Bitcoin, cryptocurrency and markets - A summary of the first half of 2018

Hi all, it has been a while since I have written any blog posts about cryptocurrency. I have still been following all the developments, but have not found the time to write. I thought the half year mark was a good time to amalgamate my thoughts. I will approach this from a 'fundamental' perspective as opposed to technical (charts and retracement levels).

I will separate this blog into two parts - The history since 2018 and then more 'recent news' follow this through in chronological order.

My overall sentiment is that I remain bullish long term and my thoughts are that only top 20 to an absolute maximum of 50 cryptocurrencies will survive in the long run. In other words there is a bull market due and no-one knows when (could even be in 5 year) but that will be the one that see trillion dollars in total market cap. This might take a while and I will go through the why and how. There appears that the general consensus among most are that there is one more 'shakeout' or leg down lower still due.

To everyone that entered to become a millionaire overnight. I hope you understand now making copious amounts of money is not easy. Risk and reward is the double edged sword that can make or break you. Next time you question why your investment is making a loss when has no effort and time resulted in fortunes? Stop and think for a moment. Everyone in this market is out to be rich so how are you any different? What are you doing that is different? This is a volatile market and I borrow three quotes from Warren Buffet that I apply to my investment methodology:

• "Wealth is a transfer from the impatient to the patient"
• "Be greedy when others are fearful and be fearful when others are greedy"
• “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

2018 - Q1 AND Q2 REFLECTION

The beginning of the downtrend was in the middle of December 2017 when the 'bull run' was in full swing. Everyone and anyone was talking about cryptocurrencies. Your dog could select a coin from the top 100 and you were guaranteed to make money. The exuberance and energy was real. The positivity and happiness is one thing I miss amongst the community.

WHAT CAUSED THE DOWNTREND?
The moment futures launched on the market it gave our beloved 'institutions' the ability to short bitcoin (sell Bitcoin and buy back at a lower price) - in other words as the price falls you make money (check Investopedia if you want to learn more). This appeared to be bullish for Bitcoin but since its inception it has had a strong 'grip' on the price causing it to go into a downtrend and 'bear market'. One of the reasons this was not a good outcome for 'hodlers' and those bullish was that these shorts/longs on futures do NOT need to own the underlying asset i.e bitcoin. This is detrimental for an asset that has a value proposition from fixed and limited supply.

Moving on we had our beloved Mt. Gox Trustee selling off Bitcoin on the market to liquidate funds for creditors and the legal case. Mt. Gox was one of the largest crypto exchanges in the 2010-2014 to when it was hacked in 2011 and halted in 2014. This has been a long running legal battle and to both fund and credit all those involved the trustee has been selling off Bitcoin. For more details read: https://www.coindesk.com/140-million-bitcoin-moved-mt-gox-wallets/
https://cointelegraph.com/news/effects-of-mt-gox-trustees-400-mln-sale-on-bitcoin-market

To date comments have been made that the sales have provided sufficient funds for the rest of the legal proceedings and crediting investors.

HACKS? SECURITY THREATS?
This is one of the ongoing problems in this space as people dont understand how to secure their coins. I recommend you visit the following:

• https://steemit.com/bitcoin/@banglasteve/serious-about-security-or-more-like-seriously-security
• https://steemit.com/cryptocurrency/@banglasteve/cryptocurrency-security-and-wallets-explained-within-2-minutes

The first major hack this year was Coincheck with a theft of $400 million worth of NEM. These do not mean there is any underlying weakness in the currencies themselves. Rather the exchanges and how they store the coins.
(https://www.coindesk.com/coincheck-starts-crypto-hack-refunds-and-allows-limited-trading/)

Overall the amount of hacks and types of hacks can be found here: https://www.finder.com/673-million-stolen-in-crypto-hacks-in-2018

TETHER!?

• There have been discussions that Tether printing resulted in the Bitcoin rally. This allowed it to reach the mark of $20,000 USD. There was a study conducted and rather than link the article I want to link another one as the study has been questioned and broken down step by step and labelled an 'underwhelming analysis', please check: https://www.bloomberg.com/view/articles/2018-06-15/bitcoin-manipulation-study-is-less-than-it-seems

Right now all of the market is 'bearish' and people are predicting $3k bitcoin and lower. My advice to many is everyone comes in originally for the money but when you explore the technology and understand it - you will not leave. One of the most ridiculous phrases is 'blockchain but not bitcoin'. Feel free to message me if you would like to discuss this further. I encourage everyone to look into the fractional reserve banking system and one video that opened my eyes to the 'system' was the following video I encourage ALL OF YOU to check out:

BULLS AHOY?
Now I think it comes time to talk about the POSITIVE news. First and foremost the development and awareness in this space is more now than ever. Last year the price got ahead of the development and now the inverse applies. Development is far outpacing the prices. Here is a brief summary of some bullish news:

• Increasing growth of the lightning network (off-chain scalable and very cheap transactions for Bitcoin): https://www.facebook.com/cryptonewsmagazine/posts/617033981993997
• Application for a Bitcoin ETF, as it was recently not declared a security. That was obvious though right? https://www.nasdaq.com/article/will-vanecks-renewed-attempt-to-launch-bitcoin-etf-work-cm979148
• Coinbase is ramping up to start selling other cryptocurrencies and they are one of the largest on-ramp platforms: https://www.bloomberg.com/view/articles/2018-06-15/bitcoin-manipulation-study-is-less-than-it-seems
• Institutional investors?
• Ethereum is NOT a security! Personally felt the price action was underwhelming. https://www.cnbc.com/2018/06/14/bitcoin-and-ethereum-are-not-securities-but-some-cryptocurrencies-may-be-sec-official-says.html
• Payments, payments, payments! There are more and more merchants becoming cryptocurrency friendly https://dailyhodl.com/2018/06/04/you-can-now-accept-cryptocurrency-on-twitch-bitcoin-ethereum-litecoin-and-bitcoin-cash-accepted/
• This looks promising: https://www.cryptoninjas.net/2018/06/10/ethos-partners-with-fusion-financial-advisors-for-cryptocurrency-portfolios/
• Dotcom bubble was localised to the US and cryptocurrency is GLOBAL! The peak was 3 trillion. Apply Net Present Value and crypto scratches that surface: https://www.reddit.com/r/CryptoCurrency/comments/7irww4/bitcoin_bubble_vs_dotcom_bubble_market_cap/
• So many people are bearish, markets can surprise when we least expect it. There will be some resistance as those scared will sell in the first instance and this is what will drag out the timeline

MY PREDICTIONS? (THESE CAN BE FAR OFF BUT JUST MY PERSONAL THOUGHTS)

• Cryptocurrencies will remain in a downtrend until the end of the year with potential for a retrace
• Bitcoin ETFs/Cryptocurrency ETFs will stimulate the next bull run
• Clear guidelines regarding cryptocurrency for institutions is provided and larger and well known institutions who are on the sidelines are both more comfortable and confident in the sector
• If all three play out - it will be very interesting times

Some reading for those that want to look at other thoughts have a read of this: https://medium.com/@super.crypto1/4th-dimension-bitcoin-manipulation-cartel-can-it-be-burnt-no-way-c53de65c166a

As always start small and learn big.

Now more than ever as a community we must stand strong. "United we stand. Divided we fall".

Cryptosteve