Bitcoin Makes New Highs, Ethereum Is The Real Opportunity

Tom Luongo profile picture
Tom Luongo


  • Bitcoin's surge above $5000 had thin coattails.
  • Hard fork fears dogged Ethereum for the past few weeks.
  • Ethereum-like cryptocurrencies are a unique investment opportunity.

Friday, Bitcoin (OTC:GBTC) pushed through its previous high near $5000 like there was no resistance. The digital currency spent a couple of days pushing up against that limit until a number of minor news items brought in a massive wave of buyers.

What was interesting was watching most of the rest of the crypto-market not respond alongside Bitcoin. Unlike in rallies past where Bitcoin’s success was a rising tide lifting all boats, yesterday saw continued selling in a many coins/tokens with bright futures.

In effect, we saw liquidity drain out of coins like NEO, Waves, Monero and STEEM and back into the big three, Bitcoin, Litecoin and Ethereum. This makes the argument pretty clear that some of these coins were way ahead of themselves.

They were the recipient of profit-taking out of the big three. Most of the money that moves into the crypto-space isn’t coming back out again because of uncertainty surrounding taxes. This is part of the reason why the ICO – Initial Coin Offering – market exploded this year.

All of these profits can’t be brought back to the ‘real world’ lest these newly-minted ‘Crypto-Millionaires’ get rapped with massive capital gains taxes, especially here in the U.S.

The I.R.S. classifies Bitcoin as ‘property’ and hence is taxed at the capital gains rate. If your cost basis is next to nothing, pulling that money out for any purchase bigger than your mortgage or car payment makes little sense if you think the correction in Bitcoin is a temporary one.

Hence, using that new capital to fund new projects as a form of tax shelter makes sense. So does booking profits in the ‘under-valued’ coins. And it doesn’t take a lot of this rotation to send some of these coins up by factors of five or ten.

But, once Bitcoin

This article was written by

Tom Luongo profile picture
I am a former research chemist by trade and an Austrian Economist by study and a market analyst by choice. For the past four years I have been a Senior Financial Editor with Newsmax Media publishing my thoughts on where markets, central banks, gold and geopolitics meet and explode.  I am now the publisher of Gold, Goats n' Guns, a monthly newsletter offered through Patreon.  I have been an investor and market analyst for more seventeen years and am an astute observer in changes within the culture and the political landscape. Feel free to find me on: My personal blog, Giold Goats 'n Guns: www.tomluongo.meYou Tube: Twitter: @TFL1728 Patreon: @tomluongo (Mondays at 8pm and Fridays @ 9pm EST)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own Ethereum, Steem, Waves, Litecoin and Neo. I do not own any Bitcoin.

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