Bitcoin and Cryptocurrencies: Where do we go from here?
Volatility has set in on worldwide stock markets with the Dow Jones Industrial Average, the most popular stock exchange in the world, experiencing massive 600 and 1100 point drops in the past 2 days alone. It is now off by 8.5% from its record highs established just less than 2 weeks ago.
This however still pales in comparison to the selloff we're witnessing in the cryptocurrency world, with bitcoin, the most popular cryptocoin today, now off by more than 60% from its record highs established less than 2 months ago. While the magnified volatility is not new with cryptocurrencies, this prolonged downturn has certainly put many enthusiasts and traders on edge.
To those who have been with bitcoin from the very beginning, the price at this level would still represent handsome gains. However those who have gone in at the wrong time would probably be sitting now on unrealized losses. Where do we go from here? I don't think anyone has a concrete answer.
What I can say is that whatever coin you're in, what you can do is look beyond the short term price pressure and evaluate what the coin is about, what it stands for, what it aims to accomplish, what is the future roadmap, and others. Look at this fundamental picture, and ensure it is sound and concrete.
Renowned fund manager Peter Lynch mentioned in his the book Beating the Street: “This is one of the keys to successful investing: focus on the companies, not on the stocks.” I do think this can also be extended to cryptocurrencies. Look at the fundamental picture of the coin; in the long run, the price will take care of itself.
At the end of the day, we're all hoping for some stability to set in, and price to reflect the true value of what each coin is worth. Let's hope this comes sooner rather than later.
Risk Warning: All comments, charts and analysis on this post are purely my own and should in no way be treated as recommendations or advice, nor should they be construed as an endorsement or recommendation to buy, sell or hold. Please do not trade based solely on the information provided on this post. Furthermore, past performance does not guarantee future success. Always do your own due diligence and analysis when trading.
Photo courtesy of Pixabay.
According to the firm Autonomous Next, the number of hedge funds investing in digital assets like Bitcoin has grown rapidly to more than 100. Since the launch of Bitcoin Futures on the Chicago Mercantile Exchange in December 2017, it shouldn’t be a surprise to anyone why the price of Bitcoin is down 50% from the high.
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Only Retail Investors chase price and buy high and sell low, while the Professionals buy low and sell high. The Hedge Funds have purposely sold Bitcoin futures to get in a better price.
At the moment, there is a war taking place between the buyers (Hedge Funds) and the sellers (Retail Investors) called capitulation. That line in the sand was at $9000. Capitulation is when investors give up any previous gains, by selling, in an effort to get out of the market. Capitulations are outcomes that result from the maximum psychological and financial pain that can be endured by a group before throwing in the towel. The Retail Investors are throwing in the towel after seeing a more than 50% correction in the Bitcoin price to the buyers, the Hedge Funds. With 100s of millions of dollars to invest, we are witnessing an accumulation phase by the Hedge Funds between $6000 and $9000.
The Hedge Funds are loading up and buying from the Retail Investors. But to fill all their buy orders, as the sell orders dry up, price must go down to the next stack of sell orders. We are approaching what I believe will be the bottom of bitcoin at $6000. My first target is $12,000 and my second target is $17,000 over the next 3 - 9 months.
The easy money has been made over the last 12-18 months. With the big boys in the game now, the rules have changes. The question is, are you ready to play to win with a new play book?
This post is my personal opinion. I’m not a financial advisor. Do your own research before making investment decisions. By reading this post, you acknowledge and accept full responsibility of any gains or losses.
Interesting post. Thanks for sharing.
best advice i've seen. upvoted.
Thanks so much as well! Your compliment is well appreciated.
Good post bro i upvoted it maybe you can follow me i follow you back
Thanks for the compliment.
I hope things will change soon and bitcoin will recover again, I still believe that bitcoin can go to 100k in the future and it's just a kind of correction we have.
I hope so too. Bitcoin has a few hurdles at the moment before it can continue to progress forward. Hope these can all be addressed in time.
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I've checked your link, thanks for sharing.
There is no clear reason today why cryptocurrency market is going down. FUD is finish.
It does feel like we're in the middle of a storm. Let's hope prices do stabilize soon.
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