Cryptomania Will Fade in 2018

The cryptocurrency phenomenon has exploded in 2017 - and the envy, and confusion, around cryptocurrencies has sparked what is called cryptomania.

Editor’s Note: Welcome to our week-long special series! Our editors for both the Sovereign Investor Daily and Winning Investor Daily are looking ahead to 2018 and providing their insights into what they believe will be the big movers and shakers for the new year. They are also looking at critical steps you can take to preserve and grow your wealth. Happy reading! — Jocelynn Smith, Senior Managing Editor

 

The cryptocurrency phenomenon has exploded in 2017 — and it’s one I’m sure no one saw coming.

At this point, bitcoin and other cryptocurrencies have surged in value this year, hitting levels that have handed random people who owned them for years riches beyond their wildest dreams.

The envy, and confusion, around cryptocurrencies has sparked what is called cryptomania.

This is an era that is much like the dot-com bubble, where companies were changing their names to reflect an online presence even if they were not an online company at all — that is what we are seeing with cryptocurrencies.

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The rush to change business names and add domains that reflect cryptocurrencies has been rampant.

On Thursday, a company that sells iced tea changed its name from Long Island Iced Tea Corp. (Nasdaq: LTEA) to Long Blockchain.

Blockchain is the technology behind cryptocurrencies that makes them secure and, some say, impossible to hack.

The company has no exposure to blockchain technology at the moment, but it changed its name anyway and said it plans to invest in it.

This caused the small-cap stock to pop more than 400% on the news. Take a look:

The cryptocurrency phenomenon has exploded in 2017 - and the envy, and confusion, around cryptocurrencies has sparked what is called cryptomania.

This type of cryptomania can only last so long.

I’m not calling for bitcoin to plunge, or for cryptocurrencies in general to fade next year. But this hysteria, and the mad rush to say a company has exposure to it, will end the same way all hysterias do:  badly.

These stocks that are getting a boost on the news will plunge back to their normal levels, or even lower, as the normal holders of the stocks exit on these irrational moves higher.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert