The entire crypto market (with the sole exception of Bitcoin Cash) entered a correction period today. This is was spurred on by claims Bitcoin Cash is the new Bitcoin.
NOTE: This is notably not investing advice. We don’t want to affect what investing choices you make on any day, but specifically we don’t want to do so in times like this. Hope you find the information helpful, but please don’t mistake it for advice on what you should do!
First off, one should know that it is very likely that the coin known as Bitcoin Cash is not going to become the dominate Bitcoin.
Instead, it seems that some players in the pro-Segwit2x camp (Bitcoin.com, the forked Bitcoin classic, the infamous Roger Ver (who owns Bitcoin.com and was closely affiliated with the Bitcoin classic fork), some miners and Bitcoin holders, etc) got together and decided to tell everyone that Bitcoin Cash was going to be the new Bitcoin now that Segwit2x was cancelled.
The problem is that these minor players with no relation to Bitcoin or Bitcoin Core have legit sounding names, and thus their statements caused a panic and a sell-off (that is the theory from what I can piece together).
This panic has led many to lose money on-paper (billions at least, if not more).
The problem here is that the chances that Bitcoin Cash becomes the dominant cryptocurrency are very close to zero.
Instead it is very likely that this turn of events will be short lived. However, meanwhile, those who orchestrated this move will make out like bandits, those who are holding any crypto will take on-paper losses, and those who time the bottom will also do very well.
Think about it, those who spread the news knew this was coming and sold their Bitcoin at the high, they knew this was coming and bought $300 Bitcoin Cash, and they will likely have a good sense of when to jump ship on Bitcoin Cash and buy other crypto.
That trifecta is likely to leave them with giant multiples on their money while everyone else holds the bag. We can assume this worked out very well for people like Roger Ver… but at what cost to everyone else?
This was the most messed up way to handle Segwit2x fork fallout possible. It was a very selfish move, taken at the expense of the entire crypto community.
After-all, the result is essentially losses for whoever got caught up in the panic and made a bad move (like selling at a loss, but not timing re-entry properly).
That is the gist of the story, but it gets a little worse.
Generally predictions out there say that if Bitcoin falls below $6.5k – $6.2k, it’ll likely spur on a decline to the low $5ks (where it will find so much resistance it’ll be likely not fall below that).
That of course is just a generally recanting of investor sentiment from news articles and price analyses, not gospel, but if that is right… then we could all be in for another $1k of losses in BTC if things get worse (and the equivalent in other cryptos).
In other words, if Bitcoin can’t rebound very quickly from its current position of $6.4 – $6.5k…. it’ll likely to lose another $1k.
This will therefore likely be known in the future as the crash after the 5th wave.
Otherwise, it’ll still be that but will on a chart look more like a temporary correction (likely followed by a short bear market and then new highs).
While it is true that Bitcoin needed a correction after its recent bull run and its hitting an all-time high this week, the way it happened is sure to leave a really bad taste in everyone’s mouth.
If there was tension between the forkers who brought us Bitcoin Cash and Segwit2x before and those who support the Bitcoin standard BTC, there is even more tension now.
There isn’t a ton of upside here, but if there is some things to be happy about. For example:
- Cheap crypto for a minute. Everything just went on sale. If you average in or time the bottom, there is a really high chance you’ll come out ahead shortly.
- Bitcoin got its correction. Things can’t go up forever, something needed to spur on the correction. May as well be something in-community and not a major nation banning crypto.
So let’s end by saying this:
At this point it is tempting to jump ship. However, at some point the bleeding will stop. When the bleeding stops, the chances are high that Bitcoin will make its way back up again like it always does.
Thus, jumping ship isn’t unreasonable. However, if you do sell, be ready to time buying back in.
As, just as quickly as Bitcoin lost weight, equally quickly will it likely rebound to new heights.
In fact, the rebound could be so quick that you might not be able to catch it.
I can’t give you investing advice. But I can tell you that people are going to lose and make a lot of on-paper money today.
Do you bet that BTC resists $6.5k? That is a great bet. But you could lose big on it.
Do you bet on Bitcoin Cash? I wouldn’t, but I’m not you.
Do you HODL? If you believe in crypto, then you have to be ready to hold through days like this. That doesn’t mean hold every satoshi, that means hold what you feel comfortable and don’t panic sell (sell based on a strategy if anything).
At the end of the day, this is only one of many Bitcoin corrections. Every correction so far brought us to a high of $7.9k. If you panicked and sold your Bitcoin’s you bought for $8.00 for $1.00 back in the day, then you lost out on $7.9k in gains per Bitcoin. If you panic like that today, you could be telling that same sort of story in a few years.
Ultimately though, you need to make your own choices. It isn’t unreasonable to sell Bitcoin or other cryptos and jump on the Bitcoin Cash ship… but it is an odd move given the history of Bitcoin being everyone’s trust choice of crypto and Bitcoin Cash generally being considered an altcoin.