Blockchain and crypto-assets are here to stay. That’s for sure, at least for me.
I have been in crypto already since 2013 and learned some lessons about crypto-investing the hard way. I entered the crypto-trading space at a price level of US$30 per bitcoin (BTC). Ethereum was not there back then neither were ICOs or tokens. I saw the first BTC price peak sometime in late 2013 when the BTC crashed the US$ 1,000 line, corrected down to below US$230 in 2015, and exploded to almost US$20,000 in December 2017. Between 2013 and 2018 millions of new crypto-investors entered the market and thousands of crypto-millionaires have been created.
Today, May 21, 2018, the BTC price is around USD 8,500, still very volatile without clear direction. Literally hundreds of millions of FIAT are funneled into BTC almost any single day without seeing the price going up. On the other hand, the Mt. Gox sell-off have not really damaged BTC either. To me, it seems that we currently experience a sort of fundamental restructuring of the bitcoin investment scene. Old FIAT money is coming in, bitcoin whales diversify into FIAT. Big BTC volumes are on the move in OTC trades. Currently, OTC bitcoin buyers have to pay a premium of up to 10% to the market price as a sort of “access fee”. On the other hand, we have seen some sellers offering discounts up to 7% for big volumes with several hundred thousand BTC. Terms and conditions actually vary from region to region. This rather crazy OTC scenario may go on for awhile and will definitely impact the market price and its volatility.
Despite the success of Ethereum and its native currency (ETH), bitcoin is still the lead currency in the market. Typically, BTC leads the way and ETH as well as the other coins and tokens follow suit. The situation is a bit different in the “penny-token market” where irrational price movements against BTC can be seen but that’s a different story I may tell later. Let’s come back to BTC. Where is it going to? I found a great chartist, Denny K, that already accurately predicted the recent BTC cycle and has another chart-based prediction for us.
Based on his interpretation of Elliot Waves and the respective charts, Denny believes that we are still in the bear market after the price peak in December 2017. It’s not over yet, Denny believes and we have to expect the last correction that could lead the BTC below US$ 5,000, it could even correct down to US$2,000 before the next bull cycle starts and BTC will recover. He gives that scenario a 60/40 chance of happening.
If I had to make an educated guess, I would say that the results of Denny’s chart analysis and the consequences of the huge OTC bitcoin movements lead to the very same conclusion: we have not yet seen the end of the bear cycle and should be prepared to see BTC prices well below US$5,000. With the end of this bear cycle, we will face a completely different crypto-investment space with a lot of new “whales” who diversified their FIAT portfolio into crypto.