Is Bitcoin Crashing Because of Tether?
$BTC crashing down, blowing bellow support, but bouncing back above 10k is a strong relief signal to the investors. A lot of people are attributing this to Tether subpoena, however that is not the case. Tether subpoena is 2 months old news that showed up on Bloomberg.
My technical analysis that was based on Low Volume predicted todays bears. I am slightly surprised that it dipped bellow few of my support lines that I came up with, and still managed to bounce back above $10 000. I was expecting the drop to the lower level of $9200-$9300 range.
However the interesting element was the fact that Alt-Coin market got completely obliterated. Entire Market Cap dropped down to $512 billion. I could remember a month ago when I was starring at $800+ billion market cap thinking that $1 trillion dollars is behind the corner. Almost feels like we’re traveling back in time.
The real reason why Bitcoin is crashing is because the Chinese miners are cashing out. It is the same story as our Christmass and New Year, and Chinese are the major stakeholders of BitCoin. You can see this in the daily trends. During the hours in USA, the price is going up a little bit, and during the night the price dumping occurs. It’s like daily occurance. I am almost wondering if I could day trade these swings until 15th February.
Impact on Major Alts
Ripple dropped down 12% yesterday, despite all the amazing news coverage it has been getting amongst the larger media outlets, including Coin Desk. It has been sliding harder and further than $ETH and $BTC. Ripple is in a deep bear market and I am expecting to have it tank to $0.80 cents before the end of February. Even with Bull reversal, I expect that the most resilient bag holders that bought Ripple at $3+ will abandon the ship in a chase of bigger gains elsewhere. They will eat up a loss and switch over to $ETH or $BTC which show stronger bullish capacities once the markets switches from bears to bulls.
The problem with the Bitcoin wasn’t the speed, it was the transaction fee. And now that fees are virtually zero, we are safe to assume that Ripple as a transfer of value is losing its potency and appeal. Lack of the network effect is diminishing its value.
Majority of the transfer that are happening on Block Chain networks are happening between the massive exchanges, and not Peer To Peer. That being said, the main reason why people are transferring large crypto’s is to trade them further for alts and dollars on the mentioned exchanges.
Yesterday All top 20 coins in the market have been bleeding heavily anywhere from 4% to 15%, while today majority of the coins remains stagnant.
Analysis of January and Predictions for February
Based on my own analysis, I am safe to assume that we will have slight bear or sideways trading market until the middle to the end of February. If you are new to the crypto markets you can use the following two weeks for fractional “buy ins”, until you reach the investment portfolio that will be to your level. I never suggest that you “buy in” all at once. Try different prices, do increments of $50–500 at the time, depending on your total budget for your investment.
If you are already invested, try to strengthen your position, especially in the noteable alt-coins that you are a fan of. I think that currently there isn’t a wrong buy anywhere.
A lot of people are excited about RobinHood App, Taxes and numerous other things that are happening, but I don’t think that all of these factors will have an immediate impact on the price. Numerous people that are waiting for RobinHood are existing Coinbase users. The entire month of January was extremely decimating for the hodlers, God Bless Them, their patience will pay off in the Spring.
If month of January proved anything, that hodl-ing is a poor mans investment strategy, if applied only on its own. What we could learn from this is that serious crypto investors will invest in the futures and options in order to hedge the risks of price dropping. I will probably explore this in more details and inform you of the results. This will make sense from risk protection perspective.
I started to change my own attitude towards holding the crypto currency, however, I’ve learned that HODL is possibly the only strategy that investors without know how or that don’t have access to futures. Hodl-ing is more reliable than day trading when you don’t know what you are doing. I’ve lost money on not hodling, and missed quite a few of the good pumps of major coins. Day trading can hurt you if you don’t know what you’re doing.
If you don’t have access to fancy strategies, perhaps you can hedge with mining. Now that mining prices are fairly low, you can rest assured that miners are not hurting right now. Mining mihgt not yield as great results per invested dollars, but in a bears market it will give you a guaranteed return, while the rest of the market is bleeding.
Alt Coins that I am currently invested and why
Here’s a list of current alts that I made positions in:
- $TRX – Tronix – because of the insane marketing and huge price volatility. My position ins’t huge, but it’s substantial, and I am expecting some gains by Mid March.
- $ETC – Ethereum Classic – Because of the upcoming fork in March, price increase in late February ahead of the sidechain fork and air drop.
- $bts – BitShares – this coin already sky rocketed from $0.30 to $0.40 (with spikes to $0.50).
- $Strat – Because it’s a platfrom (kinda like Ethereum), and everyone is expecting that platform coins will be a big deal.
- $Dash – for the same reason as Strat, with the added bonus of master nodes, that are a hot thing on the market now.
- $Zen – this coin is the coin I will be mining. I’ve got a small position in it, because it’s on Bittrex, and I really hate that website, so lazy to login into it.
Luckily, right now you can’t go wrong with buying any coin, so blast away, if you are in a buying mode.
HODL strong, we all got kicked hard in January, so it’s not just you. You need to understand how entire market is unreliable, unpredictable and most importantly irrational. The prices aren’t the reflection of the relative value of the coin, but more of the insanity of the market. I am pretty confident that once the Chinese New Year clears out, and corporate slump (holidays and stagnant position with the institutional investors clears out) the price of the entire market should bounce back and exceed previous all time highs.
I am kinda amazed that there are so many people selling at these low prices, I think this kind of correction won’t happen ever again, as crypto starts taking swings towards market domination in the financial world.