The cryptocurrency market is a rollercoaster, if you’re a day trader, which is why I’m really glad I’m not a day trader. I’ve already made two rules for myself when it comes to crypto:
- Only put a small sliver of my investment dollars into crypto. If I loose 100% of my money, it is a-okay.
- HODL until 2023 (i.e. five years from now)
Now to the current state of Bitcoin and the crypto market which has dropped like a rock over the last week. While it would be fun to say that you can use traditional technical analysis to explain what’s happening, or refer to your favorite Wall Street genius the reality is that crypto is incredibly volatile and even single news stories can move the market massively in one direction or another.
This week what scared the crap out of everyone (and for good reason) is that Bitcoin’s incredible price rise over the past few months could have been caused by a cryptocurrency exchange called Bitfinex buying a bunch of Bitcoin with…drumroll please, Tether.
In December 2017, Bitcoin reached a historic high of almost $20,000 (£14,000), before slumping to its current value of roughly $9,800 (£6,876). This catastrophic plunge may have been driven by the actions of a Bitcoin exchange called Bitfinex, it has now been suggested. This exchange stands accused of using a cryptocurrency called Tether to buy vast amounts of Bitcoin, which inflated its price. (Source – Metro.co.uk)
If this is true it means that Bitcoin’s price was massively manipulated and honestly, there’s nowhere to go but down. How low could it go? Who knows but I wouldn’t be surprised if it continues to drop like a rock.
As many of you know, I’ve never been ridiculously bullish on Bitcoin, Ethereum is my largest crypto holding and I’m also a fan of other altcoins like Litecoin, Cardano and Stellar. Of course, in the current market if Bitcoin is down, everything is down, and I think it could take a while for everything to sort itself out if it turns out that the rumors here are true.
So here’s the question, if Bitcoin drops below $8,000 – heck if it drops to $1,000, do you care? Since it’s such a small part of my crypto portfolio I’m not that emotionally attached to it…but if Ethereum dropped to $200 I’d be pretty bummed. That being said, given a five year time horizon I still see this as the very early days of crypto so I’m interested to see what the years ahead will bring.
What do you think? Comment and let your voice be heard!