GM. This is Ponder Crypto.
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The newsletter that brings all the boys to the yard, to discuss crypto investing.
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π Sitting in No Man's Land
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π¨ How Can Bitcoin's Price Change so Rapidly?
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π° Crypto Chronicles 2023: Week 9
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π₯ This Week on PonderTube
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π Sitting in No Man's Land
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The Bear Case: $21,500 (5% drop)
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The Bull Case: $25,200 (12% rise)
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These are short term targets of course.
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Trading any crypto right now is risky because Bitcoin could drop back to $21,500 and pull everything down with it.
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Bitcoin could also break $25,200 and send things sky rocketing.
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Right now, you're sitting in between multiple points of resistance and support with a greater than 2:1 target to the upside.
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Making a play on Bitcoin to 25k with a stop loss at 21k looks like a pretty solid trade. (not financial advise)
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π¨ How Can Bitcoin's Price Change so Rapidly?
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Like a giraffe on roller-skates, the Bitcoin price can fall HARD.
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In 30 minutes on Thursday night, Bitcoin dropped $1,200 erasing 22 billion from the total market cap.
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This drop has been attributed to Silvergate holding off on filing their 10-K which has led people to speculate some underlying financial troubles.
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Why this spooked the market is MicroStrategy, One of the larget Bitcoin holders is associated with Silvergate.
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As a Bitcoin holder, you get numb to price movements like this over time. But the question often comes up, how can the price drop so dramatically in such a short amount of time?
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1 / The Bitcoin Market cap is still relatively small compared to other assets.
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- Bitcoin's Market cap: 432 Billion
- Google's Market cap: 1.179 Trillion
- Amazon's Market cap: 944 Billion
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The ENTIRE Bitcoin network is worth less than half of many individual companies; which highlights just how early we still are.
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2 / Liquidity levels are constantly dropping on exchanges
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More and more people are taking self-custody of their Bitcoin from exchanges which is making the amount to trade with less and less.
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With lower liquidity levels, it makes price swings, both up and down, more volatile because it takes less capital to clear our the buy and sell orders.
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3 / Market sentiment makes up a LARGE portion of trading
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There are a ton of trading bots out there scanning the internet for the next piece of nugget to give them an edge.
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When they find that nugget, they trade it immediately, hoping to beat out the market. Because crypto trades 24/7/365, this makes bot trading much more effective and timely as important news stories break.
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4 / Many traders are still using high leverage
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When people use leverage, they are borrowing money to take a larger position in the market.
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Where this becomes a problem is when someone takes a large levered position like 20x or even 100x and then the market drops out from under them.
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This leads to them having their position liquidated, which drops the price even further, which liquidates the next investor, and so on and so forth.
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One area that I would like to see changed is having the amount of leverage reduced to 5x or something reasonable.
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Too many people get greedy or try and make up for a loss by taking an overleveraged position, lose it all, and make the market more volatile in the process. Lose Lose for everyone.
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DO NOT use high leverage. 2x or 3x is fine. Any more and you are playing with fire. π₯
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In Summary: volatility is the price you pay for being an early adopter. A good rule of thumb is if you feel nervous or upset when the price drops rapidly, that is an indicator that you may have more invested than you should.
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Over time, Bitcoin's volatility will subside as the market grows, but until then, buckle up for a wild ride! As quickly as it drops, you'll get price jumps that'll make you wish you put your child's school fund into Bitcoin!
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π° Crypto Chronicles 2023: Week 9
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Top stories you should know this week.
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Brief Summary: After switching to Proof of Stake, the Ethereum network drastically reduced energy consumption. In an era where ESG policies are at the forefront, the network is positioning itself as a "green" protocol to help improve optics. One Ethereum transaction is now equivalent to energy it takes to play 2 hours of YouTube.
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Our Take: Many crypto enthusiasts are HARDCORE PoS (proof of stake) or HARDCORE PoW (proof of work). Our opinion is WHO KNOWS what's best yet. PoS is more akin to the current fiat model, which is why I lean towards PoW and Bitcoin for my main store of value method. But PoS and Ethereum can be something completely different and still succeed. I think both sides have merit and I for one don't feel the need to choose between the two at this time.
