December 2017 Was The Exception, Not The Rule

For trading platforms and crypto exchanges, December 2017 was the most stressful and profitable month ever. Likewise, it was the best time ever for price speculators.

Bitcoin, the king of all cryptos, rose from $10000 to $20000 within two weeks and hasn’t gone below the $11000 threshold since. Other altcoins like Litecoin, Ethereum and Bitcoin Cash have also had their share of meteoric rises, as they reached all-time highs in record times. Even XRP, the centralized sellout coin which used to be called “Cripple”, went to the moon with an unexpected 1000% rise.

The first two weeks of December 2017 were truly insane and will always be remembered as the time when everyone bought, almost nobody dumped, and every coin got pumped to all-time highs which exceeded every wishful estimation.

But it was only a matter of time until people got greedy and financial institutions started their plan to slay King Bitcoin: some whales withdrew, old-timers like Roger Ver ditched their bitcoins for their own questionable altcoin, and CME and CBOE started offering futures that didn’t seem to help the price at all.

And as we could observe on the graphs, the growth of every coin is correlated with that of Bitcoin.

This relation of dominance and followership happens because most altcoins are still bought with Bitcoin, so the king is also the gateway coin to the rest of the market. Some exchanges also accept Ethereum, Litecoin and Neo (especially the Chinese ones), but Bitcoin is still predominant in spite of slowdowns and transaction fees that increase with the price.

But thus far 2018 seems to be a lot slower in regards to the main coins. The only big one that recently hit an all-time high is Ethereum, but this sudden growth seems to raise concerns about scalability and network congestion: the coin is still in its development phase and even a blockchain game like CryptoKitties has caused slowdowns and issues.

If anything, the money seems to alternatively flow into questionable altcoins that are cheap and can bring quick profits. We’ve seen it happen with XRP, TRON, Verge, IOTA, and other coins that grew over night but lost a lot of market capital just as rapidly due to greedy investors who cashed out.

It seems like the dynamics of the market have temporarily changed and crypto traders look for the coin that brings gargantuan returns in a couple of months because it’s a lot easier to get a 1-cent coin to one dollar than to pump Bitcoin to $100.000. Even if it’s the same amount of money that’s required, the psychology of the low price and enormous mass makes people more willing to invest.

If buying one of the big coins back in late November and early December generated a huge instant profit, now it has (at least temporarily) become much more difficult.

Perhaps that the previous convention will unexpectedly return just because the whales like to be unpredictable, but until then we, the small-time players, have to look for coins that have a future that’s backed by a committed development team, and HODL.

But always remember the principle of the hot hand fallacy and never expect previous results to be indicative of future performances. Follow the news directly from the source (the members of the development teams who tweet are most reliable), make your own judgement, remember to buy the dip and always HODL until the all-time high. The trading game has shifted in 2018, but our instruments have remained the same.