In philosophy, everything is instructive. Since Aristotle said (paraphrasing) “everyone who speaks is in a way right, and in a way wrong,” we’ve known we needed to take in views from all available perspectives regarding a given issue to give ourselves the best chance at understanding what’s going on.
everyone who speaks is in a way right, and in a way wrong
--Aristotle
I’ve even taken it so far as to develop a formal system for evaluating propositions at the factual level of worldview; most of the views I disagree with, I do so because there is no logical way for the facts to actually add up and prove the stated or argued-for conclusion. This means that most of what I do, when I evaluate the arguments I disagree with, is to look for moral value as opposed to factual value.
I’ve been reading about the Bitcoin (BTC) mini-crash over the Thanksgiving holiday, looking for an explanation of this implausible event. Nothing major had changed in terms of support or resistance in the market, leaving articles like this one feeling somewhat flat. No, there was more to this, so I kept reading, thinking in the back of my mind as I did, that there was something passe here, being overlooked. The 1D chart on COINBASE Pro seemed to confirm my suspicion. Why such a precipitous dip?
I evaluated a handful of possible explanations, but I think I’ve finally settled on an answer: the price dipped because people at institutions were leaving the office for the Thanksgiving holiday. Now it’s rising in anticipation of their return on Monday, and smart companies probably are buying back in now so as to take a moderate profit of about 10% ($19,000-$17,000) and get right back to trading up through the bull market.
Market Trends, Currently
The thought here again is that ETH2 will revolutionize blockchain everywhere by uniting scaling techniques such as sharding and proof of stake (POS) with their best-in-class early following. Bitcoin is rising because it is the progenitor of these developments. ETH is going up because of investor confidence that dApps (decentralized applications) based on the Ethereum framework will become widespread and popular. Altcoins in general are going up because they’re finding traction and executing against a similar goal to ETH.
Against this hypothesis, I’ve evaluated a few other conjectures in the effort to figure out what’s really going on. Articles like this one say that it’s normal, healthy even, for there to be periods of consolidation during a major rally. Normal or not, things that happen tend to be caused by other events. This minor downturn may appear to be over, and the events which caused it (whether you would rather point to expired BTC options, OKex withdrawals, or Thanksgiving holiday break for institutional players) also seem to be over.
The major trends haven’t changed here. The crypto markets just had a Black Friday sale for us. Next stop: Bitcoin’s New All-Time High. Unless I miss my guess, it looks to me like markets should be opening up again tomorrow to a somewhat-mixed bag of news: Black Friday was good but not great, unemployment insurance is on the cusp of expiring for millions of Americans and the US Government has until December 11, 2020, to pass a new spending bill or it will face a shutdown. This gives Democrats plenty of leverage, but Republicans today are famously not concerned with what anyone thinks.
More stimulus? Politics looms.
The political dynamic is ultimately quite toxic, but we’ve seen most of the rally take place in spite of all the chaos on that front. Hence, it could well be the case that we see the rally continue even before the government does anything that could directly increase the price of BTC, such as issue retroactive stimulus payments of $400-$600/week to Americans for each week since early September. The amount of money on the table there is roughly $6,000 to $9,000, in a lump sum, and I can only imagine that a significant number of people would put their money directly into Bitcoin and use a product such as Nexo Wallet to pull spending money out while holding the crypto assets.
In a nutshell, the fundamentals of the rally remain relatively similar to what they were the first time we saw the current BTC price. We have some media coverage, but the crypto markets are competing with the stock markets for coverage and all of the hype that led to the 2017 bubble seems to be a target of aversion for most of the news outlets who aren’t saying anything yet. Despite this, people are calling for ridiculously high BTC prices, in some cases $1M within 5 years, and the market seems intent upon validating these claims with an ever-increasing BTC price tag.
The question of the moment is where that price will go next, and I’ve already made my view clear: I think we’ll see prices in excess of $20,000 within the next few days and perhaps that will provide the fuel that will push the BTC market cap to $1T. When that happens, we’ll probably see another epic rally--but if the current pullback indicates anything, it’s that people are a bit more conscious this time around. We’ll probably see more temperate growth and more minor pullbacks even during the most bullish of rallies as a result.
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