Sometimes I am still surprised by the clarity a simple pros and cons analysis provides. This form of analysis reminds us why we are in a trade (and maybe why we should stay in it) during volatility. It is also helpful when a complicated concept needs to be explained in a straight forward way. Let’s apply a quick pros and cons analysis to Bitcoin as a crypto asset…
Of course how much “weight” we ascribe to each of these pros and cons may vary from investor to investor, but the point is simple…there are more pros than cons.
Let’s take a look at a 1 year chart to gain insights on price action. Because Bitcoin is a new asset, I would argue that chart analysis is essential when trying to understand and predict the price movement. In a new asset such as Bitcoin, volatility feeds our most primal emotions – Greed and Fear – making technical/chart analysis a solid means to gain an edge.
(Chart Source: Coinbase)