Bitcoin came back from a correction to $5.5k over “Bitcoin Cash drama” to break $8k by Nov. 19th. For now it looks like Bitcoin will remain King/Queen.
The correction and quick rebound was one of a handful of such events that occurred this year. Each time the catalyst has been different, but the effect has been the same.
That is, in each event some form of bad news filled with fear, uncertainty, and doubt spurred on a correction just as Bitcoin reached new heights (heights that had been predicted by important Bitcoin analysts; for example, by an analyst at Goldman Sachs).
In the past the events had been related to state action, but this event was spurred on by what some describe as “a war with Bitcoin Cash (a war between regular Bitcoin and a “hard fork” of Bitcoin).”
Specifics aside, in all cases a destabilizing event occurred and panic and a sell-off followed.
In each case the sell-offs saw Bitcoin lose about 20% of its value or more.
Then after hitting bottom we saw a rapid turnaround.
Then, after a short period of time (only a week in this latest correction) we saw Bitcoin recover to new heights.
Above are the facts, below is some armchair speculation on what the future might bring (see the notes in the sidebar, this is not investing advice; make your own choices and do your own research):
No one knows what the future will bring for Bitcoin (that means neither me, nor the analysts, nor the whales of Bitcoin avenue).
However, if history is repeating at all, we could realistically see $10k Bitcoin by the year’s end.
With that said, $10k Bitcoin is a magic whole number like $5k and $7.5k.
The last two corrections happened at those magic whole numbers. So, if this is a “sixth wave,” and if history is set to repeat in some form, then we want to be bullish in the $8ks but exercise extreme caution as we near the $9.5k zone.
That will mean different things to different people. For some that will mean taking some profits along the way to ensure they have cash on hand in the case of unforeseen events (potentially doing some volatility trading or BTC/a Given Alt along the way), for some that will mean setting stops and riding thew ave, for some that will mean trying to time the top.
Whatever the strategy, during the next panic event, we want to make sure the result is that we are at least part in cash, ready to buy some alts, and ready to average in trying to find the bottom for the next rebound.
Keep in mind though, history doesn’t have to repeat. It could all end tomorrow, or it could go to $15k. Bitcoin Cash could come back with a vengeance and hinder Bitcoin’s growth (it is naive to think the Bitcoin Cash whales have given up), we could see a worldwide ban of Bitcoin, or we could see further adoption!
We don’t know, I don’t know, no one knows. We can only look at what has happened so far and muse on what maybe might happen in the future, à la the above.
To conclude the above speculation, the following are things to watch out for this cycle:
- Bitcoin Cash (its pumpers and its natural growth). It has some serious backers, and just because they seem to have lost the battle of the second weekend (after causing a bloodbath the first weekend) it doesn’t mean they have given up and gone home. Logically instead, one can assume that they now have way more on-paper money at their fingertips (after selling off their $2,500 Bitcoin Cash they got for free, buying more Bitcoin at the bottom, and then riding Bitcoin up to the $8ks; if anything they just leveled up). Here all I can say is: Keep an eye on the price of Bitcoin Cash, if it start spiking it could cause a dip in Bitcoin.
- Bitcoin futures trading (this could create opportunities, or change the way Bitcoin grows, or bring the ire of governments down on Bitcoin if too many people lose their shirts and can’t pay the bets they make).
- Alt coin price movements (alts tend to go down or stay stagnant when Bitcoin goes on a run… but not always). We’ll want to keep a close eye on how alts behave this cycle. Will they ride Bitcoin’s coattails like the summer, or will they be suppressed like they were September – November?
- State regulations. If China or another major country gets salty about Crypto it could hinder the growth of Bitcoin. We saw this happen back in early September, its unlikely to happen again (as the market is now fairly resilient to bad news from states, but one should be ready for destabilization none-the-less. Likewise, states embracing crypto, or China embracing ICOs, could cause growth in cryptos that aren’t Bitcoin (and there is always the odd chance that will hold Bitcoin back).
TIP: If you live in the U.S. or another country that taxes capital gains, make sure you understand the tax implications of trading, using, and holding cryptocurrency! Here in the U.S. Uncle Sam is going to want his due (and its up to you to report and pay correctly), in other countries you need to follow your tax laws carefully.