A drop of more than 25% in less than 5 days is not normal for Bitcoin. I mean, these are extraordinary times. “Experts” and “influencers” on Twitter speak of a further decline in Bitcoin stories. I mean no problem. It’s â€œnormalâ€ . In fact, the collapse is presented as a great buying opportunity worth celebrating. Obviously this is a show. No one likes seeing their wealth drop more than 70% in less than a year. That unsullied faith and indifferent calm is lip service because many of these so-called “heroes of patience” bought Bitcoin with debt. And right now they are in the red. This is not very good news for your creditors. An epidemic of bankruptcies is possible. What would be a disaster for the industry.
markets fluctuate. Of course it’s normal. What is happening is that some markets are more volatile than others. Investors buy today to sell at a better price tomorrow. The main motivation is undoubtedly profit. Despite the fact that many of these “experts” claim that price doesn’t matter and that the ultimate goal is indeed to save the world, panic has gripped the markets. This widespread pessimism is hitting the industry hard in many ways. First, the readership of the trade press is falling dramatically. Second, mining is less profitable. Third, exchanges make less money. And fourth, with new projects, everything is a little more difficult. In other words, it seems so to me this decline should be taken seriously.
Bitcoin is a risky asset. Job. It’s that simple. At this point in its history, it’s a speculative asset with a volatile, fragmented, and fairly illiquid market. Why is the price falling? The price falls due to macroeconomic conditions. Investors are becoming more conservative, seeking stability in safer assets and moving away from more volatile speculative assets. The truth hurts. The possibility of a recession is real. The possibility of multi-year hyperinflation is also real. This means that the world’s major central banks will be forced to withdraw liquidity from the system more aggressively than expected. That, in turn, means investors have less money to invest. Bitcoin has never been in such conditions in its short history.
The war of narratives is won by leaving Twitter and studying the prize directly. The price falls when there are more sellers than buyers. And sellers are essentially bearish. You have a very particular interpretation of the facts. Bitcoin falls for the same reasons as SP 500, Nasdaq and FAANG. And for the same reasons, the dollar and T-bonds are rising:Â The next meeting of the United States Federal Reserve. Liquidity drives markets higher. The withdrawal of liquidity lowers the markets. Bitcoin suffers more because more volatile assets suffer more in such conditions.
We can’t go back to old diagrams to figure out what’s going on. This is not a fall like the previous ones. The change in monetary policy by the US Federal Reserve marks a before and after. The war in Europe marks a before and after. And the â€œend of globalizationâ€ marks a before and after. It’s a new paradigm. The phrase “Bitcoin has been through this before” isn’t accurate. Because Bitcoin didn’t go through that.
Current support is the 2017 high. That means the person who bought in December 2007 waited almost 5 years to get back pretty close to where they started. Binance, the top cryptocurrency exchange by volume, has suspended payouts for a few hours due to an alleged temporary “congestion.” Not everyone believes the official version. Is Binance not as solvent as we think? The distributor Celsius was also bitten by the same mosquito. Because it has also suspended its redemptions due to “extreme market conditions”. Coinbase, the top exchange in the United States, announced an 18% reduction in its workforce, blaming the crypto winter. The price doesn’t seem to matter that much.
Microstrategy is red. El Salvador is red. The creditors of both are unlikely to be very happy at the moment. If you’re up to your neck in debt and you’re in the red right now, Your â€œIâ€™m fineâ€ is not very convincing. Reading social media, Bitcoin seems to be more of an “end of the world cult” than an asset. Sometimes fanaticism is just too much. Some live in a fantastical world and set aside reasoning to repeat slogans over and over again. “Price doesn’t matter”, “1 BTC = 1 BTC”, “The pump will always happen”, etc.
Bitcoin is code on a computer network. It’s not a supernatural object. The code is not eaten. It also cannot be used to build a house. This code represents an exchange rate. nothing else. The person who has just invested money in Bitcoin in the last few months is in the red. If you went into debt to buy like MicroStrategy, you shouldn’t be very calm. We don’t know exactly how long this crypto winter will last, meaning creditors may get paid before the recovery. Many investors don’t buy the dip because they believe there will be more dips in the future. It promises to be a long and painful winter.
In summary, Bitcoin’s volatility should not be taken lightly. It has to be taken very seriously. It is no joke. Nothing is certain with Bitcoin. And we can never overestimate our happiness. Be very careful with debt. It is very important to design a diversified and balanced portfolio and to weigh risks and rewards. Winter can’t find us naked. This usually means that we also need stable assets in our investment portfolio in order to be able to wait calmly and without pressure for a possible price recovery.
Excess faith is a danger. Doubts are usually much healthier. I personally love bitcoin. But my devotion is limited. My love is not eternal and unconditional. And I don’t consider myself enlightened because lights come from my eyes. My priority is my bag. A code in my wallet is of little use if it doesn’t directly enrich my lifestyle. I am interested in the price of bitcoin. Easy. You can buy more things with an expensive bitcoin. And a very cheap bitcoin doesn’t do me much good without buying more fiat. This means I’ve taken profits on up cycles and never run out of fiat on down cycles.
Disclaimer: The information and/or opinions expressed in this article do not necessarily reflect the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial advice or investment recommendation. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.
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