Turkey, Trump, & Bitcoin

How our family dinner conversation might be a little different this Thanksgiving. And are there lessons to be learned from what we saw in 2018?

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Disclaimer: I am not a financial adviser. I hold no licenses. I’m just a guy. Do your own due diligence. Don’t listen to anything I say. And my views and opinions do not necessarily reflect the views and opinions of CLNSMedia. Okay, that’s out of the way…

It was just about a year ago; your big family gathering for the Thanksgiving holiday. The grub was good. Your uncle spent the whole dinner talking about the president. Then over pie, someone asked about this Bitcoin thing that they keep hearing about.

“The guys at work were talking about that.”

“I saw that on Grey’s Anatomy last week.”

“Well I heard about it on the news.”

“I have some.”

Now everyone is looking at your weirdo cousin.

And wouldn’t you know it, your cousin is suddenly a currency expert/software engineer and nobody can shut up about Bitcoin. The closing price for 1 Bitcoin last Thanksgiving was $7,977. Nothing about that price was normal on November 23rd, 2017 – but things got really out of hand immediately after.

At this point, Bitcoin was already well into bubble territory – but it still nearly tripled from the Thanksgiving 2017 price within three weeks; that is absolutely absurd price action. Having already been mentioned in an episode of Grey’s Anatomy in mid-November, it was also around this time that Bitcoin was featured on the Big Bang Theory. Between Thanksgiving table conversation and prime-time network television coverage, cryptocurrency was officially mainstream. And the price of a Bitcoin measured in USD continued hundreds of dollars higher almost every single day.

By Mid-December, the top was in and the bubble began to violently deflate. And here we are now. Falling knife status.

Even after this absolute collapse in price year to date, the timing of everything matters. I don’t anticipate that the die-hard crypto fans have even capitulated yet. Truthfully, that probably still isn’t happening for awhile. But, if like me, you think the holidays last year produced a lot of new Bitcoin buyers, we officially passed a breaking point. It’s a good bet that anyone who bought Bitcoin when it was $19,000 is likely hosed. But at this point, anyone who bought the post-Thanksgiving rocket is now also holding a massive bag. And I suspect these are the people who are throwing in the towel right now. That could make for some very interesting conversation at the dinner table this year. The turkey will still be there. The political arguments will be as well. But don’t be surprised if finance comes up again.

“Nice call on that Bitcoin, weirdo cousin.”

“Yeah, I lost my shirt on that one.”

“Hey, what’s going on with the stock market? It’s getting crushed.”

“My guy says buy the dip!”

This time the conversation might transition to the bloodbath that is Wall Street. This time, the bubble has already popped. Don’t believe me? Look at the FAANG stocks: Facebook, Apple, Amazon, Netflix. Google. As of this writing, they are all down at least 20% from their highs this year. These are the stocks that have been propping up the market. Now, they’re rolling over. So, what is going to save the S&P 500 from a deeper correction? A better question might be this one: does the S&P chart look a little like Bitcoin did last December?

Think about the answer to that question. Build your financial strategy accordingly. And maybe don’t listen to your Uncle when he says Netflix stock is cheap. Oh and definitely don’t listen to your weirdo cousin this time when he tells you to max out your credit card on Ripple or Dash.

Happy Thanksgiving!


You can follow Mike on twitter @MikeFay34 and read his stock market technical analysis at faybomb.blogspot.com