Analysts predict more bitcoin crashes

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Since yesterday, the price of bitcoin went down by another 10 percent or so, to trade at $3,369 by early morning, Financial Times reports.

Bloomberg concludes that prices for Bitcoin and other cryptocurrencies are likely to weaken, “with Bitcoin falling to around $1,500.”

Bloomberg Intelligence analyst Mike McGlone said: “There’s little to prevent fading Bitcoin prices from reaching the continuous mean of $1,500.” McGlone’s article is paywalled, but Bloomberg notes that the analyst attributes the exits among investors to the Bitcoin Cash split and selling related to year-end tax purposes, among other things.

A commentary published in Smartereum elaborates on the last point:

“First-time investors in Bitcoin are faced with large capital gain taxes from the profit they made in 2017. Reports show that they are now selling off quickly before they file their April taxes.”

McGlone said in an interview, as reported by Bloomberg:

“We’re at a classic psychological stage where the market is reversing the 2017 frenzy. The hard fork was a key trigger that signaled the technology is way too nascent. You had these dicey characters threatening to destroy each other and institutions said ‘It might be best if we stay away from this for a while.’”

“The trend is lower prices, lower volatility, reduced speculation, and the preponderance of stable coins.”

Until then, McGlone concluded, cryptocurrencies have to find a base to see more stability and “we’re not near that base yet.”

Bloomberg also notes that the biggest-ever bet on Bitcoin options, purchased for almost $1 million just days after Bitcoin peaked a year ago, is about to expire worthless.

What. The. FUCK.

WFT is happening, and why? More importantly, WTF will happen next?

My habit and personal policy is to cash out bitcoin immedietely after receiving it, for two reasons. One, I need cash to pay bills. Two, I have always considered bitcoin as a risky speculation. But at the end of 2017 I gave in to pressure from my wife and stored some BTC in a hardware wallet. That money is nearly worthless now. I don’t cash out because I promised that I’ll only sell on the day I can sell at a profit.

But I’m afraid that day will never come.

Or perhaps I am wrong. Predicting what will happen to bitcoin price is essentially impossible, just like predicting what will happen in the stock market is essentially impossible.

But in the stock market investors can be guided by fundamental analysis. If a company sells good products and services that people want to USE, cheaper than its competitors, chances are that its stock will go up in the mid-long term. This isn’t a sufficient condition — deep changes in the industry or new incompetent management can still bring the company down — but I think it’s a necessary one.

I’m persuaded that the fundamental, structural problem with bitcoin is that nobody uses it as digital cash. When the price goes up, most people “hodl” their bitcoins instead of spending them. When the price goes down, most people panic-sell.

In neither case is bitcoin used as Satoshi intended, to buy goods and services online. If bitcoin is not used, it can’t have intrinsic value. This is a fundamental problem that goes beyond Bitcoin Cash and end-of-year taxes.

Picture from Pixabay.

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