Where is Bitcoins Bottom? How to Ride the Crypto Market Turmoil

Turmoil overnight with Bitcoin dropping into the mid $6k range, recovering to around $7k at the time of writing, Ethereum also taking a hit and now at just under $400.

The big questions for newcomers and long term crypto enthusiasts alike have to be why, how much lower can it go, how long for, when will it recover, and what to do in the meantime?

Why is the market falling?

There are a number of contributing factors at play – whilst there has been a barrage of regulatory news, much of which is being reported as the cause; overnight for example 5 Japanese exchanges have taken the decision to close their doors before the Japanese FSA does it for them over security concerns. This is no bad thing to be honest, and appears to be a positive step towards protecting the crypto markets as a whole. However, Headlines such as “Five Cryptocurrency Exchanges in Japan Throw in the Towel” despite being technically accurate – really do the industry no favours and does little more than spark panic in this fledgling industry and relatively inexperienced user/investor base.

Another revelation overnight being blown out of proportion is that email marketing platform Mailchimp has amended its acceptable use policy banning the use of their platform for advertising anything crypto related. Whilst the discovery of the changes has been doing the rounds in the social streams and no doubt many marketers using Mailchimp crying in their cornflakes this morning – if you read between the lines, the ban has nothing to do with cryptocurrency itself. Mailchimp are simply protecting their IP addresses and mail servers from high bounce/high complaint traffic. Their business is 100% reliant on being able to deliver marketing emails – spammy marketing tactics by ICO promoters (if allowed to continue) would bring their entire business to a grinding halt. If you were Mailchimp – you would take the same action. It’s not personal for them – it’s business. Promotors need to be more responsible with their claims and learn about real marketing.

How much lower can it fall?

To be pedantic about it, theoretically it could all go to zero. The reality of that however is a different matter. Cryptocurrency is here and here to stay. It can’t be “uninvented” the same way as firearms, porn, weed or the atomic bomb – you can’t unring the bell once it’s been rung. That’s not to say it will be a pleasant or easy ride in the markets – but crypto has made its mark on the world, and little short of a nuclear war and/or continental level electricity failure can halt that.

How long will it last and when will it recover?

The answer no one wants to hear but is the unfortunate reality is “as long as it takes”. Positive indicators are on the horizon, tax season ends shortly in the US which has been causing significant panic selling, compounded by the overall crypto investor base (especially those that entered the markets in Q4 2017) is relatively young and inexperienced, being led by in many cases other inexperienced “marketeers” touting get rich quick schemes that are now panic selling. In some respects the panic selling is no bad thing – it’s all part of the “correction” that was one of the few guarantees of the crypto market timeline.

What to do and how to ride the storm?

For many the first thought that comes to mind will be to sit back and watch – very much the wrong thing to do. Watching a market never made anyone money. With no “skin in the game” you’re only wasting your time and setting yourself up for more bitter disappointment when the market turns around.

Take the logical approach. ICO investors will know the majority of projects are built on Ethereum and take ETH as a contribution currency, primarily because of smartcontracts, the underlying processing system. ICOs will continue to happen, they might be given a new name at some point and need to meet higher standards and so on, and Ethereum will still be (for the foreseeable future at least) the primary currency of acceptance for ICOs. With Ethereum falling in price it makes sense to acquire it over time and often through what is termed as “dollar cost averaging”. Acquire ETH hourly/daily whilst it’s falling – you might already own a pile of it at $700 or more – buying more will bring your average acquisition cost down significantly, and you’ll have more upside in it on future ICO purchases as the market turns around.

If you are yet to own any cryptocurrency or you’re a newcomer to the market – see the video below and the following link for how to set up a Coinbase account and buy some Ethereum whilst it’s low. Small amounts over time will limit your risk exposure to further market swings and get you through the crypto storm.

 

Created: Friday, March 30, 2018

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