Right now? Sell.

What we just saw and are still seeing is the second big bitcoin price bubble. It is now in the process of bursting, so we will see the bitcoin price essentially shrink over the next couple of months.

The underlying reason is the same as that of the first bubble. New inexperienced and often clueless "speculators" came into the bitcoin market and applied inappropriate methods like trend-following. They all lost their money the first time around, and the new breed that is active now will also lose their money and give it away to the serious speculators.

We have about four different layers of bitcoin holders:

• Traders, who use bitcoin to pay for goods and services
• Value keepers, who keep bitcoin for a long time in the hope that their value will appreciate
• Speculators, who will use their bitcoins to stabilize the price, i.e. buy low and sell high, for a handsome reward
• Clueless newbie "speculators", who will do just the opposite, i.e. buy high and sell low, and thus lose their money

The number of bitcoins actually used as a trading currency is only a small fraction of all bitcoins. Most of them are in the hands of people who want them to appreciate in value or who want to trade for a gain.

As already mentioned, the current price is excessive in the short run, so sell your bitcoins, as long as you can still get $40+ for one. Buy them back for $20 later. Perhaps keep some for the unlikely case that some millionaire comes in and buys bitcoin like mad.