Don’t Listen to What Billionaire Crypto Critics Say. Watch What They Do.

  • Bitcoin price is under pressure, nearing prices seen in late 2017, just before the enormous bull run to $20,000.

  • This is exactly what big investor want as the underlying blockchain technology gains traction across the economy.

  • Many wealthy and famous crypto critics are likely now buyers, despite their early claims that cryptocurrencies would not last.

The prices of the various cryptocurrencies continue to struggle while the underlying structure of the market continues to strengthen. For instance, investments in blockchain technologies and new businesses through initial coin offerings (ICOs) are accelerating at a pace far greater than what was seen in 2017.

The investors in blockchain technologies and ICOs are not afraid of a bear market in prices because there is a high confidence level in the potential for this market.

The next bull market in crypto prices will be a result of the continuation of these investments.

Crypto investors are nevertheless concerned, of course. Prices for many of cryptocurrencies are down to where they were in November 2017. Of course, after a sharp pullback into the November 12, 2017 low at $5,400, Bitcoin shot higher into its December 17, 2017 high near $20,000. That rally was a bit exuberant, even for cryptocurrencies.

It’s common for strong retracements to follow parabolic moves, like the November-December 2017 rally, which was followed by this year’s pullback correction. The low in June, near $5,800 for BTC, suggests the 2018 correction could be nearing completion, if it’s not already completed.

There is the potential for Bitcoin to drop to the $5,000 to $5,400 support zone that I’ve been discussing for the past month before we see the start of the next bull market rally. The bear must be satiated before it lets the bull back onto the field.

crypto critics
Bitcoin Daily Chart

Whether the retracement is good news or bad news depends, of course, on when you invested in Bitcoin. For those who invested between November and December 2017 you’re either at breakeven or under water in your investment (bad news).

The silver lining is that you now have an opportunity to get into Bitcoin at prices similar to those seen before the previous ramp-up. Many who were not into Bitcoin when it climbed more than $14,000 in a month ($5,400 to almost $20,000 from November into December 2017) got a serious case of FOMO (Fear of Missing Out) when they saw BTC rally so strongly.

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Patient investors who waited for a pullback from the parabolic spike, or investors lucky enough to start investing after February 2018, have been able to buy at prices no one thought possible back in December. There aren’t many “do-over” opportunities but we currently have one. It’s been a very good time to accumulate a position before the next bull market rally begins

This year’s bear market has brought out the Bitcoin haters, who are once again declaring Bitcoin is dead — for about the 300th time since 2011. It’s important for you to ignore those who are against (or simply don’t understand) the idea of cryptocurrencies and the blockchain technology behind them.

(As side note, if you’d like to get a better understanding of the blockchain, what it is, and how it makes transactions secure, Reuters did a nice job with a graphic explanation. You can see it at this link.)

Some of the naysayers about Bitcoin and other cryptos are saying one thing publicly (to depress the price of the coins, perhaps?) while doing something very different privately.

Jamie Dimon, the CEO JPMorgan Chase, various people at Goldman Sachs, George Soros and other high-profile bankers and investors disparaged cryptos publicly right as they began efforts to develop their own blockchain technologies. They also started up crypto exchange desks and began to invest in cryptos. What they do speaks louder than what they say.

The revolutionary part of cryptos is that money can now be transferred to anyone in the world virtually for free. It takes out the middlemen, the banks, and completes transactions in minutes rather than days. It also cuts out all of the costs incurred by banks and their antiquated systems.

Big money is now entering the world of cryptos and blockchain because of its improved safety and speed. Blockchain, for instance, enables “smart contracts.”

This cuts out the middlemen, such as lawyers, facilitating person-to-person and business-to-business agreements. Once an agreement is locked into a blockchain, just like a crypto transaction, it cannot be changed.

In coming years we will see blockchain applications in cryptos, real estate transactions, shipping records, and a slew of new applications that most industries aren’t even thinking about yet. These new applications will then drive more demand for the crypto currencies, since they are used to pay for many of these services.

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Patience is a virtue. As I’ve mentioned in previous newsletter updates, I expected the summer to be a relatively quiet time for the market and I can see it in the volume numbers.

New account openings and trading volume are slowing, which is typical in a bear market, especially during the summer. Some of the coins will appear to be “dead” but in fact there’s just very little activity to move the market.

Most importantly, there is no active selling. The market is simply quiet. People are not dumping Bitcoin or the other coins in a rush to get to cash.

It continues to be an excellent time to quietly and slowly add to your positions and prepare for the next bull market.