The Crypto Market Comes to Life
Over the past week, Bitcoin broke out of its 4 month slumber and the rest of the market followed its lead. What’s been notable during this rally is that the rest of the market has been moving at a much faster pace than Bitcoin. Now this could be attributed to the more significant declines the rest of the market experienced during the recent downturn, but it doesn’t really matter. What matters is the market has been going back up, and the question to ask now is, whether this rally is a sign of things to come, or if it’s a “breakout fakeout?”
It’s easy to understand where Vinny Lingham is coming from here. In my last writing, I predicted that Bitcoin would bottom around $4–5k and consolidate for the rest of the year. Using history as our guide, it made the most sense considering prior exponential runs followed up with very significant, 70%+ declines. The previous bear market took a full year to bottom and then nine more months of consolidating before it broke out to the upside. As the market has advanced and blossomed since then, I reasoned that it would take less time to recover.
Well, if this is the beginning of a new bull market, I would not have expected it to happen THIS fast. Just four months of correction and consolidation after an exponential rise? That would be pretty incredible and likely unprecedented in the investment world. The more logical part of my mind thinks its too soon and that Vinny is right; but this is crypto, and there’s nothing normal when it comes to it. This could very well be the continuation of the rise we experienced last year.
Why? Because crypto fever has infected the world. There’s nothing to say that investment demand won’t come back as people start to see prices rising again. The herd mentality is strong when investment gains are so large. Plus, crypto has finally became legitimized in the minds of the masses, so at the first sign of a breakout, it wouldn’t be surprising to see significant investment demand perk its head up once again.
But the truth is, nobody can predict with certainty which way the market will proceed going forward. Crypto hasn’t made a whole lot of sense for quite some time; with scam coins making out like bandits, token coins without a workable product valued in the hundreds of millions of dollars, and Bitcoin valued over $300 billion when the network became almost unusable from congestion and high fees.
Not a whole lot has made sense in the crypto world since the beginning of 2017. If it had, or if we reverted course and the market came to its senses, I would expect to see investment demand continue to increase, and pile into, Bitcoin Cash. I would expect to see Bitcoin Cash continue to gain traction as an actual form of money where real usage and adoption across the world accelerates. I would expect to see innovative use cases continuously blossom out from it. With an unrestrained capacity, it can flourish as a form of money and innovation platform that Bitcoin was always meant to be.
Eventually, the market may have its “aha!” moment and what happened to crypto after the Segwit2x cancellation could happen again. At this time, investment demand flocked into Bitcoin Cash, Bitcoin dropped precipitously, and since every other coin is priced in terms of BTC, they went down with it. Should history repeat itself in a similar manner; the overvalued coins, scam coins, and token coins would all decrease in value with BTC, while Bitcoin Cash lived on to become the dominant form of cryptocurrency throughout the world — and rightfully so.
To me, that would make the most sense, but irrationality has been a part of crypto for so long, and it has shown no signs of changing course, so who’s to say that the market would come to its senses anytime soon? I for one, most certainly can not.
