I've seen some posts today about the possibility of cryptos diving more.
Reason given is that in the summer of 2017, many crypto hedge funds entered the market, and they are getting ready for potential redemptions from their funds, as the minimum lock up period expires (usually a year).
Let's keep in mind that during the summer of 2017 bitcoin was around $800-$1200 and the price now, with all the crash from $20k is $6000. Some will want to cash out at impressive returns. You can read a bit more in the stories where I've seen this information (you can also check the original quote of Spencer Bogart, I haven't):
Now, here's what I think.
From a bearish market like we have right now there are two ways to reverse the trend:
- Slowly, in very small increments, rebuilding the market confidence over a long period of time. We've seen that happen before, after the crash caused by Mt.Gox's hack, and the long bearish market followed by the long and slow bullish movement. I think we have very few circumstances for this scenario to happen.
- Abruptly. In this scenario, I believe the bitcoin price (which will engage all the others) will dip seriously, and once it hits a strong support it will come back just as quickly, but this time the climb will continue.
So, I go with the second possibility.
Can the selloffs from these hedge funds determine these dives? I'm not sure, more likely not. But there are other players who can and most likely will. And, if we disregard the high volatility associated with crypto prices, we can see these kind of movements in mature markets too.
Why I say it's great to have this big dive before going up at full force? Because I don't believe we will have the start of a big bullish movement until that happens. It might be quick and scary, very scary if or when that happens.
Do I sell now, thinking I will buy the dip? No way! That's the biggest mistake in my opinion! I am a hodler in this case.
Do I buy more until it comes? Yes! I cannot rely on being there when the dip occurs, if it does, to buy then. And if I will be, I'll try to buy then too.
If the dip doesn't come we will have many boring months to come, during which many will forget about the crypto land. Would it be good for the space, less attention? I don't think so. Maybe when it matures enough.
What do you think will happen? What's your strategy during these times?