Bitcoin - Where next?

2018年8月25日

Greetings Peeps,

I would like to share my views on Bitcoin's current movements (or rather the lack of!) and see how the price of Bitcoin might move from here, what factors we should be aware of moving forwards and how we might navigate these difficult waters.

First of all, until we get some clear sense of direction on Bitcoin, I’m not spending much time monitoring alts. You see, while Bitcoin is sitting with no real direction, the short term trading of altcoins carries quite a lot of risk, and the first rule of trading is to protect our investments – we must be patient and wait for only the best opportunities to come to us. So for now our effort is best invested in watching Bitcoin, making occasional BTC trades, and when we feel that BTC may have plateaued, we will turn our attention to some tasty alts – and go shopping at bargain basement discount prices! If you are sitting on some hefty altcoin losses, never fear, I’ll be showing you how you can get yourself back in to profit and ahead of the game in a future update. Remember to follow me to receive future updates.

But for now, let us turn our attention back to BTC.

Bitcoin is clearly by far the biggest fish in the crypto sea. Bitcoin currently makes up 53% of the entire crypto market, with the next top 10 coins taking around 29% and the rest (1000+ and counting) accounting for less than 18%. That means is that when Bitcoin moves, it makes serious waves that affect the rest of the market. When Bitcoin drops, everything drops. And the effects are often magnified for those smaller coins. A 3 or 4% drop in BTC, may cause a 10% drop in many alts. So we don’t want to be heavy in altcoins until we feel more confident that Bitcoin is not about to drop again. Over the past 2 weeks the market has been moving sideways as it figures out where we’re heading next.

So why is BTC’s price moving sideways?

Well, first off, we’re still in a downtrend since the beginning of the year. Many new crypto investors that jumped on board during last December’s highs are now trapped and sitting on huge paper losses and the confidence that brought all of that fresh money to the market at the backend of last year, has now evaporated. With no new demand, there’s little to drive the price of Bitcoin significantly higher. What’s needed are new investors to enter the market, but you’re average person on the street is not likely to jump in until they start seeing headlines that price is rallying again.

So where’s that new money going to come from?
What’s been driving some of the recent movements has been (premature) excitement about an Exchange Traded Fund (ETF) that’s awaiting review. It’s felt by many that an ETF would be a gateway for new money to easily flow in to the market – and not just any money, but the likes of banks, pension funds and other investment funds. In other words, the financial institutions, who have the capability to pour 100’s of times the amount of money in to crypto markets than us little piddly Mino retail investors have. Exciting stuff huh?

The problem is that those financial institutions have their hands tied somewhat by regulation. They have to have frameworks in place to manage risk, they need insurance against theft (hacks) and so on. They can’t just go on to Binance and buy a bunch of Bitcoin and hold it in their wallet!

So that’s why there is so much excitement about ETF’s at the moment. ETF approval by the US SEC could well be what triggers the next bull run. However, so far although there have been several ETF applications made to the SEC, none have been approved. Now, there is one particular ETF application made by the Chicago Board Options Exchange or CBOE. Many are excited about the CBOE application and consider it the most likely to be first through the gates. At the moment, the SEC has until 30 September to review the application, but they can choose to extend their decisions. For the time being, everyone is waiting for the outcome of this application. If it’s approved, that will almost certainly be bullish for Bitcoin. If it’s postponed again or worse still - declined, then we should expect a further drop in price.

Will an ETF be approved this year?

It’s a possibility. The SEC could grant the CBOE on 30 September (or before), however that seems unlikely. So far one of the major concerns of the SEC is that the Bitcoin market is too easily manipulated, and crazy moves just like the one we saw just a few days ago when Bitmex went offline for maintenance just adds weight to the SEC’s argument. My personal feeling is that yes, the CBOE’s application will probably be the first true Bitcoin ETF, but probably not until next year.

What else could push prices higher?
In the past week, there’s been news that the first Shariah complaint exchange will open soon, which will make crypto trading ethically approved by the religion. I don’t think that this will have an immediate dramatic effect, but it certainly paves the way for new money to enter the market.
bitcoinist.com/first-islamic-cryptocurrency-exchange-fice-set-to-launch-in-the-uae/

Can we trade in the meantime?

Sure! But we’re need to be extra selective because we’re buying against the trend. Bitcoin is gradually starting to move and seems to be respecting price action most of the time. Many alts are currently at all-time lows which makes it difficult to find good levels to buy in at – where do you define the bottom of a bottomless pit?? Sure there are going to be opportunities from time to time – but with lower targets until the market picks up - and I will be letting you know which are a worth a trade and when to stay out. Patience is more important now than ever during these times.

Profits are not far away but we must preserve our money for when that opportunity comes along.

Remember to follow me if you like this to keep up to date and keep receiving these updates.

Until next time…

Trade safe peeps!