Before I get back into teaching my strategies let's talk about the HOT TOPIC right now in the market. Is the Market Crash of 2021 already happening? Should we panic that our precious coins are all dropping? Well, to answer your question, YES and NO. Be sure to read this whole post before you panic for all the wrong reasons.
Yes, the crypto market is dropping. Bitcoin is becoming cheaper (though still very expensive for us regular Joes 😂), Ethereum is dropping as well. Basically, all coins are falling day by day. Bitcoin, from 64,000$ a month ago, to a price of 39,000$. That's almost half of what it was just a month ago. Ethereum, reaching an all-time-high at 4300$ just about a week ago now down to 2800$. We all know this since we can view this in the charts. It's all there. But do you know WHY it's happening?
Most of us are probably worrying for this reason:
"The market is dipping! We have to buy! Buy the dip! BUY BUY BUY!!! But wait, I don't have any funds left!!!"
If this is what you're worried about, then you're worrying about the wrong thing. You see, in tokenomics coins will always crash, dip, and eventually go back up. But WHAT IF this time it doesn't go back up? That's what you should be worried about.
If you retrace back to 2017 Bitcoin and Ethereum started their uptrend at the beginning of the year, then crashed at the beginning of 2018. People who bought the dip eventually gained from that and the big gainers now call them Millennial Money. Have you heard of them? Of course you have. Anyone who is addicted to the crypto universe has heard about them. Because of their success, many of us keep thinking, what if I buy the dip now, then the coins all go back up again? I will become part of the Millennial Money! But we must consider what caused the crash before and what's causing the crash now.
In 2018, the crypto market crashed, Bitcoin fell 65%! This event was known as the Great Crypto Crash. Why did it crash? In the beginning of 2018, China banned cryptocurrency exchanges and ICOs (Initial Coin Offerings), and in 2018 clamped down on Bitcoin mining operations. This brought many investors to withdraw their investments, eventually scaring off new investors from holding and therefore leading them to withdraw their investments as well.
In other places like New Zealand, the main issue that contributed to the crash was the continuing lack of clarity about how cryptocurrencies should be regulated. While the Financial Markets Authority (FMA) has published guidance documents, their advice still left investors with more questions than answers.
As for issues regarding taxes, some countries did release their tax guidance during that time. However, there were still gaps (how to deal with ICOs being the main one), but taxes were at least clarified that cryptocurrencies would be treated as property for tax purposes. So more than anything else, cryptocurrency prices dropped in 2018 because of regulatory crackdowns and uncertainty. As a result, institutional money has steered well clear of the crypto market.
So, what is the difference between the crash of 2018 and the crash of 2021 which is happening right now? Well here's what:
In today's market, if there's one thing I've learned in my last job which involved marketing, influencers can make a HUUUUGE impact in the latest trends. They can literally control the buying behaviour of the market. Make one of those famous icons like Dwayne "The Rock" Johnson endorse your gym shirts, his fans WILL buy it. Heck, even if you make LeBron James promote your umbrella, PEOPLE WILL BUY IT! And unfortunately, we have the same scenario happening in the crypto market. One of the biggest influencers, if not the biggest of our time, aka the memelord and dogefather, Elon Musk, has dropped the bomb on us!
A few days ago, he stated that Bitcoin was bad for the environment and so Tesla would no longer accept transactions involving Bitcoin, and also went further and mentioned he has been in works with Dogecoin in creating a better system, better software, better everything compared to Bitcoin. This itself triggered millions of investors in withdrawing their investments, new investors backing out, and potential investors straying away from Bitcoin. Leading to the price to drop.
Not only that, we are also experiencing the crypto ban FUD in China which has happened in the crash of 2018 as well. What is FUD? Fear, Uncertainty, and Doubt. Under the ban, institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement. The reason they are doing this is to protect their economy. How? Three institutions came with a joint statement stating:
"Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people's property and disrupting the normal economic and financial order"
And the last reason is one that not all of us has been talking about. Ethereum's hot streak in the recent weeks. That's right, Ethereum may be impacting Bitcoin's fall. How? Ethereum has been outperforming Bitcoin in the past few weeks reaching all-time-highs everyday before it started to crash (which is likely expected to be just a correction). What that hot streak led to was the rise of "Ethereum competitors", including Ethereum Classic, which resulted in Bitcoin's dominance to drop, as well as trading volume for smaller-cap assets to surge.
So what you should be worrying about is not when you're supposed to be buying the dip or that you don't have enough to buy the dip, but you're supposed to be worrying whether the price of Bitcoin will ever go back or not. Yes, some have said history repeats itself. But are the circumstances of the market crash of 2018 and market crash of 2021 the same? One was caused with the flaws of the system and taxes, while the other one is being triggered by influencers, who is almost like a hedge fund on his own, FUD, and a civil war between coins.
So what do we do now?
Well, what we should understand now is WHAT'S GOING TO HAPPEN NEXT? Enough with the negativity. You're probably already becoming a FUD because of this post. If you reached this deep into this long and boring post, I'd like to say congrats. And you earned what I'm going to share next because here's where it gets interesting again.
Many say that the price of Bitcoin WILL recover. Though recovery will be slow, the bear is imminent short-term, and we'll be in for a bull run soon after that.
As of now, following China's move and other developments, Bitcoin investors are now in a state of fear, a situation that may influence further price drops. Bitcoin’s recovery is, however, dependent on the coordinated effort by both retail and institutional investors to defy the market trend and load up on the coin. This recovery can occur at anytime as resistance is bound at this time. This drop is significant for the crypto space as most altcoins respond in tandem with the Bitcoin price movement. A continued fall without cushion may signal a broader entry into a bear market.
🦍💎Too Ape Didn't Read? Well here we gooo (Explain like we're 5) 💎🦍
Basically as of now we're not sure whether or not Bitcoin will go back up, and if history will repeat itself because TAs in the charts are almost not effective right now due to the manipulations we have been seeing with Elon Musk dropping the bomb, FUDs building up, China Ban, and hedge funds investing into other coins to create a civil war between cryptos. So all we need to do now is not go and try to beat the system by investing earlier than everyone else to bring the price back up and maximise your gains, but instead wait for the price to go back up while showing signs of Bullishness then enter the market when it starts its slow and steady uptrend. Also make sure that you don't enter too late and miss out all the fun! But don't worry because even if you miss a few days because you ahead and decide to shut yourself out from crypto in the next few days or weeks, once you come back you wont be too late for the party. A day or 2 wont be significant enough to cause a huge upsurge right away.
I am not a financial advisor, all of my content is only for reference, for ideas, and does not qualify for any investment or financial advice. Everything is based through my own experience. And always remember that trading comes with risks, so before investing in anything consider your risk appetite, do your due diligence, and make sure your analyses are accurate.
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Did you guys find my explanation easy to understand? Did you find my insights helpful? I hope you aren't FUD-ing now. If you liked this content, please do buy me a cup of virtual coffee, just click the button. This will really help fuel my work to provide all of you with all the strategies that I use. Cheers! ☕️☕️
My hot trades:
I am currently looking in buying into a few alt-coins. These are:
PUFFYDOG token
CHANGE token
FEG token
BONFIRE token
Check these out and buy into the stock along with me! Good luck and enjoy!