Why bitcoin might go below $10,000 again.
Ok, I am being pessimistic again. Fact is, taking a look at the events of these past couple of weeks it will be hard not to get emotional. Bitcoin has been on a run, couple of corrections…well if that was actually the case. The bull run was teased, for bitcoin holders from the peak of 2017, Christmas almost came early. It still might anyways, that’s if we choose to stay optimistic.
For the first time in over two years, bitcoin is smashing record highs and holding support at higher levels. Few other top cryptocurrency projects could say the same. Ethereum followed a similar route, but compared to 2017, it was actually lagging. Punters filled the space with optimistic tweets, according to one ‘this bull run will be the greatest thing that ever happened to mankind’…lol. That was a whole lot in one statement.
The charts had other motives and we saw a drop of almost $100 billion in less than 48 hours. The market has since set its path on recovery and bitcoin has broken the $18,000 barrier a couple of times since the last huge drop. Once again, bitcoin has shown better signs than every other cryptocurrency. Altcoin holders might have to wait a bit longer. Stellar (XLM) was probably the best performing top 20 coins during the very short lived ‘altseason’. Ripple was auspicious too, breaking the $0.5 level and peaking at almost $0.8. Some bag holders from 2017 already cashed in on that move!
Optimism would have been a more comfortable feeling, to be frank, but taking a deeper look, we could see more intense ‘correction’ very soon. The dynamics looks positive, just like some weeks ago, for some reasons, this could go the other way…
Bull run or bear trap?
What happened in 2017 was an actual bull run, gains were coming in multiples…not percentages. An average altcoin recorded a 3x gain, most solid projects can boast of way more. Things are not looking the same. FOMO was really a factor during the 2017 bull run; however, it is very much different this time. Things looked way more organic back in 2017, and you could easily tell that ‘cryptocurrencies were being bought’. It is harder to say for sure what is happening with the current run. For some reasons, it looks like the market is sitting on some time bomb. It will take time to find out…probably whenever the blast happens.
Honestly, I’d be glad if the reverse is actually the case, but the market really looks very complicated and traders might be getting trapped once again like the last time. This is actually a normal event, this time, it might happen in a very short time. And things might explode downwards before traders could grasp the dynamics.
Are institutions really buying bitcoin?
Easy guess…yes. Institutions are really buying bitcoin. But, is Grayscale really ‘buying all newly mined bitcoin’? Lol, not sure if there’s a real answer to this, but this phrase has been thrown around the crypto space too frequently. A very clear exaggeration in my opinion. The bitcoin uptrend actually set off after square capital threw $50 million from its reserves into bitcoin and PayPal announced its venture into bitcoin trading. Bullish news I must say.
Sequel to these two news, rumors of more firms buying into Jack Dorsey’s ‘tool for financial freedom’ filled the space. Apart from Square capital and PayPal, most of these firms are yet to make an official statement about this. Well, no one expects them to do so, but in same vein, this casts shades on the authenticity of this news. Probably someone trying to trigger some FOMO with these news? Maybe institutions are really buying bitcoins? No one knows for sure.
The current generation has a preference for cryptocurrencies over other archaic stores of value…no doubt. However, the details of this fact might be exaggerated and the market could actually be going haywire over hyperboles. I’d be glad if the reverse is the case. But if it’s not, we might see more harsh corrections.
Bags from 2017?
2017 was an actual bull run and people clearly bought cryptocurrencies with the future in mind. With the infamous end to this run, many bag holders were made. The weak hands probably sold off long ago. Apart from the 2017 peak level buyers, many (most actually) have bought dips and lay in wait for new highs. These bags will surely get new holders…only time will tell.
Regardless of how you look at it, this is the fact and as you could guess, they are really heavy bags. During the short Ripple pump, dormant wallets from 2017 came to life again. Most other cryptocurrencies have similar holders and they will come alive at the right time. If the next bull run lasts long enough, then the market will be able to take these bags comfortably, else another correction could follow.
There are numerous reasons to believe in more corrections than more uptrends, maybe the FOMO is yet to set in…or there is none actually. The market could be led by hyperboles and shills from cryptocurrency communities and influencers. Hundreds of millions in stable coins are still being printed without clear explanations. If these are really investors buying, then its good news. But if money is being printed from thin air without any regulations and are being sent to the exchanges then we might be sitting on an even bigger time bomb.
But these are mere opinions and are in no way a financial advice.
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