becoming hilariously dated before they can get them up on the web. Heck, not even nuclear threats from North Korea can pry our eyes away from the Bitcoin charts. We simply shut out the world and cheer for higher prices. I'll admit it's a fun ride--even when you're just watching from the sidelines. But you can't get too caught up in the craze... I'm certain you've seen charts like this one many times before. In fact, I could pull up countless examples of this parabolic pattern. Spoiler alert: they all end the same way. Could Bitcoin double from here? Absolutely. Then it might even double again. But you gotta get your head out of the clouds for a minute. History has shown us that these moves all end badly. Every single one. It doesn't matter if a business or idea is groundbreaking, terrible or somewhere in between. The pendulum will eventually swing back in the other direction. You can't argue it any other way... I'm already seeing rumblings from the Bitcoin faithful defending this run-up. However, all of the arguments boil down to the same tired excuse: This time it's different. No it isn't. It's never different. Go ahead and speculate all you want on Bitcoin. You might make money, you might lose money. Just don't treat it as a long-term investment. Any emotional attachment will slaughter your account. As always, it never hurts to be prepared. Even if you're content to watch Bitcoin from a distance, you need to take a few minutes to educate yourself. Pick up a FREE copy of The Bitcoin Bible from my friends over at The Laissez Faire Club today. Rude Numbers Targets, Predictions and Wild Guesses $1,579 buys an ounce of gold this morning. After a quick spike toward $1,590 yesterday, gold is settling back into its range $27.68 buys an ounce of silver--which also enjoyed a brief pop above $28 yesterday afternoon. 4% higher is where the Market Vectors Gold Miners ETF ended the day Tuesday. 1,568 is where you'll find S&P futures this morning. Meanwhile... 54% of stocks trading on a U.S. exchange remain above their 50-day moving average. Rude Trends When to Buy... When to Sell "Thanks for the heads-up on gold," writes a careful reader. "I'm aware of the pro-gold arguments but I've been out of it since late 2010 (when gold started making the front page of mainstream newspapers).  I've been squeamish about my decision to exit gold, however, when it makes the front page, it's usually time to move on.  Bitcoin happened so fast that I learned about it on the front page of the paper!" Your contrarian instincts are strong... The front page is always a great way to gauge when the music might stop. It also helps to quiz people who don't spend a lot of time following the markets. I was asking a couple of friends about Bitcoin over the weekend. They don't follow any sort of investments closely, but they certainly got excited when I brought up the currency. That's a red flag. When kindergarten teachers were quitting their jobs back in 2004 to flip houses, something was up. The same goes for all of those "daytraders" who jumped into the tech stock craze in the late 90s. Speaking of the 90s, does this chart look familiar? Change the name and timeframe and you could match it up with every single "hockey stick" setup ever recorded. And we all know how this one turned out... [Ed. Note: Send your feedback here: rude@agorafinancial.com... and don't forget to follow me on Twitter: @GregGuenthner] Ignore At Your Own Peril Today's Must-Read Links A New and Sneaky Way to Play Oil and Gas Government Mandate Creates Potential Investor Jackpot... Expert Reveals "It's Too Late to 'Save' America..." Additional articles and commentary from The Daily Reckoning on: DR iPhone APP To end The Daily Reckoning’s Rude Awakening e-mail subscription and associated external offers sent from The Daily Reckoning and The Rude Awakening, cancel your free subscription here. Please Note: If you unsubscribe from The Rude Awakening, you will also be unsubscribed from The Daily Reckoning. If you are you having trouble receiving your Rude Awakening subscription, you can ensure its arrival in your mailbox by whitelisting the Daily Reckoning. Copyright 2013 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. Nothing in this e-mail should be considered personalized investment advice. A lthough our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.We expressly forbid our writers from having a financial int erest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation.Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.