I still think a bottom of $2,500 is a solid target and I’m waiting for it and buying bits and bobs as insurance for missing the bottom by being too greedy. But I can look at the chart and consider worse levels than $2,500:
Bitcoin could fall this far... Credit: ADVFN
I can if I try really hard imagine we have seen the bottom but what looks very possible is that we are repeating the previous bitcoin performance of basing with tightening volatility. What happens next is a breakdown and the next leg of the crash.
If it does, I believe this will be the final bottom.
Nothing in my mind can make bitcoin go to zero, bar some unforeseen technical disaster. A mining collapse is the only possibility and that could only happen if the price went suddenly and significantly below $1,000, because the latest breed of SHA256 (secure hash algorithm) miners can operate profitably below $1,000 a coin and who knows if there are private application specific integrated circuits (ASICs) that can mine even cheaper than that.
To me if bitcoin isn’t going to zero, it is going to go to the moon. Long term there doesn’t seem much of an alternative.
Meanwhile, this first bubble cycle is not over and busts simply do not end with a whimper, they end with an ‘end of the world’ clap of thunder.
This final capitulation has not happened though all the signs of pain are clearly in the news. Just like the fate of so many dotcom darlings, there are lots of layoffs and retrenchments going on in the crypto space and this market crash environment will roll and roll for many fledgling blockchain companies.
I recall walking in ‘South of Market’ San Francisco in 2002 along streets of empty start-up offices, my feet crunching on sidewalks covered in broken car quarter-light glass. This base of the cycle has to be reached and that we are not there yet and it might be months or even a year or two for crypto to reach a post-crash environment.
This reality doesn’t play out in sync with the price. The price falls first and the weak start-ups fold immediately. The price bases and the next wave of start-ups fail and more layoffs kick off. The price begins to recover but more start-ups die as no one will fund them for fear that the small recovery is a ‘dead cat bounce.’ Green shoots come from the survivors first then a return of interest perhaps a couple of years later as the price continues to grind up slowly.
As I see the news I sense, as Mark Twain didn’t say, “déjà vu rhymes.”
The market has definitively crashed, unlike the stock market this January 2019, so now it is just a matter of divining the bottom. In percentage terms from the top of the market, it is close, but in percentage terms from the current price it looks far.
While I stick to my $2,500 level, we need to watch out and ride the final leg down and not be hasty to reenter in size. It remains a good strategy to buy the last leg of the W pattern and for the moment it is unlikely we have seen the end of the first down leg of the W.
But it won’t be long now.
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Clem Chambers is the CEO of private investors Web site ADVFN.com and author of Be Rich , The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide ....