… if I use the words of Mark Yusko and make them a bit more general. Not that I don’t believe in bitcoin, but I think the whole asset class is here to stay and disrupt. Possibly big time!
While a lot of people are saying bitcoin is a scam, one should buy puts on every crypto, and while there are many ICO frauds, I am not so sure about the negative outcome for the asset class as a whole. I don’t want to go over all the reasons why, but I think it has a lot to do with the same reasons as why the stocks are in a bullish trend, e.g. money is super cheap, we could be in the beginning of a secular bull trend (see my post from Sep17, Why are you so pessimistic?), etc.
But there is another one which could push the prices higher. Institutional money is just starting to get in. Did you participate in any of the ICOs lately? There is a huge change compared to a few months ago when average Joes were participating with small amounts of money. Now people started organizing themselves in pools, even wealthier individuals and smaller companies started participating with much more serious amount of money. And if this trend continues, bigger companies with a lot more money could start piling in. This is definitely a sign of risk appetite! And if could be just the start.
Until now central banks didn’t like cryptos, but this is starting to change too! St Louis Fed sees the future in crypto as an important asset class.
Also ECB officials are getting it.
“Starting with wholesale markets, we see that distributed ledger technology (DLT) has a lot of potential for market infrastructures. All major central banks are looking into it.” Source.
While this is a very good sign, it doesn’t mean anything just yet. So what does the price and sentiment tell us?
Recently bitcoin fell from $20k to $9k level, ethereum halved from $1400 level to $700 level. It felt like it’s the end of the world, it felt like it’s over, like cryptos are going to zero. The following tweet is very telling.
Sold all my bitcoin at $11250. I'm out of this crypto ponzi scam. Good bye.— Sachin (@S4FCB) January 16, 2018
I was told to buy when there’s blood on the street. This might be it. And while I like bitcoin, I prefer ethereum at the moment (see my past post from Nov17, Time for Ethereum’s turn?). If ether fails this means that all projects that are built on top of ether’s platform have to by definition fail too! As mentioned above, there are many scams and they will fail, sooner or later. But there are also a lot of good companies which will create value.
So let me conclude with a chart, after all this is why we are here for, right? I think ehter has very good chances to continue moving higher. I also think it could out perform bitcoin and be one of the best performing major crypto currencies in 2018.
This doesn’t mean bitcoin can’t or won’t move higher. They both could move up together and if bitcoin gets above $12k level it could very quickly start marching towards $20k again and then even beyond that.
Food for thought, if ether out performs the major crypto currencies, this means that companies or tokens built on top of ehter’s platform have to perform well too. So some of them could even out perform ether. Let’s see..