Bitcoin Bubble Revealed... What Now
Let me start of by saying that my goal of this post is awareness & learning and not to spread fear or uncertainty. With that said, the views here are my opinion and not intended to be financial or investment advice.
Starting from mid Dec 2017 to early Feb 2018, Bitcoin has sold off about 70% at its worst. Was there any predictable signals that we could have looked out for that would have alerted us to the possibility of this happening. After doing a fair bit of research here is the 5 signals I found that could help us better predict a large sell off in future.
Warning Sign 1 — resemblance to previous bubbles
I dont think there is much to explain here other than that history often repeats itself largely due to the fact that human nature rarely changes. You can disagree with me on this but you have to admit that the graphs look very similar.
Warning Sign 2 — low volume rally
The recovery rally into early Jan 2018 had been on very low volume vs what we saw on the sell off a few days earlier. This is usually the case in other markets with volumes increasing on sell offs. However, we saw quite an extreme ratio of about 3:1. High volume and a change of market direction is something you always have to pay attention to.
Warning Sign 3 — year end timing
In equity/stock markets it is common to see a year end rally as people are in the festive spirit going into Christmas and New Years. It is fairly common to see sell offs early in January when people return from their holiday and reality dawns on them as their mood changes. While never guaranteed, its tends to happens more often than you imagine.
Warning Sign 4 — retail holders rather than institutional
By and large the holders of Bitcoin are retail people like you and me. We are subject to cashflow strain much more than institutional investors. What does this mean? Well me normally over spend into the festive season and end up short in early January. Hence there will be less retail money around to support the Bitcoin market and if anything people may look to take some money out as we fund our January cash shortage.
Warning Sign 5 — Novogratz halts hedge fund
Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, shelved plans to start a cryptocurrency hedge fund and predicted that the digital money may extend its plunge. While many have different views, the fact is that new investments were being delayed.
Full Bloomberg article here: https://www.bloomberg.com/news/articles/2017-12-22/novogratz-shelves-hedge-fund-sees-bitcoin-dropping-to-8-000
Again my goal here is awareness. Let me know whether you agree or disagree with the views here.
Stay safe out there and lets hope we retrace to previous highs by mid 2018.
I agree. It was climbing like crazy in December. I'm happy that I was able to withdraw my initial investment before the crash, so even though it's sad to see my portfolio down to half of what it was, I'm not financially ruined or anything and can just wait it out now. Now is the best time to get higher steem payouts while the coin is low. It was quite something seeing it at almost R100 per coin in December and I think with the influx of new Steemians as well as the scalability of Steemit as a platform we'll see some very interesting movement this year.
It's useful to know about the customary December high and January dip.
Oh and don't worry about cheetah. She's here to catch people plagiarising. If she shows up too much then consider rewording your article before posting it. You just need to change it up a bit.
thank you will do
Nice to meet you. I first started to get into steemit. I'll follow you. Thank you for a good article.
thank you and welcome ... im new too