Bitcoin is in a downtrend. There’s more selling pressure than buyers. In an immature market like Bitcoin, there’s more individual traders and investors than larger institutions and programmatic trading software that tends to level out large price swings. And in mature markets, there’s usually less “FOMO” (fear of missing out) which in Bitcoin’s case increases the volatility of the asset.
Is Bitcoin going to fall further?
Most likely. What tends to happen after a cryptocurrency rally like we saw last fall, is that we get all hyped up. Attention is brought to Bitcoin and regulators start to monitor the market with a magnifying glass. We get more and more news about different regulatory hurdles for exchanges, private persons, and cryptocurrency businesses (e.g. ICOs), and people get more anxious about the future of a decentralized ecosystem. Just recently, Mailchimp jumped onboard with Google, Twitter and Facebook banning cryptocurrency ads.
People get scared, and people tend to operate like a herd. When the price reaches a new monthly low, people sell to lock in profits or stop their losses driving the price further down.
The dilution of Bitcoin
It does not help that Bitcoin itself has split into multiple coins like Bitcoin, Bitcoin Cash, and Bitcoin Gold. When Bitcoin is competing with itself (in some ways) it makes the market unpredictable and creates unnecessary noise. When players like Roger Ver, the owner of Bitcoin.com, uses the site and his own influence to promote Bitcoin Cash due to his own investments and beliefs, it creates a situation where no one really knows what to support and invest in. Especially not for new investors. They must be exhausted trying to follow the market developments.
Dilution of an asset is never good for the price, but it can be good for the ecosystem. More funds to different technologies that tackles different problems. This may improve the future of the different cryptocurrencies.
What Pro’s Do
Professional traders saw this coming. They started selling when the Bitcoin price reached new all time highs. Unexperienced traders started to buy at new all time highs. There is a saying that’s always correct:
Buy low, sell high.
Bitcoin price is hovering around $7000. It’s still way higher than it was just a year ago. The question is how low will it go? My personal belief is that we will experience a new all time high within a few years. But I wouldn’t buy anything at these levels just yet. We probably got a long way until we will witness a new strong bull market in the cryptocurrency market. But when it comes, it might be more fierce than the 2017 bull market.
What kind of investor are you?
Are you a patient investor or are you always chasing profits from a day to day basis? I can let you know that if I had been patient enough back in 2015, I would have had 20 million USD in profits. I was like most unexperienced traders, and I sold my holdings at a yearly low. I thought it was going to crash big time, it didn’t. It climbed slowly back up after a year. I did ensure profits, but I could have had so much more if I just were patient. And I should have bought even more when it was at its lowest.
It’s inhumane to know when a price of an asset is at its lowest. And of course, cryptos can tank to zero. There’s always a high risk, but the reward can be so much higher. It is important to only trade with money you can comfortably lose, as then you won’t have the “rush” like most people do to make money fast.