Bitcoin used to be the sandbox of the uber-nerd. Even today even market sophisticates who’s job it should really be to know all about Crypto and still shuffling around in the foothill of understanding or commonly totally clueless about what it is. This is not surprising because crypto really is the deepest rabbit hole most of us will have to pursue. This complexity is one of the areas weaknesses as it was for the internet and computing before it. Unsurprisingly it’s the kids that have wriggled the deepest into the warren of blockchain knowledge, another field mark of the next big thing if ever there was.
When Bitcoin and cryptocurrency crossed over from this subculture underworld the price took off.
Lets call this moment 1/1/2017. The denizens of Crypto might disagree but without doubt 2017 was the year of Bitcoin so we can start there.
Lets look how prices developed.
From this perspective altcoins are the big story. While Bitcoin was the giant brand, the runners up, Ethereum and Litecoin punched harder for the Hodlers. The scale of the chart is normalised to BTC to USD.
If you had the good fortune to buy on the 1st January and the insanity foresight to hold then the returns remain even now practically psychedelic.
It is interesting to note the Bitcoin peaked first, Litecoin next and finally Ethereum, with huge jumps after Bitcoin peaks.
As believers we do not think Cryptos will go to zilch, instead we look to the next bubble cycle to kick off. As I stated in a previous article, Crypto is a logarithmic asset where the price is driven by its passage into the mainstream, when the next wave hits and the top tiers of ‘normal people’ ‘get it’ the cycle will repeat. That’s the belief.
So where are we in the cycle?
Most of the way to the bottom.
So lets look at what happened to BTC, ETH and LTC since Bitcoin hit its peak. The scale as above is in BTC to USD.
We can see Litecoin under performing Bitcoin and over the period because of the late rally for Ethereum after Bitcoin’s peak, Ethereum outperformes Bitcoin. However this outperformance would require a perverse and fortunate market timing for the buyer.
Lets look at the recent history since Ethereum’s peak.
Stating the obvious, all these coins are clearly correlated. ETH and LTC have the alpha on Bitcoin.
As such it would make sense to watch them as a way to catch the bottom with some extra pop.
So lets go back to the beginning. We want a signal that shows us when to re-enter.
Ethereum and Litecoin lagged the end of the bubble, signalled by Bitcoin. What signalled the beginning?
What am I doing? As a believer that however much you polish your crystal balls you can never see the future clearly, I’m gently buying dribs and drabs of Bitcoin, Ethereum and Litecoin, all of which I hold and many other coins beside. I am however waiting to buy material amounts, because the trend is down and the trend is not our friend until the bend in the end.
I’ll spend at the bend in the end.
That is pretty clear.
The altcoins have the alpha and Ethereum lead the charge last time.
The past doesn’t predict the future blah blah blah…. But you would be a fool not to watch for Ethereum and Litecoin to start rallying as a potential signal for the Crypto market bottom we are all waiting for and last year it gave plenty of advanced warning, so will likely do so again after the “Bitcoin is Dead” headlines hit the mainstream press.