For those who voluntarily or involuntarily found themselves in the crypto — currency world in December 2017 or January 2018, having bought bags of bitcoins, it is very painful to observe what is happening now. This week, the price of Bitcoin for the first time in a long time broke the support level in the area of $ 3800 per coin and rushed below — to the area of 3000. A boring “bearish” year, during which the capitalization of the crypto-currency market gradually “lost weight”, it seems, is approaching its logical end. But what will this end be? Let’s see.
First of all, it should be noted that the overall macroeconomic background, and in General the economy does not look very impressive now. Microsoft has overtaken Apple in capitalization, the stock exchange is all red, oil again goes to the area of $ 58 per barrel, VAT is growing, and the hyperinflation of the currency in Venezuela shows some astronomical figures.
“Buy when there’s blood on the streets, even if it’s your own blood,” Warren Buffett once said. And was absolutely rights. Only now there is nothing to buy.
Bitcoin at discount. Bubble burst?
To understand what is happening in the cryptocurrency market, let’s first look at the big picture. Here is a chart of growth and decline of Bitcoin (BTC). On a linear scale, it may seem that he is now at the bottom. But on the logarithmic chart we see that it is much more expensive now than at the beginning of last year, or the year before. Each growth is followed by a fall, and it is inevitable: there is simply no eternal growth. The market is cyclical, volatile and subject to sentiment, that is, the mood of buyers and sellers. If the bulls win-the price increases, the coin is bought, if the bears win-it is better to sell and buy cheaper, “at the bottom”. There is no doubt that people really need bitcoins — the capitalization of BTC still represents an impressive 66 billion dollars, and the coin itself is in search of its true price. This search may take years.
Let’s look at a few points that affect the value of bitcoin:
- Bitcoin is the first and oldest crypto-currency. In the nine years of its existence, the Bitcoin Protocol has not revealed any serious vulnerability, and the system itself, thanks to the underlying blockchain technology, is reliable and can not be hacked. If you don’t believe it or don’t know, you’d better learn what blockchain is, it’s a cool thing.
- There will never be more than 21 000 000 bitcoins in circulation. If all the dollar millionaires in the world wanted to buy at least one bitcoin, there would not be enough coins for everyone. It is likely that in the future for the coins will be a fight (in fact it is already underway), and this affects the growth of prices. Price is determined by demand.
- The cryptocurrency market has a huge space for growth. The condition of the people from the Forbes list of billionaires is greater than the market capitalization of bitcoin. Only one Apple is worth more than 10 times than all the bitcoins, if you start from capitalization.
- Bitcoin, at its core, is still poorly developed and not particularly common technology. You can compare the appearance of cryptocurrencies with the first beginnings of the TCP/IP Protocol. Everybody uses it, but nobody knows what it is.
- The lack of regulators and a kind of “freedom” leads to the fact that the price can fluctuate greatly. Yes, from 3800 to 20000 dollars it is quite possible to call such fluctuation. While Bitcoin showed the stability almost to the level of stock throughout 2018.
- The absence of regulators also means the almost complete absence of large investors. And large investors have so much money that if they wanted to buy the whole cue ball, its price would be somewhere on the moon.
What happened to bitcoin?
As we have already found out, if everyone starts selling, a chain reaction is formed. If the chain reaction gets out of control, the “bubble” bursts. Only in the case of bitcoins and a bubble-there is no any-the coin still has a value and considerable, and will have it for a very long time, until it falls to zero. Only here is to imagine the fall even to 20, 100 or 500 dollars is very difficult — at each level of support when moving down will meet more and more willing to buy coins. Because in order to sell more expensive, you must first buy cheaper, and not Vice versa.
The current fall of Bitcoin was preceded by two main agendas: a protracted, unpleasant, boring, flat, red, bearish year and the war between BCH SV and BCH ABC. The fact that BTC is an enemy is separated coin BCH, created based on the same blockchain and BTC. At all desire, I won’t be able to tell briefly and clearly, than they differ and that such fork, but you will be able to learn independently on 2bitcoins.ru if you like. In November, the BCH community split and the coin itself split as well. A branch of supporters of Craig Wright, who tried to impersonate the real Satoshi Nakamoto — the inventor of Bitcoin, who mysteriously disappeared, separated from the main core.
But if Craig Wright is a real Satoshi, he must have a lot of bitcoins. And if he gave threats in the style of “after us the deluge” in the action by sliding at least a fraction of its reserves, the market would have simply collapsed. This fear also played an important role.
Also, amid falling Bitcoin has postponed the launch of a major platform for cryptocurrency trading Bakkt, which could pave the world of crypt of the road for very large investors. The platform is promised to be launched in January, and should have been in November-December. To understand the scale of inequality of the cryptocurrency world and the stock market, think about it: the capitalization of the entire crypt is about 130 billion dollars, and the value of all shares in the world is 70 trillion. No one can even calculate the cost of derivatives, but it should be around 630 trillion — 1.2 quadrillion dollars. Next to these numbers, the price of bitcoin does not even look solid.
Nobody knows. Because if someone knew how the market would behave in the next second, minute, hour or year, he would have become a billionaire. Some are lucky, some try to use technical analysis for trading.
Will bitcoin grow? Of course, it will grow, at least to adjust the current fall and return the previous all time highest, that is, the record price. When this will happen, is unknown.
Will bitcoin fall? It may well be, because the correction of its last year’s growth continues and sell those who bought for 1000, 2000 or 3000 dollars. In the end, they are in the black and in the big.
This bitcoin price is a discount on black Friday. Remember how crazy people were when they saw the rapid growth of the coin from 3000 to 10 000 dollars, and tried to catch, jumping on the train to the moon. This is a great opportunity to buy cheaper, but there is a recommendation not to try to catch a falling dagger (on the chart), but to enter the beginning of an uptrend, that is, to wait for at least some thaw in this bloodbath.
In any case, do not take my words as financial advice, I’m just a modest observer of the technologies of the present and the future. Do your own research, especially when it comes to investment, and in any case do not invest the latter and do not take out loans.
What will you do?