With Bitcoin crashing – in fact, the entire cryptocurrency sector crashing – I thought I should cover it up quickly today.
Needless to say, she’s not pretty.
Belief in cryptocurrency has taken a beating – in most cases, it is absolutely true
At this time last year, bitcoin went to one that was worth over $60,000. Then I had a monster accident.
I don’t remember if it was on these pages or on Twitter, but somewhere I suggested that a reasonable target for the correction might be $20,000.
The $20,000 was the old price since the boom and bust of 2017 and an obvious pivotal price point.
But the correction stopped at $30,000 or just below.
The conclusion I came to – and based on the current evidence I got it wrong – is that, as Bitcoin matured, its volatility was declining. The 90% retracement of the previous bull markets is now the 50%-60% retracement.
Bitcoin got a second boost above $60,000 in the fall, followed by another massive correction, and here’s $30,000 held again (actually below, but I’m using the round numbers because it’s more readable).
As an asset, Bitcoin has become closely associated with the Nasdaq and technology stocks, and as we all know, tech stocks have been in turmoil. Peloton, for example, which we wrote about yesterday, is down more than 90%.
So over the past two weeks, I’ve been very encouraged to see bitcoin holding up so well compared to other tech stocks. $30,000 looks like a floor.
Then we had the collapse of the Terra protocol, the so-called Stablecoin UST, which John covered earlier in the week, and the sector was hit hard.
This is big and will take some recovery from it. The 2016 bubble was approaching scam ICOs. Today it is stable and stable coins. Staking returns – more than 20% in some cases – were unsustainable and therefore unsustainable. (If you’re at a loss as to what I’m talking about here, don’t worry, you haven’t missed it, at which point it’s very well for the better.)
Hundreds of thousands of people have lost money, and in some cases fortunes, and the reputational damage to cryptocurrencies is huge. All those who have declared “cryptocurrency a scam” now seem wise, while those, somewhat including myself, who have made the argument that Bitcoin is a hedge against currency devaluation, seem stupid, given that it is a 65 percent discount. % of its heights.
Bitcoin will survive (again) but it will probably hit $20,000 and could drop further
Of course, bitcoin and cryptocurrency are not the same thing. Bitcoin is still a product of technical genius and open source, but in its wake and surroundings, there are disasters, bugs, scams, and scams.
Altcoins, NFTs, Metaverse, Defi, staking and whatever else is hype – it’s all so much value that the bubble has burst well and truly. repeatedly.
And there lies the keyword – again. This isn’t the first time this has happened and it won’t be the last. And despite all the junk that surrounds it, bitcoin keeps plunging around.
As I write it, it’s worth $27,500. I can’t see how he’s not retesting $20,000 in the coming days.
Hopefully $20,000 will be kept, but these are horrible, horrible, horrible markets – and I’m not just talking about cryptocurrencies. Oil was heading for bananas in 2008, rising to $150 a barrel, which caused this crash. It seems that not much different is happening now, after oil prices rose to $130 last month.
There will be a lot of forced sellers – leveraged players (those using borrowed money) and so on. So we will see a lot of filtering. My advice, if you own quality assets, and you don’t have to sell, is not to own them.
Gold, bitcoin, good companies – whatever. Its price may go down, but if you are not confident that you can beat the market, don’t sell. Because just as bubbles always burst, quality always comes out well. And Bitcoin itself – I’m not talking about other cryptocurrencies – Bitcoin itself is a high-quality asset.
There is even a chance of a return to Corona panic lows in March 2020. Well, everything else seems to be going like this. That could take us up to $3,000. I’d think that’s unlikely, but I’d say never, especially in these markets.
If you think you can beat the market, like I said, go for it.
If not, HODL quality. Don’t trade it.
Dominic’s film, Adam Smith: Father of the Fringe, about the improbable influence of the Father of Economics on the world’s greatest arts festival is Now available to watch on YouTube.