RE: Why Cryptocurrencies are Down and What to Expect
I am not to worried about the crypto market in the long term. I only buy a little bit here and there, which allows for dollar cost averaging. What does concern me is that most ways in and out of the crypto market goes through bitcoin.
About 9 months ago I heard about this tether issue, that they were suspected to be buying lots of bitcoin through tether, and suspected it would be an issue. On top of that, if you look at other crypto including steem, you have to go through bitcoin or ether to buy steem. So the step is, link bank account to Coinbase, then buy bitcoin. Then use your bitcoin wallet to buy steem with ether or bitcoin. Maybe not the only way, but that’s a typical way to buy right? It’s like that with nearly every crypto. So demand in bitcoin may go up because of that.
Lets take this example in the opposite direction now. You earn a bunch of steem and you sell it for bitcoin or ether, transfer it to your bitcoin wallet, sell it at Coinbase for US dollars, and have it transferred to your account. You might do this with your ripple, dash, steem, or any other of the 1200 crypto that you own. If everyone is trying to sell at the same time, the market falls apart. I think just the sheer number of cryptos with only a few limited ways out is bad for liquidity. Liquidity is limited, so it’s not good for the market.
I still hold, but I see the weakness. Long term is positive for blockchain, just like long term was good for the internet 20 years ago. Short term though, these 1200 crypto currencies with a continuing number coming online is not good. The weak will fall, the strong will survive. Liquidity is the weakness, and when everyone freaks out, we will see the sky fall for a bit. But crap, we are down 70% from the high. Maybe the sky has fell? Who knows.
I was calling it a bubble when I bought at $250 and it went to $800, I still called it a bubble at $2000, and $4000, and $6000, and $18,000. I really am not a sage on bitcoin. The long term is good, short term I just see it flat for a while. The consolidation of currencies will happen, just like any other industry, bitcoin will survive it. Others will survive it. Time will tell.
To me you are hundred percent right with your assertion, and another way to get out of this current scenerio is the acceptance of fiat currency. If many exchange allow straight conversion from cryptocurrency to our traditional currency it will go a long way in boosting the market for profitability thus making it exciting.