Bitcoin - You're doing it wrong (maybe)
This post is mainly written for the newer investors: those who hopped aboard the 2020/2021 crypto-train. There may also be value in this post for more experienced investors who need to be reminded of a thing or two. I'll finish off with a little update about what I think BTC is most likely to do next - which is good info for everyone to hear.
September Bitcoin: a tale of woe
September has been a bad month for Bitcoin investors. Note I said "Bitcoin investors", not "Bitcoin". Bitcoin itself is doing just fine! Earlier this month a nation recognised it as "legal tender" for the first time (and began dishing some of it out to their citizens for free - well as "free" as something bought with their own tax money ever can be). That's a BIG milestone in the Bitcoin timeline. Make no mistake: that action will be recorded in the history books, even though it went largely unacknowledged by the Western media, or was derided when they did care to pick up the story (to the surprise of nobody).
No my friends: Bitcoin's fundamentals remain as strong as ever - which is where the problem comes arises...
... because people are dumping it this month. And that HURTS to watch!
This isn't about me. It's not about the hodlers. I/we don't really care if the price of BTC takes a dive, it REALLY doesn't matter to us in the long-term!
What hurts is that I know that those dumping BTC are likely to be the newer retail investors. These are people desperate to try to make a little more money in a world which is ****ing them over on a daily basis, and they are those who can't afford to make a loss on an investment. These are people trying to find a way to make money in a world which continually takes money from them by force. I've looked at some financial news today, I happened to check CNBC and Forbes: both are sowing Bitcoin FUD.
New guys, listen up! Listen CAREFULLY! THIS IS NORMAL!
The financial media ALWAYS bashes Bitcoin! It's been doing so for as long as what Bitcoin has existed. Big banks ALWAYS bash Bitcoin - they have to - their very survival is threatened by it! Governments bash Bitcoin - it has the potential to completely crumble their corrupt system of governance and funding. THIS IS NORMAL!
I wanted to cry when I saw people dumping Bitcoin about a week ago just because Powell was opening his mouth again. What's Powell's big concern? Inflation rates: they're rising faster than predicted. What does that mean? It means he has to raise interest rates or face runaway inflation. What does that mean? It means that borrowing becomes more expensive - so local investment and growth stalls and unemployment grows. What does that mean? It means that the US economy - and hence the US Dollar - becomes threatened by other economies/currencies. What does that mean? It means that the the status of USD as a global reserve asset could vanish, that the petro-dollar could vanish and that the dollar would no longer be a safe haven. What does that mean? It means that the US will sit with massive debts it can't repay. What does that mean? It means that money printer will go BRRRRR!!!! at hyper-speed. What does that mean? It means the collapse of the entire global economic house of cards in a hyper-inflationary scenario of cataclysmic proportions.
What does that mean?
It means that you should be BUYING Bitcoin as a hedge against inflation! Ignoring the entire "Bitcoin is freedom" thing - which is the main reason for holding it - dumping Bitcoin now does not even make economic sense!
Why do you think the media is full of FUD? Who do you think is buying your Bitcoin when you sell it? SOMEBODY is buying every sell transaction, that's how trading works! Why sell your Bitcoin cheaply when the market is trending strongly upwards? Have you zoomed a Bitcoin chart out lately?
No, you haven't. You'd rather listen to the short-term engineered market panic because "China banned Bitcoin".
Again.
If I had a dollar for every time that "China banned Bitcoin" since I've been investing in it, I would have at least 10 bucks by now! China ALWAYS bans Bitcoin! Or regulates Bitcoin. Or restricts Bitcoin. Or limits Bitcoin. Banning Bitcoin is China's national sport! They are the uncontested world champions at it. They manage to re-ban it several times every year, without ever unbanning it!
And every time they "ban" it, the truth behind "the ban" goes something like this:
- China passes a law a few days prior, everyone misses it because they don't read Chinese government announcements.
