Wow...Litecoin is down 85% off its highs, look at all that value! This must be a great time to buy, right?
Sadly, the perception of discounted value based on the size of an asset's fall is one of the oldest traps in the investing game. And in Litecoin's case, too many are failing to appreciate that at the $50 level, Litecoin is only back to levels seen in Nov. of 2017 -- just six weeks before the final market top.
The point is that in a bear market, downside extremes are as likely as upside extremes in a bull market. When I was buying Litecoin at $13 last year and had it more than double on me within weeks, I remember thinking that this wouldn't end well. Of course, I couldn't fathom it going up another 10x or more. So, on the downside, within a savage bear market, one must appreciate that the extreme lows could be as severe.
Look at the chart I've drawn below for Litecoin. You might see value, but I only see a bear market decline within a very well-defined Cycle downtrend. In my book, you always go with the trend and have an expectation that the prior Cycle pattern will continue into the next Cycle. Obviously, at some point all trends reverse and the pattern breaks. But, as the chart clearly illustrates, this current Cycle offered up a bull trap last week and the next Cycle Low is not due until the Oct 20th timeframe.
There are NO CERTAINTIES in trading/investing. But between now and Oct 20th there is plenty of time left for this to get worse.
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