Well, that wasn't fun.
I've read lotsssss of reasons why this week's selloff happened. Things like Elon's tweet, China banning mining (for the 10th time), Tether's balance sheet breakdown, Binance being investigated for tax evasion, a Federal Reserve CBDC in the works, more crypto IRS reporting requirements, etc...
A year ago, a friend asked:
- Friend: What should I expect during the bull run?
- Me: A lot of weird shit.
- Friend: WTF does that mean!?
- Me: It's hard to explain.
- Friend: Well, tell me when it happens.
- Me: Ok, but you'll know it when you see it.
Well friend, this is the weird shit. Emotional events driven by Fear, Uncertainty and Doubt (FUD). Events that are impossible to predict piling negativity sky high all at the same time.
But forget why, what everyone really wants to know is, "Was that it!? Is the bull run over?"
I don't think so. I've felt since the beginning of this run that it was progressing too fast compared to cycles of the past. My initial top call was for October! I personally believe this to be some sort of mid cycle reset. We had one in 2013, but not the 2017 run.
Also, this drop wasn't caused by the blow-off top which proceeded all tops of the past, this drop was caused by FUD, and FUD has historically represented the buying opportunity of a lifetime (like the Covid drop in March 2020).
It couldddd also mean the proponents of "the crypto supercycle" are right and that institutional money and a more evolved crypto derivatives market will cause lots of smaller booms and busts along a longer timeframe and higher price target than Stock-to-Flow predicted.
A few things this past few weeks definitely had me concerned:
- Bitcoin kept stalling out at $1T market cap
- ETH started going nuts, which was what happened after the BTC top in 2017/2018
- Shitcoin gambling was out in full force. If you didn't know about dog coins, Cumrocket and PUBE, now you do...
- On-chain data shows that whale addresses were depositing BTC to exchanges around $50k
But the antidote to fear is hope, and we still have plenty of that:
- $3B+ of leverage was flushed from the system due to liquidations
- The institutions who have spent months planning and getting approvals to enter the crypto market were just handed an epic dip
- Crypto whales actually want China to ban crypto, so if this banning is in any way true we could see something similar to when The Silk Road was shut down (check Oct. 2nd 2013 on the charts)
- Taproot, Bitcoin's biggest improvement in years, is launching soon and Ethereum has tons of scaling (ETH2) and policy changes (like EIP-1559) set to launch over the coming months
- The Bitcoin 2021 Conference takes place in Miami the first week of June and is expected to have some monster announcements planned
- Inflation is here and Bitcoin still represents an excellent modern day hedge
- And most importantly, nothing has technically changed. Bitcoin has continued producing a new block every 10 minutes like clockwork.
The only thing that changed is new crypto investors got a wake up call. This volatility was expected. Crypto is new and it's attempting to disrupt the global financial system. You can't expect it to act like an index fund! The further and faster we go up, the further and faster we fall. The only hard part is knowing whether we've fallen for the last time this cycle or not. I think not.
To the moon 🚀 — @GΞR฿Z Founder & Creator @ BitLift