What happened to the crypto market?

I have been researching a lot Bitcoin/USDT trading opinions, forecasts and honestly a lot of information has been even for me confusing.

I have visited some Facebook Groups and a lot of people are blaming Elon and China of Bitcoin’s fall. But is it a 100% true information or only part or is it totally misleading.

Let’s just review how Bitcoin performed from the last year.

Bitcoin started the year 2020 with comfy levels around 11 to 12 K USD, until the Covid’s effect came and Bitcoin plunged to 4.9 K in the middle of March. During the following months, BTC was locked in a sideway trend between 9 and 12 K USD. Then from October each month stronger and stronger bulls were taking over. On December 12th, BTC overpassed its record highs from December 2017 of around 20 K and in two weeks jumped by 60% up to 32 K USD. On April 10th it reached its record high of around 64.8 K USD. So from October to the second week of May it was locked within a strong bull run as you can see in the thumbnail.

For the rest of April, Bitcoin has been losing gradually its steam and it was bouncing basically between 47 and 59 K USD. Two weeks ago, weekly moving averages crossed down. The first weekly candle was an innocent almost imperceptible bullish cross. However this week a strong reversal appeared when Bitcoin slumped from 42 K to 29 K USD in one single day.

Of course the following day it recovered. But something changed. 42 K which used to be a strong support has become a strong resistance. On Wednesday BTC recovered to around 42 K, and yesterday BTC was flirting around 42 K but it didn’t overpass 42.5 K level, and today we see come back to 30’s K.

Now how people perceive the situation?

Some of them think that it’s because of Elon Musk. Some of them think that it’s also because of China.

I have noticed that many important cryptonews sources haven’t been communicated the fact about possible crypto reversal to our community. It’s like if discussing the cryptobubble is some kind of tabu for us and it shouldn't be discussed in advance and therefore sometimes you feel that some mean guy or some mean country caused it.

Let’s stop thinking this pointless facts and let’s get into the land of reality.

Have you ever thought yourself that the cryptocurrency market has been heavily overpriced?

Why am I saying that?

Besides any Technical Analysis and Fundamental Analysis which of course applies to cryptocurrency market, this market is mainly built on confidence.

You could have seen this with the price of BINANCE Coin. From 13 USD it came almost to 680 USD. Over 50 times higher from the price of September. Is it because Binance is a better option? Is it better than Ethereum? Certainly it’s fees are cheaper than Ethereum's abusive gas fees. But does 50 times increase reflect real value of any cryptocurrency?

Those maybe questions that me and you can be asking yourself at any time.

I have seen that in some Telegram trading groups, people are waiting with anxiety for any update, listing, a new app, a Hydro deflation and they pump the price to levels which you could hardly ever imagined.

The best example could be Yearn Finance. Someone who bought 1 Yearn Finance at 15 USD, 2 months later was earning already 45,000 dollars. And how about all the buzz around Doge coin?

People, traders, communities, influencers – all of us may have participated in this mechanic of strong bull cycle. But you also know that whatever comes high, will eventually fall one day.

Last week 1 Bitcoin Cash (BCH) was 1,600 USD. I commented to some friends that it may get to 600 USD in less than 2 weeks, nobody believed me.  I was feeling like a kid who spoiled the party with some nasty comment. They got into bullish trap, amazing gains of your favorite coin can eliminate the sense of being Down to Earth.

I commented my opinion in some Telegram Groups, not procuring to give any financial advice but expressing my personal opinion. What I personally think, doesn’t have to match with masses.

Today one friend of mine, thanked me that he was able to save tons of money because he analyzed better the market after I told him that it was heavily overpriced. Other guy told me, that I am underrated in my trend forecasts. I am probably humble because I don’t try to convince anyone, only to get on the right track.

And in cryptocurrency market it is called bear market. Why bear?

