explanation of why we are
going to see lots of corrections
this year in the
Expect the roller coaster this year!
And more specifically with Bitcoin....
But first, a disclaimer: I am not an investment advisor or an economist & and these are just personal observations and thoughts...
Just a little background while I am no where near an expert in the cryptocurrency world,
I think my background helps me a just a smidge.
I have worked programming for & consulting to Thomson Financial Systems, CS First Boston, Chase, Morgan Stanley, Software Options, a Fund taken over by Price Waterhouse and Independent Investors and served as an expert witness in two cases.
- Trading Systems,
- Portfolio Management,
- Order Routing Systems
- Position tracking software
- Arbitrage systems.
And presently I provide services as a business operations consultant.
A position where I need to see trends to protect my clients.
I am presenting my observations here, you must first decide if they make sense to you and if you can us it in someway.
But You must do your own analysis, findings and go do your own investment, this is just part of the information I use to make my portfolio decisions.
So Let's look to see why I believe there is going to be huge volatility in BTC we can leverage in the market over the next year... Please note we don't even need to be right with all of these just a few and your going to see huge swings!!!
And you just need to find the true Bulls (real valued coins) and Bears (overvalues coins)
Here's the list:
The cryptocurrency market has almost every currency that trade, trades on is faster Blockchain then BTC. This makes for many arbitrage situations when even dealing with non-exchange sites, and the last thing some one receiving a payment wants to see is lose of value as they are waiting over 20 minutes to just complete a transaction. So there will be a flight towards faster transacting blockchains.
Exchanges have used Bitcoin as the defacto fiat for other currencies, but it is not tethered to a non-cryptocurrency,
So using it to pay for real world goods does not work.
And therefore pushes uncertainty about value to other currencies.
As time goes on those who have purchased other coin that has a value from use, will become more and more less likely to trade their tokens as Bitcoin goes up and down. Because of the intrinsic value of the coin it gets from it's intended use. Those maintaining value as Bitcoin's goes down relatively...
Exchanges will define more and more base currencies to use for market pairs.
Thus making BTC not a way to evaluate value. So the evaluation of the market as BTC becomes less and less accurate. So after as BTC goes down coins not correlated with btc, should rise in value vs. btc.
Almost every new person coming into the market buys Bitcoin unknowingly overvaluing it. And there are going to be waves of millions of new investors in the market over the next few years.
Causing Bitcoin value to inflate and then need to correct vs. other coins.
BTC is an enforced purchase right now, because it is the base currency to buy for all non-ethereum contract tokens. Meaning people are buying it as a short term conduit an raising its value through the ratchet effect. And since they are being purchased to just make a quick short term purchase the effect on the value is not permanent because there is no hold on the position. Thus making another situation for a correction.
Finally it is obvious that the first in the market is important ,
but rolling forward 20 years forward rarely are they the largest or even around affecting the market....
And certainly they won't have 25% of the market value.....
I can see that migration in real time going on this week Bitcoin was close to 35% of the market cap last week!
And Right now either the market is still severely undervalued, or assets are not spread correctly,
Because even though other coins in the Top 20 moved up More then Bitcoin, Its % of the overall market only dropped to 30% of the market after prices rose today, (see the page below)
So what does this mean....
Bitcoin will keep getting overvalues vs. other currencies and keep correcting
If you can see when it is falling taking down other currencies down temporarily.
don't follow it blindly
If the other currencies have good bones, they will bounce back higher than bitcoin.
So it stands to make sense that when Bitcoin starts going down, if you can find some currencies with good bones going down faster,
If you move some of your bitcoins over during the fall. When the Correction ends your going to be sitting with more valuable currency and after the bounce back starts you can either buy back your position in Bitcoin with profit sitting in positions of the other cryptocurrencies, or just be sitting with more valuable coins.
I will be liquidating at least half the profit back to bitcoin for the next dive down, that it will inevitably.
Note Litecoin did just that ...look at it over the last year it's matched the USDT, but not Bitcoin in it's valuation!
Guess what I was buying yesterday as bitcoin and others dropped.....
Litecoin (LTC) at (2) $188, (2)$181, (4)172, (2)$162 and at (2)$173.
Steem (200) at $2.24,
Neo at (4) $85.
Before the correction Neo was at $130 and LTC at $215, Steem was $3.40. Already Litecoin has come back to $190, Neo $92, and Steem to $2.54. If the correction comes back for all the other currencies except ETC and BTC, like it did for the one 2 weeks ago I should net conservatively close to $1000 for only a $2500 investment....Now I will point out that its not really ALL profit, because I am just preventing lose in Bitcoin by a flight to better coins....
This technique I expect will work again as bitcoin gets artificially inflated again a bunch more times this year....Of course the currencies may not not be Litecoin, Steem and Neo....
Please note non of this says Bitcoin will not rise in value, and it does not mean that you can't make money buying and holding it. It justs says some other currencies have to do better. Which ones ...
That's the biggest question, that hopefully we can figure out.
If you can't do day trading and you think the market for cryptocurrency is going to continue to go up over the long hall, but are afraid of picking winners and losers I have a solution for you for that one. That will be my next Post on Cryptocurrency.