Bitcoin Bear Market
Let us discuss the Bitcoin Bear Market. A bear market is defined as “a market in which share prices are falling, encouraging selling” – by the dictionary. This is the opposite of a bull market – therefore a bull market would be: a market in which prices are increasing, encouraging buying.
If we look at the Bitcoin market from October/November to December of 2017 – we were in one of the biggest bull market of all time. Even i would look at prices and think – this is madness, what is happening? We shot through $10 000 dollars per Bitcoin like a hot knife through butter, it was glorious. Amazingly, people were buying in to Bitcoin and Cryptocurrencies like it was the next gold rush, i have heard stories of people mortgaging their houses just to get extra cash for Bitcoin (a very stupid idea by the way – do not ever invest in Bitcoin or any Cryptocurrency with money you cannot afford to lose).
All the Technical Analysts warned a steep correction would be due anytime soon. Technical analysis of theCryptocurrency market is like religion – it requires a lot of faith and is based on past occurrences, trends. It is like being told there will be a second coming of Jesus and the world will come to an end, but nobody knows when that will be. So if you call that prediction, perhaps they predicted the market would correct – but they could not tell you when and how. So when the correction comes it is swift, merciless and brutal. We saw Bitcoin plummeting overnight just before the $20 000 per BTC price.
There are many ideas around what caused this bear market – from normal market movements to MtGox trustee. Personally i think it is the human psyche. We expected the bear market, so everyone was on edge and it took just one red candle to topple the house of cards. As we observed the price crashing, we rushed to sell quickly to minimize losses and in turn fueling the crush even further. A bear market is a self-propagating vicious cycle of hopelessness and doubt, panic and irrationality. There can be no winners, except for the market shorts and futures betting contracts – even then, its a short term win. You can only short an asset once – even then you are limited by its price the profits you can make. Going long – has no limits.
So what happened
- There is a detailed MtGox BTC sell-off that was overlaid over the BTC graph, showing how every major red candle was caused by a sell-off of thousands of BTC. I believe that was just the beginning, or the trigger.
- The BTC/BCash wars have not done us any favors. I theorise that the initial dip was caused by BCash fanatics dumping BTC for BCash (Attached link is historical CoinmarketCap prices – Bitcoin down 30% but Bcash was up 60% in that week of the Crash). BCash was likely attempting a flippening, with all their stupidity they did not realize that when Bitcoin falls – there is no place to hide – everything falls.
- MtGox likely took a hint and started dumping – the domino effect was on and the bear was awake. The average person will sell, to prevent further losses.
Ponzi schemes such as Bitconnect could no longer afford to pay their ridiculous promised returns, so they were the first to go. As people got aggrieved, lawsuits started flying up and down. People lost millions and they wanted someone to nail.
Online advertisers such as Facebook saw the risk – decided to ban all Crypto advertising – creating FUD in the market. Many people were recruited through Facebook to Ponzi schemes such as Bitconnect, Facebook could be held liable for allowing such schemes. Facebook responded with a full ban on EVERYTHING – Crypto. Others soon followed, twitter, Google also announced similar bans. The industry was royally …..
Assume people that took out credit card debt, second mortgages could no longer afford to pay back the money. Credit card companies started banning purchases of Crypto. Banks started colluding to ban Crypto in India, regulate closely in Korea and other countries – creating further FUD.
MtGox trustee kept dumping BTC.
Media FUD – the media took every opportunity to create more negative sentiment in the market, people lost money and started to lose interest in Crypto – reducing the number of new money coming in. I would hear stories on the radio saying “Bitcoin crashes due to China clampdown on ICOs and banning Cryptocurrencies”. Just madness considering China already banned Crypto in 2017 – the media was just recycling stories of FUD and prices kept falling.
We started seeing recoveries, but there seemed to be a hard-wall at $10 000, overtime we approached – there would be a major sell-off. MtGox wallet is now being closely tracked and reported on in Crypto circles, we know the Trustee is still selling as he withdraws Crypto from the wallet – before major price crashes. What i say is, use this opportunity to stock up on as much Crypto as possible because MtGox will eventually run out of Bitcoins and we will never see these prices again – unless if Satoshi Nakamoto decides to start dumping his 1million BTC.
Light at the End?
Yes, eventually this will normalise – we are already seeing it happen. We will get used to no advertising, the ponzies will be liquidated, MtGox will run out of Bitcoins, the stead increase will continue – – – people will come in slowly, but as they come in, they will activate the bulls. All i need is to look at BTC prices this time last year, which other market could have offered you these type returns? tell me?