- Someone translates the law a week or two later and crypto social media picks it up - the "news" (now old) runs wild through the community.
- CNBC, Forbes, Yahoo!, Bloomberg etc pick up the story and join the FUD train, adding their usual spin to it.
- Retail investors panic-sell to "protect" themselves from financial mishap.
- Big money buys the dip (thank you for the price drop retail investors - you suckers!).
- The price of BTC climbs again.
- Those who bother to dig into the details find that China has not enacted a total ban on BTC.
End result:
- Retail investors: lost Bitcoin and dumped at a bad price.
- Whales: accumulated during the dip and soon sit on a very tidy profit.
- Smart money: sighs at the madness around it and ignores it all.
- Bitcoin itself: just carries on going from strength to strength - irrespective of what the media says about it.
Remember, Bitcoin has already died at least 430 times before... https://99bitcoins.com/bitcoin-obituaries/
What's next?
My Bitcoin predictions for 2021 have been obstinately stable for the entire year. The latest market activity changes them somewhat, but not by much. The simplest way for me to explain what I foresee happening next is to say: "take everything I wrote in my August Bitcoin update and simply delay it by a month or two".
By my projections, BTC is now clearly well into oversold territory. This is an unstable situation and is unlikely to remain this way for much longer. While one can never predict such things with certainty, it is HIGHLY likely that a major upswing is on the cards for late 2021.
So to state things clearly and unambiguously: having FUDded ourselves to a lower price than what we would otherwise be at (assuming that I've sort-of done the charting predictions in a realistic fashion), we are oversold and are due for a rapid increase in price.
Fears in the market, especially among the newer investors, will keep prices down for a while to come,
OR - will result in a slower climb than one might expect,
OR - (and I consider this to be the most likely scenario) will cause further corrections in price as it shoots up (which would happen anyway, but they could be more severe than anticipated).
Looking holistically, this is a good thing. Every delay - every time the top of the market is pushed further into the future, the price which BTC will reach at that market top becomes even higher. For the savvy investor, this presents an even better opportunity to possibly lock in profits by temporarily going to stablecoins.
Final note
For the not-so-savvy investor: when you don't know what to do, when the market confuses you, when you feel panic rising - rather just do nothing. Don't buy, don't swap one coin for another, and above all - don't sell! Even people who bought Bitcoin at the worst possible time in late 2017 - at about $20k per coin - are now sitting on a profit of more than 100% (assuming they held). Forget the hourly charts, the daily charts, the weekly charts. Look at the yearly charts. "HODL" is a damn good strategy. Anyone who says otherwise will have me to answer to.
For the savvy investors: remember history; remember your roots. Don't give in to the FUD and FOMO of the newer guys. You must influence them, don't let them influence you, even if they outnumber you (which is a good thing, it means adoption is accelerating). Remember what crypto is, how it started, and WHY it started. I am heartily sick of seeing the willingness of "crypto investors" to participate in derivatives markets. Being pro-crypto and pro-derivates is like being anti-abortion but pro-killing babies - it makes no sense at all and is counterproductive. Crypto is NOT "Fiat 2.0". It must not make the same mistakes that fiat did. To do so is to corrupt it and manipulate it. Let's try to keep it as fair and free as possible. Crypto OGs, you need to step up and show the new guys how crypto should be done! Otherwise we'll end up back where we started...
Yours in crypto
Bit Brain
All charts made by Bit Brain with TradingView
"The secret to success: find out where people are going and get there first"
~ Mark Twain
"Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful"
~ Bit Brain
Bit Brain recommends:
Crypto Exchanges:
Yours in crypto
Bit Brain
All charts made by Bit Brain with TradingView
"The secret to success: find out where people are going and get there first"
~ Mark Twain
"Crypto does not require institutional investment to succeed; institutions require crypto investments to remain successful"
~ Bit Brain
Bit Brain recommends:
Crypto Exchanges:
