Monday, March 19, 2018

Another Crypto Ad Ban, Dead Altcoins, And Big Bitcoin Predictions

I spent my afternoon yesterday taking in more financial education videos via YouTube while relaxing on my couch. My pest control business went from activity of about two days per week to ridiculous hours overnight last week, so I'm back to the part of my season where relaxation time is well and best spent doing exactly that.

While I was taking in the videos, I noticed that the price of Bitcoin, which has been falling for two weeks, started spiking up significantly. Since I was already sitting in front of one news source, YouTube, I looked to see what "Bitcoin" would bring up.

That's when Tom Lee of Fundstrat started popping up all over the place in my search results. Tom Lee is someone I've mentioned on this blog before: he is the creator of the "Bitcoin Misery Index." As I wrote about then, his index has been flashing a "buy" signal on Bitcoin. Lee is coming up as a top search result again bceause of his newest Bitcoin price prediction: $91,000 USD by March of 2020, two years from now.

It's been known for some time now that the price of Bitcoin tends to correlate with Google searches for it and related terms, basically as an indication of whether Bitcoin is on people's minds at the moment or not. Sure enough, around the time that the articles about Lee's prediction began to be published, there was a spike in searches for "bitcoin" (without capitalization, as most people will not bother to capitalize stuff while searching):

I've circled the spike in activity, which occurred roughly one hour after these articles started to appear, which was roughly twenty hours ago as of the time of this writing.

I don't know if Lee's prediction is worth anything, and I generally ignore specific price predictions entirely (like John McAfee's call for Bitcoin at $1,000,000 USD per coin within the same time frame as Lee's prediction - yikes!). However, such claims do get people curious, curiosity leads to exploration, and at least some of the time, buying.

The next thing I came across that I think is relevant to what's potentially happening with this latest price spike was one mention of a significant piece of news about the alt coin space: a major exchange, Bittrex, is delisting dozens of alt coins that are under performing or are completely dead.

The reason this is significant is that people who have funds in those coins have to withdraw them from Bittrex before the delistings or their funds will be lost forever (if they're not already because of the coins on the list that are already dead). Owners have a choice to move their coins to other exchanges that will still list them (for now), to private wallets outside of any exchange, or, the most likely outcome, to exchange them for other coins as all of the coins on this list are likely doomed. Bitcoin stands to gain from this as money flows out of these dying alt coins and back toward proven, reliable blockchains, Bitcoin being the first, longest running, and most known of them all.

A third factor that came up in the last couple of days is news that now Twitter will join Facebook and Google in banning cryptocurrency advertisements.

As per the usual, much of the financial media out there wrote their headlines on this news as, "Twitter To Ban Bitcoin Advertisements," in keeping with their habit of either outright lying about Bitcoin, or using "Bitcoin" as shorthand for "cryptocurrencies," which is grossly misleading. The fine details of the story, at least what has been commented on by Twitter thus far, read differently: the focus of the ban will be on "cryptocurrency wallets, exchanges, and initial coin offerings, with limited exceptions."

What "limited exceptions" means exactly is impossible to say at this point, but in light of recent news on the regulatory front, it probably means "vetted." This also builds on something I blogged about just a few days ago, that these crypto ad bans are basically only targeted at all of the ridiculous alt coins that are out there, because they absolutely need advertising to exist at all. Bitcoin and other "household name" coins like Litecoin and Ethereum, and a coin like Ripple that is rapidly gaining traction in international money transfers by traditional banking players, do not need paid advertising. People already know of them, and they are reported on daily in the financial media. That is because they, unlike the sea of copycat crap coins that are out there, actually exist as original solutions to real-world problems, not just as pointless also-rans. They're relevant; the vast majority of alt coins simply are not.

Finally, at the end of the 24 hour period in the market where the price spike began to occur, the result at the end of the day was the formation of a bullish "hammer" candlestick, occurring below Bitcoin's 200 day moving average in the midst of "oversold" conditions on the Relative Strength Indicator, on a spike in trading volume, my favorite setup for a buy:

Where to from here? Who knows. Like I said before, I don't like price predictions. I do like combining fundamental analysis with technical analysis and then identifying entry points (exit points I'm fairly lax on because I tend to just sit on assets until something in my life makes it advantageous to liquidate them, not because I think I've found the "top" in a particular span of time in a market). In fact, as I am typing this paragraph, Bitcoin just broke through $8500 and appears to be moving higher, significant because round numbers tend to act as "psychological barriers" in markets. When these barriers are surpassed, more traders jump in, momentum builds, and the action really heats up. Combine this with all of the factors I described above, and this could be the starting point of big things.

Who knows... Maybe McAfee won't have to break out the mustard in a few years after all...

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