Going Down: Lessons from the past

2020年3月19日

I was going to write before, but like most people I was shocked by the sudden plummet of BTC on March 12th. The truth is I sold that night before. Considering how BTC was acting in relation to the stock market, I thought it was a sign that people were moving to cash to position themselves better when stocks bottomed out, but I couldn't have guessed it would move so fast. People are spooked and there will be a huge opportunity for cheap shares and cheap crypto. Long-term I still think BTC will soar, but I think better positions will reveal themselves in the short term, and that we are going down.

Good story, right? Sounds familiar...

I love crypto, but I think we need to step back to really get a good look at what is going on. I have heard lots of talk of how BTC is holding steady the past few days as the stock market continues to sell off, but I never hear them mention how BTC lost basically half of its value in a single day and more than that as trading extended into the next day. The stock market only lost about 5% of it's value that day and at most has only lost about 32% of it's total value since mid-February, for perspective. Yes the global financial markets are looking extremely fragile right now but there are institutions in place to protect us from complete doom, institutions that have been around to stand the test of time. Is now the time those institutions fail; will BTC rise up and free us from the evil bankers, creating a new world order led by the 2 year long-term hodlers in perfect philosophical anarchy? I doubt it, even in a perfect world.

Back down here in the real world we find a crypto environment that is in no position to save us even if global economies collapse. First off, very few people own crypto and even fewer know how they work. Only BTC, ETH and XRP are really worth considering as legitimate as everything else is either a clone; scam or so obscure that they have little chance of ever surpassing the big 3. Even these three coins have serious problems for mass adoption. BTC transactions can take hours to clear and is so overvalued that few people can afford even a single coin. Ethereum's infrastructure is a mess and most of the dapps are quite useless. I have been an ethereum surfer since the beginning and have used most of the better known dapps and can tell you navigating the space has hardly become any easier (or faster) over the years and again the functions are quite useless; you're better off just hodling ETH than participating in the ecosystem. I have tried EOS as well and find it just as pointless although a little less clunky. Of the two though ETH has the institutional backing and more infrastructure set up and will probably continue to lead. XRP is the most affordable of the three but the least transparent. Banks probably will integrate a Ripple-like system as infrastructure gets better, but why not just invest in the banks if you like XRP? I'm illustrating these issues as a case against a near-term rally against traditional markets and currencies. Again, I love crypto and I think it's the future. For now though A LOT of infrastructure needs to be built before we can restore faith in it and promote mass adoption.

I expected BTC to rally as the stock market started to fall. It was the perfect situation; good structure coming off of a higher low and good correlation with gold (a classic "safe-haven"). The charts pointed to a moon-shot but as we know the opposite happened, for gold as well. We were like Plato's cave dwellers chained to a wall making predictions about the flickering shadows in front of us, praising those making the best predictions as the most clever wall gurus. But this technical analysis doesn't perfectly portray the true way things are. Coronavirus has brought world economies to a crawl, and people need cash. Fortunate people are selling their assets to prepare for a great buying opportunity when the virus' effect releases it's grip from our economies. The less fortunate are selling because they have lost their job and they need to buy groceries. We're not sure how long this is going to affect us, but I believe as long as people can't go to work the markets are going to keep going down.

I was a long time hodler and it was very hard for me to let go of my crypto, but I want you to know, for anyone who might be wondering, it feels very good to be free. Particularly because I'm shifting my attention to stocks (I'm younger and have been waiting for the market to correct for a long time) which means I don't have to constantly monitor the crypto charts 24/7; I can turn off the screen at the closing bell, now freed from my chains at the wall. I'm not trying to tell anyone what to do, but I will give a nudge. I think we are going down and it would be good to have some cash if we do. If that scenario plays out, it will eventually lead into the next set of bull markets. Obviously crypto could go and stocks could go and anything could go and have a moment. I think stocks ultimately are the most reliable and the most likely to provide the best ride up, at least in the short-term. Of course I'll be waiting to buy crypto at lower levels as well. If you're strictly a crypto hodler (as I was), have you not considered diversifying? This might be the best opportunity of your lifetime. This was a long post but it's something I've been chewing over the past few days. I'd be happy to discuss any of it if anyone took the time to read it. I wish you all to do good.