Bitcoins recent high was at $ 41962. It is as I write $31265 which is a fall of over 25%+ A 25% fall is, at least in stocks and shares considered a crash.
Here is the chart.
For me this is a very bearish chart almost supernaturally similar to the boom bubble of 2017.
When I predicted this fantastic rally back in 2020, I used the 2017 rally as a guide and have done so for the bulk of the way up. I sold at $32,000 because as an equity guy I am reminded that bears get feed, bulls get feed but pigs get slaughtered. I’ll be honest, my sell limit was $38,000 but I couldn’t bear to hang tough for that extra profit. As JP Morgan said, “I’ve made a fortune getting out too soon.”
The question now is, is this another short pause or a continued replay of 2017. I believe it is the later but if it isn’t then would most likely happen.
Let me be clear I think this is highly UNLIKELY.
Forgive my dodgy chart cut and pasting, but this is what I see as more likely.
Now I’m not predicting every twist and turn with this, just the general thrust of what might happen on the backside of this boom. Again its simple a replay of 2017/2018 and as it played out that way on the road up it is highly likely to do so on the way down.
Why would that be? Simply because the same forces are at play: FOMO, Halvening and increased adoption. Until new drivers enter the picture this boom bubble bust cycle will play out over and over again just as similar cycles have played out in tech since the 18th century.
Remember this is the classic shape of all these types of verticals. Rockets that stay aloft are very rare and even the ones that go on to greatness have terrible pull backs, so this is not just a crypto thing, it’s the story of many a goliath stock.
But what is an investor or trader to do?
To me the way to play this is to shift into Ethereum and DeFi which will remain bullish for a fair amount of time if bitcoin has had it for this cycle and if Bitcoin explodes again it will certainly follow Bitcoin on the upward move.
I am not convinced that Ethereum can catch Bitcoin in total marketcap, but there is a case that this could happen with the proliferation of DeFi and it is a dream worth parking if the price action starts to confirm the possibility. Ethereum is bound currently by the huge spike in transaction fee costs and this mediates and double binds Eth. However that is going away, it is planned, with Ethereum V2, but that in itself injects the sort of uncertainty likely to be a headwind for Ethereum for the year ahead.
Ethereum’s congestion problems are solvable one way or another, be it V2, Layer 2 or 3 or 4 or ..n or sidechains, alt chains or even some new innovation that will be magicked up that no one has thought of yet. There is huge money and kudos in such solutions and a legion of tech talent is on the case, so it will get fixed.
Right now the biggest bang in Crypto is in the Ethereum ecosystem.
So the way to play is to play Ethereum and DeFi and leave the Bitcoin to the institutions to pump or dump.
If the tales or 2017 becomes the tale of 2021 then medium and long term we are back to guessing the bottom and then acquiring for the next halvening and another cycle. 4 years might seem a long time but in equities it is a 20 year circuit, one that is reaching its crescendo as I write. As such the next Crypto boom is really not that far away from now and while the Hodlers will grumble I’m happy to go with that flow and is the cycle holds the next top is $80,000.