Why I think 2018 will not be as good as 2017 for Bitcoin

in #bitcoin6 years ago
  1. I believe that if Bitcoin will find resistance at a certain level it will not stay close to it for long, but rather take a dive from it.
  2. Given the assumption above, and while inflation rates are higher than advertised by governments, central banks and most financial institutes, it is still not high enough to justify a further steep rise in Bitcoin, so Bitcoin has to keep rising sharply in its real value in order to meet speculators' and investor's expectations.
  3. Speculators and investors speculate that it will be a rise in market share, rather a rise in inflation which will keep fueling Bitcoin's rise, but while it is fair to assume that cryptocurrencies are here to stay, there are other cryptocurrencies, some with better attributes, like Litecoin, ZCash, Zerocoin and maybe Bitcoin Cash too, and I heard that Monero is the most private, while I do not think that it is better than Bitcoin, since Monero quantities will grow forever.
    Bitcoin has to compete against these other currencies both on miners and on traders.
    Some miners already migrated from BTC to BCH, and it was not the first miners' migration out of Bitcoin, which makes Bitcoin mining even slower and more expensive, which in turn makes Bitcoin slower and trading it more expensive to traders and investors, which may encourage them to ditch it.
    So I do expect cryptocurrency market capitalization to keep rising, and I also expect Bitcoin market cap to increase at a lower pace due to its competition.
  4. Bitcoin bubble is in accordance with the current fiat cash bubble, which causes inflation in most asset classes except hard asset commodities, but if this reverses, and stocks, bonds and real estate take a dive, some investors and traders may switch from Bitcoin to assets with declining values, and by doing so increase supply of Bitcoin and press its price down.

I do not call current BTC price a top, but I do believe that the estimates on Bitcoin reaching 15K prior to the year 2020 are exaggerated.
I do expect big enough profit taking to prevent 15k price from happening before 2020 and therefore I epect its price to be constricted within a rising channel with a slope smaller than an annual 5% rate.
This does not mean that I expect it to stop rising soon or at all, but it does mean that I believe that a further steep rise in value will be followed by over 1/2 of its rise correction downwards.
clarification: Not 1/2 of its value, but 1/2 of its additional value.
Will Bitcoin reach 10K this year, or until February 2018?
I would not bet against it, but once it happens, I do expect selling pressure to start meeting the buying pressure.
Both pressures will increase, and more people will feel the slowness and the increased costs of transactions, which may keep them away from Bitcoin and even cryptocurrency market as a whole for a while.
What I do not advise: to stay out of Bitcoin (I am out myself due to technical difficulties and the learning curve)
What I do advise: Still not a good price to start shorting. Do not start mining BTC unless you have very low energetic costs (these costs vary between countries and even within each country) . To find more beneficial currencies to mine unless it involves a significant cost of switching to other mining hardware. Other currencies may start declining it their mining profitability too.
I do believe that Proof-of-Work should be replaced by better measures.
The longer the term you intend to invest the more you should care about the currency's inflation rate.
The shorter the term you intend to invest the more you should care about transaction fees.
You should always consider both of these parameters.
You should also consider the variability of these parameters.
For example, what if at some point a big enough majority starts supporting even a single increase from the 21 million limit on Bitcoin or Bitcoin Cash, or another currency's supposedly ultimate quantity in order to quicken its mining by making it more profitable in the short term.
Once it happens it should cause a lose of confidence.

Is Bitcoin the better choice to purchase now than other currencies I mentioned above?
I believe it is the worse choice, but there are worse choices still.
Currencies with an unlimited dilution rate like ETH, Steem, and most other currencies.

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