Daily Ramble
Panic. Utter chaos. In more than one area of life, I thrive in these conditions. I’m certain my difficulty thriving in market chaos is one of the things that keeps me coming back. Yesterday was an absolutely shi*t show for the crypto market. I don’t need to go into all that occurred yesterday, but there are a few highlights worth mentioning. The cliff notes are that the crypto industry's $2,000B market cap plunged to $1,200B before closing the day at $1,500B. At its peak, wiping 40% of the value of the crypto industry out in a single day represents one of the most punishing days in crypto history.
As I frantically wrote yesterday’s Ramble, I was already distracted by the incoming bomb that seemed to be brewing in the market. I clicked the Publish button moments before the detonation. I frantically chased here and there across the markets, trying to sort out which way was up, but like Mike Tyson says, “Everyone’s got a plan until they get punched in the mouth.” It’s one thing to know you’re in a state of fear, but it’s another knowing that you need to make rational decisions while in that state. The flight or fight response doesn’t click off immediately, despite the need to make decisions. So I had that going for me.
At the same moment, as I was throwing together a game plan, the internet went out. “No problem, I’ll just connect my phone as a hotspot,” I thought. Easier said than done with my fear-laden butterfingers. Even clicking the right thing on the screen seemed to be hit or miss. Then every pipe and tube that crypto transactions flow through ground to a halt under the crushing weight of the universe of crypto users needing to move funds simultaneously. It took another hour of frantically hopping about the internets and juggling the phone’s internet connection before I threw up my hands and gave up the ghost.
Then my zen moment happened. It just didn’t matter any longer. The dust was going to settle how the dust settled. I’d pick up the pieces afterward. And indeed it did. I took a leisurely walk with the dog, talked to a couple of friends, and most meaningfully, realized that I wasn’t alone in my ordeal — I’m no exception to the rule of misery. 775,000 traders had their accounts wiped out yesterday. Liquidated. Gone to $0. As I mentioned to one friend, there are never enough lanes on the crypto highway when the forest fire comes. Panic is panic.
Unsurprisingly, the sun came up today. And I feel fine. But if any of my fine readers are struggling to manage their cool after yesterday, feel free to reach out. Suffering without an outlet can lead to regrettable decisions, and I’d happily be that outlet if it helps avoid those decisions.
Favorite Things on the Interwebs Today
A fellow surfer, Bitcoiner, and image that’s all too relatable. Nice to have Bethany join the Bitcoiner fold.
Bitcoin Price Prediction
Yesterday: $36.2k - $44k
Today: $35k - $45k
Tomorrow: $30k - $45k
Wow! What a difference a day makes. Yesterday was an absolute blood bath in the crypto markets as hundreds of billions in market capitalization were wiped off. My suggestion of $33k turned out to be fairly close to the final price we reached — $30k — though my prediction was about $6k wide of the market. No one, myself included, ever believes how far Bitcoin can move in either direction, and yesterday was no different. The drop can partially be explained by the logjam of activity across the exchanges and blockchains as trading tools ground to a halt. Only people with resting orders got filled as everyone else looked on in dismay. I suspect that’s one of the primary reasons we saw such a decline — few people could place new buy orders. Unbelievably, the price was bought up from $30k to $40k before settling in for the close at $37k. The market continues to be highly volatile from the capitulation,, and I’ve given wide prediction ranges over the next couple of days as a result. A trip down to test the lows at $30k is possible, but I would be surprised if $30k broke after the sellers’ capitulation yesterday. Historically, these capitulations have set up massive bull trends in the market. Only time will tell.
Bitcoin Q & A
Q: Is Bitcoin entering a supercycle?
A: Maybe.
Dan Held first introduced the idea of a Bitcoin supercycle. He proposed that Bitcoin would escape the extremes that have marked the typical four-year halving cycle at a certain adoption phase. While not clear what that would look like, it would mean that Bitcoin would no longer have 85%+ drawdowns after a blowoff peak.
A yearly 50% drawdown like we experienced over the last couple of weeks is the type of behavior that I would anticipate if we entered a supercycle market dynamic. It does not mean we are in a supercycle, but it is a sign we may be entering one.
Thanks for reading,
Kent
Do you have questions or a “Favorite Thing on the Interwebs”? Comment below or reply to the newsletter to reach me.
If you’re not on the email list, subscribe now — just this newsletter, no advertising.
Me? I offer personal and corporate Bitcoin Implementation Strategies: custody, investing strategy, security, tax management, and inheritance. Contact me for a free initial consultation.
Yesterday’s market activity is shocking when it happens, but all of the analysts that I consider worth listening to have been calling it for a couple of months. It’s still a surprise when it happens, however, even if BTC went to 30K and consolidated for a time it would still be up 10k from the beginning of the year. Is there any other asset that is anywhere close? And there are still 6+ months remaining in 2021 while the legacy system continues to sour and the crypto ecosystem continues developing. I really don’t have a lot of sympathy for those traders that overextend themselves and then suffer the results. This space is a long term play with plenty of opportunity for everybody.