Is Black Friday Coming to a Cryptocurrency Near You?
By Don Friedman
As Bitcoin was racing towards $20,000 and people bought for “fear of missing out” (FOMO), those same people are starting to sell because of FOLE – fear of losing everything. Is this creating a buying opportunity?
Bitcoin began its meteoric rise in 2017. So, if we use its 2017 support level of roughly $900 and watched it reach its peak of approximately $20,000 that resulted in a 2,122% increase. Compare that to Ripple’s XRP which if we use its 2017 support level of roughly 20 cents and saw its peak reach $2.70 (according to World Coin Index) that resulted in a 1,250% increase.
I understand there are flaws in this analysis as people could argue that XRP sat at less than 1 cent through Q1 of 2017. So, if we used a cost basis of 1 cent the increase would have been to the tune of 26,900% which is far bigger than the percentage increase of Bitcoin. In parallel, you could argue that Bitcoin’s true support level is around $250 in which case the rise to $20,000 was a 7,900% increase. Still a far cry from XRP’s 26,900% but much higher than the 2,122% we used in our Bitcoin example.
However, what is indisputable, is that Bitcoin has fallen from its peak (roughly $20,000) to its trough (roughly $5,800) which results in a 71% loss. Whereas Ripple’s XRP has fallen from its peak ($2.70) to its trough (roughly 33 cents) which results in a roughly 88% loss.
So, I ask again, is now the time to pick up some cryptocurrency? There are a million and one opinions on the positive and negative attributes of all the cryptocurrencies (why one will succeed while another won’t) so I’m not going to go down that rat hole. For me, I’m focusing on XRP. If you believe that Ripple will be around for years to come and you put some weight in the theory that if Bitcoin reaches some of the analysts’ predictions of as high as $250,000 (Tim Draper) that all tides will rise (in varying degrees). And yes, this inspires dialogue around the virtues of buying a basket of cryptos of which we’re not going to discuss here.
As of this writing, Bitcoin sits at approximately $6,500. If it hit $250,000 that would be an increase of 3,746%. If XRP rose by the same amount that would be a price of roughly $12.70. If Bitcoin simply regained its glory of reaching $20,000 that would be a 207% increase. For XRP to reach a 206% increase would mean it traded at $1.01.
The cost and total loss (should the price go to 0) of buying 10,000 coins of XRP at current prices should be less than the monthly credit card statement of anyone who should have any business buying cryptos. To me, it’s worth dipping my toes in the water for.