The bitcoin crash shows no sign of arresting itself anytime soon as it dramatically fails to hold support around the $40,000 level which coincides with the 200-day moving average.
Undoubtedly a number of factors have come together to create a perfect storm of negativity for bitcoin, with Elon Musk and Tesla at the top of the list.
But today’s violent sell-off is thought to have been propelled by the joint statement issued by the People’s Bank of China (PBOC) and the country’s internet industry associations, reminding everyone that crypto could not be used a means of payment.
But despite the slide to as low as $29,927 on Coinbase, olds hands remain un-phased by the price retrenchment – a sell-off that has been long predicted given the parabolic tun up in price that reached a high of $64,000 last month.
Bitcoin crash is good for stopping the ‘craze wave’
Tom Tirman, CEO of blockchain project Parsiq, where its innovative smart triggers bring oracles out of the rarified world of crypto to make blockchain tech applicable in many more real world use cases, thinks we’ve seen this all before and that the bitcoin price crash is ultimately a good thing for crypto.
“When corrections like these happen it stops the craze wave. The focus has to shift from hype to fundamentally strong projects that add real value to the ecosystem. Fear helps people re-evaluate their trading decisions.”
So what does he think about the rehashing of the old news on crypto payments coming out of China being the trigger behind the sell-off.
After all, the PBOC did not add anything new to what it said way back in 2017. Having noted that, it should be borne in that China’s clampdown on crypto exchanges then, and the banning of initial coin offerings, contributed to the advent of the ‘crypto winter’ last time round.
Crypto crash: can’t blame it on China?
Tirman says the answer re. the China clampdown trigger is “yes and no.”
He explains: “Elon Musk’s tweets and [the] flow of negative news from China and other sources did trigger the sell-off but from a fundamental standpoint nothing has changed.”
For Tirman the headlines around the China news China and and elsewhere that the media has been running with has its good side for crypto.
“We have a lot of newcomers who are not familiar with the rules of the game and this market sell-off looks like an overreaction. The market needed a cool-off period. The more often these types of headlines come out the less the effect on the market they will cause in the future.”
Other crypto project leaders are similarly non-plussed by the latest crypto prices crash. After all, bitcoin is said to have had 19 drops of greater than 30% in its short history and three of 80% or more.
Crypto Bull market here to stay says Orbs CEO
For Daniel Peled, president and co-founder of Orbs, whose ORBS token runs on the Binance Smart Chain and is available for staking in the Coinbase wallet, is suitably sanguine about what this all means for crypto. In fact he thinks that it will come to be seen as but one admittedly sour episode in a continuing bull run.
“In my opinion, the latest downturn is not the end of the recent bull market. In 2017, there were similar downturns where the BTC price went down in the 30%-40% range for short periods, but the overall trend continued,” said Peled.
Whereas in 2017-18 many leading projects had unfulfilled whitepaper ambitions, today there are plenty of projects with working products. An indication of that is the strength of the Ethereum platform.
“Ethereum and its ecosystem are still flourishing with innovation and Bitcoin is establishing itself as a reserve asset for public companies, institutions and investors – these trends were a major part of driving the bull market and they are continuing,” said Peled.
Orbs pitches its blockchain tech at companies who want to leverage trust as a competitive strategy.
“Other important indicators (such as inflows vs. outflows, wallets, hashrates) are also still strong,” adds Peled.
This crypto correction is blowing away ‘non-fundamental’ forth
The ongoing sharp correction is blowing a lot of the froth off the market exuberance.
“Some of the recent rise was driven by non-fundamental factors, such as media hype around some of Elon Musk’s tweets.”
So what Elon Musk giveth, he also taketh away. That’s no consolation for those sitting on huge paper losses, but if traders drowning in red ink want a life-belt to clutch to for salvation, then it holding fast to the fundamentals is it.
In that regard, take a look at this chart breaks down the price action in the days after halving (bitcoin block rewards half every four years and the last one was in June last year – from 12.5 to 6.25 BTC). The black line would suggest the sell-off is a huge buy signal.
“It was inevitable that this would be corrected eventually. But the fundamental case for bitcoin, for example as a hedge against inflation, is still strong,” says Peled.
Trying to time the market is always something of a fool’s errand, but that didn’t stop the legions of ‘Robinhood’ traders with their US government ‘stimi’ cheques making a wager – not that we think US bitcoiners in particular are primarily to blame for the boom and slump.
Why we need to get back to how to invest basics
Let’s face it, when the only way seems to be up, there is easy money to be made, until there isn’t.
“Panic-selling or FOMO buying in response to short-term news cycles, trying to predict what will be the “peak” or the “dip”, is not the way to go for most people,” adds the ORBS chief executive.
Forget about the algos and trading bots and trust in well-tested methods. That involves doing your own DD (due diligence) on the fundamentals of a project and then accumulating by dollar-cost averaging to smooth the ups and downs, with a regular monthly investment – you will end up buying more tokens when the market is down and less when it is up, thereby controlling risk.
Not surprisingly perhaps, Peled agrees: “Those who understand the fundamental strength of Bitcoin and the blockchain ecosystem should stick to consistent, rational strategies such as monthly dollar-cost averaging buying and HODLing.”
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