How high can it go?
Back in Sept I blogged about buying some cryptocurrencies, and posted my Ethereum purchase transaction. At that time ETH was trading at $230 US. Today the price is over $700 US. Sweet mother of mammaries! 🙂 And just last month when Bitcoin was trading at $7,300 US I tweeted that the price would climb to $10,000 US, which would be a 37% increase.
Bitcoin is on its way to $10,000 😉
— Liquid Independence (@Liquid_f35) November 3, 2017
Within a month Bitcoin had hit $10,000 US, lol. 😀 Unlike NASA, Bitcoin may not return back to earth once it reaches the moon. 😎 As I’ve written in the past I started to buy Bitcoin, Ethereum, and Litecoin earlier this fall and have been regularly accumulating them. My biggest winner appears to be Litecoin. For example I purchased some when it was $80 CAD. And now each Litecoin is worth over $400 CAD.
However, after the dramatic rise of the cryptocurrency market capitalization during the last 30 days I believe this asset class may be overvalued now. So I have decided to lower my financial risk by moving some money from cryptocurrencies to the stock market.
Why I’m Taking Some Profits
Since we are nearing the start of a new year, I want to collect some cash to fund my retirement account. When January comes I will have additional contribution room in both my RRSP and TFSA. This is why I have decided to divest my cryptocurrency investment. Earlier this week I took some profits by selling roughly a third of my digital currency holdings. Doing this has freed up a few thousand dollars of capital. I can use this new cash (minus capital gains tax) to begin funding my registered investment accounts in the new year. 🙂 As far as I know there is no way to hold cryptocurrencies inside an RRSP.
I’ve used this effective investment method before with my marijuana stock, Canopy Growth Corp (WEED), where I bought 300 shares at $2.55 and sold at $12.10. But instead of selling all my WEED stocks I kept 200 shares and continue to hold them today. A partial sell of a position like this accomplishes 2 things:
- First, it reduces the risk of my initial investment. I’ve already recouped all my money back, plus a tidy gain. Thus, it is now impossible to lose money on this investment as a whole, even if the future value of the stock drops to $0.
- And second, if the pot stock continues to climb in price then I stand to make additional money due to my continued long exposure to it. 😉
In other words, there are no bad outcomes here. That’s why I have used the same strategy with my cryptocurrency holdings.