An update on Cryptocurrency

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Since my last update about Bitcoin and my suspicions about the big boys dropping the price of Bitcoin on January 15th, little did I expect the price to drop and drop so fast. Since the posting, Bitcoin drop another 50% to USD6078 at writing. Although I expected the price to drop, it is never pleasant to watch the prices dip. In this article, I would like to discuss mainly Bitcoin and cryptocurrency from a different perspective:

a) Technical Analysis
BTC closed below the Daily 200 sma. This represents a bearish move on Bitcoin and the sellers did not hesitate and came in today. I anticipate Bitcoin to drop further till its first support is 6000 where it is trading right now and if that support does not hold, the next support level would be 4563. I expect price of Bitcoin to move sideways for the next few weeks or months. First range is 6000 – 8000, 8000 – 9717 and 9717 to 11236 (Levels are based on current Bitcoin low prices). To give a more definitive level would need Bitcoin to stop dropping.

b) Total Cryptocurrency Market Capitalization
Total Cryptocurrency Market Capitalization has drop to USD282 billion from a high of USD813 billion. This was the market cap before the big boys gave up killing Bitcoin. So, my question is that we saw a huge drop in prices but WHO IS SELLING? The normal people or the big boys. Putting on my conspiracy cap, I bet it’s the normal people who are selling due to FEAR and WORRY and Bitcoin wealth from the masses is slowly being transferred to the big boys. This transfer of wealth would be slow hence my prediction of a sideways market.

c) Market Dominance of BTC
For the past 1 month, we saw so many Bitcoin going to zero articles. If it is going to zero and crashing, why is the dominance still at 30%? For every 10-person buying cryptocurrency, we have 3 people buying Bitcoin, 2 buying Ethereum and the rest buying Alt Coins. One may argue that the dominance of Bitcoin has drop. I say early dominance are not actual representations as there was not much cryptocurrencies to buy till now. With the current total of 1514 cryptocurrencies and still maintaining a 30% dominance is something. AT the end of the day, you do not get a “FUTURES” of your own if you are not important. If you do not think so, its ok. As long CME and CBOE think it’s important, I am ok with that.

d) Legitimacy
Goldman Sach has admitted that Bitcoin is a currency. JP Morgan’s CEO apologized for calling Bitcoin a fraud. We have the both of them attacking Cryptos for the entire 2017 only to change their mind later and right after that the market drops. Well go figure. No matter what, their admission means it is now legit. Cryptocurrencies were also discussed in the World Economic Forum in Davos and will continue to be discussed in the G20 in March 2018. By the way, I beg to differ about Bitcoin being a currency. At best it’s a commodity for now. It is too volatile to be a currency.

e) Banking moves
Banks in the US has blocked its users from using credit cards to buy Cryptocurrency. This is a good move as cryptocurrency is not a place for people to make a quick buck. It’s for people who believe in its value for the long term. Having said that there is also a different face to the other side of the coin. This move can be seen as a way to prevent fiat currency conversion to cryptos. The fiat regime has gone through severe bashing of late especially the US Dollars.

f) Regulations
Cryptocurrency needs to be regulated. The recent sell down is largely attributed to negative news from Korea, India and China which created fear. These 3 countries contribute a significant amount of investment in the crypto world. At the end of the day, Korea has come out to say they are banning all unregulated exchanges, China is banning all foreign cryptocurrency exchange and India saying they have no intention to ban cryptos. All 3 countries are not banning cryptos but trying to regulate it to protect their interest. So, when you have a disruption in the norm, expect such drop to happen.

g) Warren Buffett
Warren Buffett in an interview said that Bitcoin smell of a bubble. I have full respect for Warren Buffett and he has been my idol since the very first day when I started in the financial world. As my idol, I read his books and watch his videos. One thing I learn about Warren is to invest in what you know. He called the Dot Com bust right but he later on also said he regretted not investing in some really good Dot Com companies like Amazon and Microsoft. He even called it his biggest regret. My believe is 95% of the crypto companies you see today will go to zero just like the Dot Com bust. Only a few would be left standing. Those left standing would be worth a tremendous amount.