Too much analysis likely to lead paralysis and perceived overvaluation is a ticket to get ruined – When S&P can stay overbought, why not cryptos?

While a few set of critics reckon that the bitcoin has been the 21st century Tulip bubble fated to burst, optimistic institutional investors on Wall Street are keen on eyeing on ways of integrating blockchain as a technology and bitcoin & altcoins as the currency system into their business operations.

How do you know when an asset price rise has turned into a bubble? In the non-virtual world, valuation is often a good starting point. A bubble can also be identified by the steepness and persistence of any price ascent as doubters and naysayers are swept away in a tidal wave of bullish froth. That is something the main S&P Composite Index certainly shares with Bitcoin.

When folks can trust that - the S&P500 could reach 2800 early next year on approval of US tax reform, so is the case with NDX and so is the case with cryptocurrency industry on the wide range of constructive underlying news – that in turn likely to expand the exposure to this theme.

Well, one justification for the surge in stocks is a profits recovery. But the underlying profits recovery looks increasingly fragile and indeed on some key measures a rapid deceleration is underway. With equities over-valued, overbullish and now also over-bought, the boring old profits cycle still needs watching.

To avoid or short an asset class on perceived overvaluation alone is to risk buying a one-way ticket to ruin. That is not to say that investors do not accept the basic investment principle that the primary determinant of long-term investment returns is their entry valuation. As you’ve seen with equity markets in recent years, the market can stay expensive and irrational far longer than most investors can stay solvent, or indeed longer than most investment managers can retain their jobs in the face of underperformance.

Clients are forced, as Chuck Prince of Citigroup famously said, to keep dancing while the liquidity mood music is playing. Clients are no longer concerned with overvaluation; they are more concerned about timing and triggers. Two key additional indicators to undermine the equity market have now fallen into place. As well as overvaluation, we showed recently that the extreme bullishness currently prevailing among professional advisors has not been seen in markets since (just before) the 1987 crash.

Amid all the focus on the parabolic spike in cryptocurrencies, it has gone almost unnoticed that, following its rapid scaling, the main S&P Composite index seems to be now most overbought since 1995. Even now, seems to be overestimated/over-bullish and overbought market might not be enough to unleash the dormant bears.

To wrap up, we conclude by saying, even if the BTC prices tumble, we wouldn’t be surprised much, perhaps that happens, maybe the industry would offer ideal entry levels to load up. You would probably be convinced by looking at the boom cycle of the price behavior of this asset class. For reading on this, refer below weblink:

https://www.econotimes.com/FxWirePro-When-entire-universe-of-risk-averse-gamble-on-Bitcoin-asset-bubble-booming-cycles-have-so-much-to-lure-1054608

The central idea of this write up is emphasize on the underlying news that could prop up any asset price’s spikes and tumbles. We reiterate the fact that - in such an industry which is in inception stage driven by brilliant technology, price speculative moves are quite common.