It is called bear when bear falls with its all weight over its prey. We call it also a red market because you will see a lot of red descending candles. Is this bear market short or long term? Good question. I really don’t know. It may last few days, few weeks or 6 months.

Cryptocurrency market has been growing at staggering pace, a strong rhytm. Great technological and financial developments have occurred across all blockchain. But certain cons have been there too.

When I started in crypto, I basically started with Bitcoin, Ethereum, Dash, BCH and some ERC-20 coins. ERC-20 coins or tokens were really great and brought us great returns. However high ETH gas fees have not been solved. I personally moved away from ERC-20, it is not an option for me anymore. But sometimes I trade them on exchanges and then withdraw the profits with other coins such as BCH or LTC.

ETH or BTC fees is not only about money, it’s also about customer’s experience. So if you treat your customers with exorbitant ETH gas fees, you cannot expect any good outcome of it on the long run.   If someone treats you bad in some department store, do you wanna come back?

So we have been having new and different options fortunately.

I gave you example with Binance Coin strong bull run but it happened almost everywhere with ADA, ETH itself, DOT, LINK, BCH, CHAIN and many others.

One day of this week, Elon tweets something, the bubble bursts and now many think that it’s his fault. Next day China announces some restrictions, and the market falls again.

What happens to people?

They see the price, and some of them freak out, they want to sell.

Why?

Because there are two kinds of investors:

Short run investors who are checking their gains and losses every day.

Long term investors who see Bitcoin and ETH or any other crypto as their store of value. If someone bought Bitcoin at 12,000 USD he/she is still earning his/her 200%. If someone got it at 60K, then the same person would be losing 40% in one month.

How’s the reaction of the community?

Maxies will tell you – Hodl, it’s a store of value and it will get over 100 K USD one day. And they maybe right, but none of them knows when it will happen. Will it happen in October 2021 or in 2 years? I don't know because I don't wanna be speculating.

Now some people discuss that BTC has been adopted by institutional investors, this is a double sword fact. 

On one hand there is much wider adoption but also traditional investors or Boards of stockholders will be always questioning the profits development their fund managers, CEO's, CFO's and other people who are in charge. So once there is any negative result, these guys execute a lot of pressure in regards with the investment decisions. Because that's the way it its, and they need to have reports and quarter, semestral and annual meetings and check all the progress.

Buy the dip – Some people bought the dip and in certain occasion they made profit. If they got Bitcoin for 29,000 USD, they are earning at this moment around 7,500 USD.

But if they bought the dip at 39,000 USD they will be losing around 2,500 USD per each Bitcoin.

Sell and leave the market – a lot of small investors freaked out and did the panic sale. Maybe they will come over again, maybe not.

Run to stable coins and wait – That could be probably one of the best strategies. Ok, you sold your Bitcoin for 40,000 USD and you wait, and maybe in few days or weeks you will get it 20,000. So you may get 2 BTC for 40,000 USD. 2 for 1, I like that.

If you visit a lot of professional traders’ videos, you may end up confused because each of them will have their own opinion. Sometimes they are gonna be right, and sometimes not.

Wnen you invest, even if you did the best fundamental and Technical Analysis, you have always a  probability that the market will go against you.

So I recommend to everybody, don’t follow always the masses, trust yourself and DYOR = Do your own research.

I don't know what to do - A lot of people actually don't know how to react, and how to solve the situation and it's a hard time for them to figure their way out of this mess.

Now how deep can Bitcoin go?

This is a good question. This is a game of probabilities.

Bitcoin often does opposite thing than the majority of people expect.

So I would grade it in terms of probabilities:

1. a) 5% - Bitcoin will record only these lows, and in few months it will go above 100 K USD.
2. b) 20% - Bitcoin will overpass 43 K resistance and in September it will trade around 60 -80 K USD. I personally don’t expect it, but it’s a probability that can happen.
3. c) 50% - Bitcoin will reach its minimum price around 18-22 K in the following months, and it will be trading between 20 and 40 K in the following months.
4. d) 15% - Bitcoin first will be traded in the range between 20 and 40 K, and then it will test the support of 20 K and will go down to 12 K USD.
5. e) 10% - Bitcoin will be traded in different ranges during the year, and may end at the bottom of 9 K USD. Here we suppose the fall of 85%.
6. f) 5% - The darkest scenario. Something else happened in the market and Bitcoin lost between 85-97% of its record high price. So the bottom may happen between 2,000 and 9,000 USD.

Which one are the most feasible for me? Option C and D.

Now during the bear market there are always strong bear waves but some bull breaks. There could possibly happen a short term bullish reversal in the second part of next week.

For example we would get on Tuesday to 25,000 USD, and then recover back to 38,000 USD. It is possible. This is just an example, not saying it will happen for sure.

During bear market there is one effect.

Market almost doesn’t consider positive news but it’s driven by scary news like the China’s reaction or possible ban in India.

Professional traders can recommend you good strategies and everyone can start learning his way of trading.

Will be there good opportunities?

Yes of course, during and especially at the end.

Maybe you will get soon you Bitcoin at great irresistible price, or any other cryptocurrency.

Maybe you get Bitcoin for 20 K and sell it for 30K and still make 10K. There could be a lot of examples. Maybe you get your Doge again for 0.01 USD.

How about Altcoins?

If you heard that ETH is overtaking Bitcoin, it was a valid argument until last Monday. Now Ethereum is losing its ground against Bitcoin. It was 0.08 ETH per BTC, now it’s around 0.06 ETH, so the peak was reached.

My question is wherever you keep on reading news on ETH, do they tell you this update?

 You will hear different opinions, but check the crossed exchange rates:

Google: ETH/BTC and then select it for 1H, 1 Day and you can compare it with your own eyes.

Altcoins usually fall much faster in % than Bitcoin itself.

Some altcoin have already lost 60% in less than 2 weeks while Bitcoin has only lost 45% from its record highs. During bear market wave some alts can go between 85-97% off, it depends on each altcoin.

During 2018, ETH went down from 1,453 to 81 USD, it lost aprox. 94% of its value and you can track other altcoins and compare. I didn't invent it, those are cold and harsh facts.

The similar pattern can apply to Bitcoin Cash, Dash, Litecoin and others.

Are you feeling guilty about having some losses?

Don’t be!

In our traditional society, we have been taught that the world only belongs to winners. But every trader knows that you have to be willing to accept some losses. For example from 10 trades, there will be 1 or 2 o 3 trades where you lose. Losing is natural, you cannot win all the trades at 100%. Some traders make one big mistake: They earned 100 USD in 8 trades but they are emotionally attached to the 9th trade and they don’t want to lose 20 or 30 USD. Sometimes it’s better to lose 30 USD than 200 USD.

One example with the current situation:

You bought your 0.1 BTC for 4,500 USD (45,000 USD per 1 BTC), then you lose 600 USD, you sell it at 3,900 USD. (39,000 USD) Ok, you feel miserable and all that stuff. But have you thought that you maybe getting your 0.13 BTC few days later for 30,000 USD. There will be always some ups and downs. But naturally you have to be willing to wait.

Or maybe you run to your comfy USD or GBP and wait few more months until the market calms down. There are many different strategies.

I personally learned that sometimes it’s better wait few days than pretending to fix my losses in 1 single day. It can be nerve wrecking but it’s true. Maybe you sold your alcoins 2 days ago and in few days you will get much more of your altcoin.

Another secret: If you got some profit, withdraw some of those profits, don’t go according Las Vegas style, one part you withdraw, one you keep.

Important fundamentals:

Check them on news.bitcoin.com or Cointelegraph but what I also do, I try to pick both parts of the story – the good news and I also see the bad news, you need to be objective.

If you are fanatic with something, you may lose objectivity. In investing you need a cold blood and be down to Earth.