Is Bitcoin Entering the Fear Stage of the Bubble Cycle?

beanstalk (33)in #bitcoin • 7 years ago (edited)

Earlier today I woke up and noticed things had recovered significantly since the "correction" that happened yesterday. Comforting, but after witnessing how quickly it could fall I was still on my toes.

After yesterdays hit I looked for other times Bitcoin had been through a steep rise followed by a correction to see if I could anticipate what would follow (a fool's errand, I know, but what the hell). What I came across was Bitcoin, and many other cryptocurrencies, have gone through a fractal pattern of Gartner Hype Cycles while maintaining a mean rise in value over its history (for more info read my previous post here). Now, the Gartner Hype Cycle is very similar to a traditional bubble, minus some small details. One of those details is the "Return to Normal".

I Believe We're in the Return to "Normal" Stage

As of this writing Bitcoin has fallen to where it was at the start of the day in the past few hours. I believe this is signalling the uncertainty people are beginning to feel about BTC holding its current value, and I'm sure there's no shortage of doubt that Bitcoin won't see massive 10 - 20% gains as it did a few weeks ago. If this is the case, we could see this all snowball into fear that Bitcoin even hold this new "Normal". And if this happens, we could seriously see Bitcoin (and therefore, all cryptocurrencies), plunge down to 20 - 30% of its peak value.

"The Dead Cat Bouncing"

If you read my previous article you'll know I tentatively predict Bitcoin could drop as low as $4,000 early into 2018. I mentioned this to a friend of mine the other day during the recovery and he said the drop could have been bottoming out or be a "dead cat bouncing". I laughed at first, but it's actually a great description of the recent ups and downs I'm seeing right now. I don't think we'll see a massive freefall of Bitcoin as shown in the bubble graph. Rather, a steady decline with ever increasing dips, and smaller recoveries. It may happen over weeks, or even months, but I do believe it will happen.

Honestly, the wishful and optimistic side of me hopes I'm wrong. I'm being bearish, full of FUD, and claiming all our extraordinary profits over the last few weeks will cease to exist. And I could be dead wrong about all this, and Bitcoin is actually consolidating before skyrocketing past $20,000. But I don't think so... not yet. So here's what I've done in the meantime:

Re-organizing My Portfolio & Cashing Out My Profits (For the Dip)

I've been fortunate enough to hit some big gains on a few coins in the past few weeks, enough to nearly double my initial investment. So, believing what I believe, I decided to take the profits out and re-balance my portfolio.

I traded much (but not all) of my Verge and Cardano coins for BTC, more of my Raiblocks, and slivers of other coins which hadn't seen much growth (but which I believe in). This amounted to about 40% of my total asset value. Two exchanges held this 40% in BTC which I sent to my main exchange where I buy and sell Bitcoin for fiat. One got there earlier than the other and I sold that close to the peak earlier today (nearly $16,000). However, the other one still hasn't been confirmed after 8 hours. How I loathe Bitcoin transfer rates... Oh well, I'll hodl onto this in case it bumps up again since I won't sell while it is dropping simply on principle. I'm stubborn.

If and when I trade that other chunk of Bitcoin for fiat I'll simply be playing with my profits. And that's where I want to be. You can't lose if you've taken out your initial investment and still have chips on the table! The best part is, I can always buy back in (if/or) when the price drops to much lower levels.

Conclusion

This is all purely speculative, I don't claim to know what's going to happen. No one can. I want more than anything to see cryptocurrencies continue to gain attention, be developed, gather new enthusiasts, and always look for new applications that better our world.

If there's one bit of advice I'd give to anybody new to crypto, such as myself, it's this: