BTC price drop - Implications, odds and ends
With BTC having broken major support levels twice in the last few days, the market has changed a bit.
Let's look a little broader at what related things are happening.
BTC price drop - Implications, odds and ends
Downward pointing spikes are interesting!
Of significance is the downward pointed spike that BTC price is forming.
Made by Bit Brain with TradingView
Historically we have seen such spikes just before BTC launches into a protracted and usually steep climb.
Made by Bit Brain with TradingView
This is in keeping with what the "capitulation theorists" were saying all along (the ones I disagreed with, but who were ultimately proven to be right): BTC must first dip sharply in order to climb strongly again. Right now they're all very happy, and I think that they have good reason to be.
As fellow Timmian @heyimsnuffles says: "Bitcoin Broke...and is Entering the BUY ZONE!!!"
Mining is having a hard time
Increased competition combined with low prices in 2018 has taken a heavy toll on miners. In fact it's been so bad that hash rate has been dropping since late September. BTC block difficulty has actually now decreased twice out of the last three adjustments! The last time that that happened was, ironically enough, in November 2017. The third difficulty adjustment, the one which wasn't a decrease, was an increase of only 0.02%, so it doesn't even count as an increase! Despite the latest difficulty adjustment being only two days old, block time has already increased perceptibly, an indication that miners are really struggling to make money and that we could even expect further downwards difficulty adjustments if price doesn't pick up significantly soon.
Long-term BTC hashrate. Source: https://www.blockchain.com/charts/hash-rate
Medium-term BTC hashrate. Source: https://www.blockchain.com/charts/hash-rate
I lost my own BTC cloud mine earlier this year after two months of sustained unprofitability, and that was some time ago. However, those who do stay in the mining game for the long-term will reap the rewards of having less competition. If they hodl the products of their mining instead of selling them, they stand to make great profits on them in the future, even though mining is not profitable right now.
There must be a lot of idle ASICs standing around at the moment! (That which is not caught up in the Bitcoin Cash hash wars!) At least the Mempool is so empty that BTC transactions are very cheap! If you are mining and you can keep doing so, then I recommend that you just hold whatever you make. Miners are still dropping out (as seen by the decrease in hashrate). The more they drop out, the more you score.
Altcoins
Altcoins continue to get punished at an increased rate compared to BTC. They're still acting like BTC superchargers, enhancing the effect of any BTC price movements. I think that the alts are a very good place to be once the bulls return in force. The alts have lost such a high percentage of their value since January that there are the most incredible deals available on what are essentially a form of pseudo-shares tied to the value of many well-founded tech start-up companies. I'm tempted to put more of my own BTC into the alts, but I fear that my BTC total is already as low as I should let it become.
FANG
The FANG stocks have mirrored the performance of BTC in November, albeit at a greatly reduced scale. This indicates that people are generally moving money out of the modern stocks and into more stable assets which retain value better. One would hope that BTC would be seen this way (as it has been in some countries which have been through recent crises), but alas, adoption of BTC is still too low for it to be trusted globally in that role. One day that will change...
Stock market indices are also dropping, also mirroring BTC to a degree, only much less so (and also less than the FANG stocks are). With the gold price increasing slightly, it looks as if seeking safe refuge and liquidating risks is again the order of the day for investors.
Foot Notes:
I need to take a look at my long-term BTC projections again. With only the long-term now providing support for BTC, the long-term is more important than ever. Once I have something more solid to share then I will do so.
My recommendation to all is that you should not let current events panic you. I'm holding (as usual) and I will continue to do so. Don't give in to a hasty knee-jerk reaction because you are scared right now. Unless you really need money instantly, liquidating crypto investments now would be a very poor call in my books. Hold. Prices will rise! A lot!
Yours in crypto,
Bit Brain
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by Bit Brain
Congrats for hodling! it takes some serious guts to still keep faith during these times and many weaker hands have already given up, so you deserve some respect for hodling on. Or maybe it isn't faith, but rather lunacy? Who knows.. sometimes I too wonder if I fell for some giant ponzi scheme, but it gets less every bubble that I survive. I am more convinced of BTC than ever before.
One note though, we're not nearly at the point where we can begin recovering. What we need now is to dump a little bit more, and then hang out at that level for the next couple of months before people are truly convinced that the bottom is in. Bouncing off of it a second time with some strength would be ideal. But it's not going to happen first.
What is first going to happen is that many newbs who are still hodling will think that soon the bottom is in as soon as we have a significant bounce. In a way they may be right that it is the bottom, but they are too premature. Those newbs coupled with the traders are going to cause a big ol' dead cat bounce first, maybe driving us all the way up to $5000-$6000 before topping out and tumbling down. That will crush some more belief and get rid of some more of the remaining weak hands. After the dead cat bounce(s) we get consolidation, bottom-forming and by late spring/summer we will have lost the last of the people from 2017 who don't really believe. What is left then are hardcore hodlers of last resort and people who cannot be shaken out because they are ready to go to 0 before selling. They are the ones who form the true bottom.
Bakkt, Fidelity, etc. etc. are all nice but they're not going to do anything to help us out of this period. Institutional investors are no fools - they do not buy in at this phase of bear markets, confirmation of the bottom is needed first. Also, instutions are going to take months to sign up and get going. Expect 6 months before actual effects are starting to be noticeable.
Second half of 2019 is going to be great I believe and 2020 is going to be glorious
Worry not, young padawan.... we have months of buying BTC at cheap levels! Instant gratification would be nice, but long term gratification is often so much sweeter.
It certainly could go that way. This market is incredibly hard to read, being so easily influenced. The Bakkt delay seems to have hit hard today. The low volume makes patterns erractic and untrustworthy. I don't see why things can't start picking up already as sentiment climbs towars the new Jaunary Bakkt launch, but nothing would surprise me right now. I would definitely rather consolidate before a climb, otherwise your dead cat will almost certainly become a reality.
You can ignore those fundamentals TBH. I don't think the Bakkt delay has anything to do with today's price action. At best/worst it only helps to speed it along.
The reality is that the people with the biggest amount of money are using TA primarily. So since everybody uses the same damn TA and is looking at the same damn triangles, it becomes like a self-fulfilling prophecy. And the more often TA proves to be succesful... even if it is a 1% higher success rate, then people will use it, thereby driving it's self-fulfilling succesrate higher than 1%, leading to more people following it. It's not about predicting markets, but predicting probability. Bullish news + bearish chart = uncertain. Need to have bullish chart in order to have bullish effects from anything. Big money does not like any kind of risk, because usually it is not their own money which they invest but that of clients.
I disagree on the effect of Bakkt, I think that news like it, China FUD, CBOE futures etc plays a big role in the minds of easily frightened investors wrestling with this new animal called crypto.
I agree on the effect of mixed signals, but disagree on those charts being properly bearish. They obviously don't look at long-term RSI and Stochs!