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Brief Summary: Cathie Wood, founder of Ark Investment's originally had a price target of 1 million dollars by 2030 for Bitcoin. She has since changed her opinion and upped the target to 1.5 million within the next 7 years. Her belief is that by the end of the decade, many technologies such as cryptocurrencies, AI, Bio-Tech and battery cells will hit s curve adoptions at the same time, exponentially increasing the value of comparative markets.
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Our Take: 2030 is a nice round number. Will Bitcoin reach 1.5 million by then? I don't think so. Will it within the next 20 years? Absolutely. At the end of the day, Bitcoin is a store of value asset and one that people should plan on holding for the long haul. Younger generations are heavy adopters of digital assets, and you have 80+ trillion that will be passed down to younger generations. 1.5 million will be hit, but 7 years feels aggressive.
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Brief Summary: Even with the price down 65% from it's all time high, we have now reached a NEW all-time high (24 million) of addresses holding at least $10 or more. This means that wallets were actively acquiring Bitcoin during the down market and did not grow due to price appreciation.
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Our Take: Adoption appears to be growing in every metric. Mining Hash power is at an all-time high. Active Bitcoin addresses are at an all-time high. You know what's at an all-time low? The amount of Bitcoin held on exchanges. You add up these sweet ingredients and you don't get the best-tasting chocolate cake; you get a beautiful setup for a short squeeze to the upside.
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Brief Summary: According to a new indictment, in November 2022, the general counsel of FTX.US warned employees to keep important documents as regulators were involved and later announced on the company's Slack channel that FTX would have to be shut down. However, FTX's CEO, Bankman-Fried, deleted the general counsel's message and continued to use Signal messaging, and deleted some of his own tweets regarding the status of customer assets.
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Our Take: I'm over this curly-haired gerbil. It's unfortunate that these court proceedings are going to take so long because Sammy boy is going to be in the news every time he sneezes. Unfortunately, many people "outside" of crypto see Sam as the "Face" of crypto and use FTX as a reason for believing cryptocurrencies are nothing but scams. The reality is, What Sam did had nothing to do with cryptocurrency. HE stole capital and defrauded clients. It's going to take a long time to overcome the negative optics he's brought upon the space, which sucks.
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Brief Summary: The Ethereum blockchain's Sepolia testnet has undergone a successful upgrade, simulating the forthcoming Shanghai hard fork that is scheduled to occur on the mainnet in March. The upgrade, called "Shapella" which is a combination of "Shanghai" and "Capella" hard forks, was successfully implemented on the testnet on February 28th.
On the client side of the consensus layer, the fork is referred to as Shanghai, while the upgrade is called Capella. The update includes a significant change that enables validators to transfer their staked Ether back to the execution layer from the Beacon Chain.
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Our Take: It's about time! Feels like that sweet 2.0 Ethereum has been held hostage for months now. Happy to see people will finally be able to withdraw their assets. I'm not sure what this will do to the price in the short term, assuming a not insignificant portion may liquidate their "extra" holdings, but long term, this will help Ethereum's price as this "unknown" will be removed, and people will feel even more comfortable staking moving forward.
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π₯ This Week on PonderTube
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The Game Theory of Bitcoin Adoption with George Gammon (WiM280)
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In this episode, we discuss the importance of voting with your wallet, how Bitcoin will impact the size of the Government, the moral hazard of CBDCs, and how to prepare yourself for an uncertain future.
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This Is How Theyβll Convince America to Adopt a CBDC
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Many people are concerned about the rollout of a Central Bank Digital Currency, especially as we see carnage in the markets everywhere.
It seems like policymakers are doing everything they can to bring as much pain as possible on everyday Americans, while asset prices are crashing and prices of goods and services are going through the roof.
So, the big question is, are the deliberately trying to reset everything so they can roll out a CBDC?
So, in this video, I'm going to give you exactly what my plan would be if I was in charge β and wanted to roll out a Central Bank Digital Currency successfully. Because if they were to roll this out right now, people wouldn't have any incentive to migrate over into it unless they had a reason to, which is why everything must go through the chaos.
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This is not financial advice. I am merely stating my own opinion on how I am perceiving the current market structure and conditions. Consult with a legal investment advisor and all the other good legal stuff that needs to be said.
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Disclosure: All content shared in the Ponder Crypto website, newsletters, video channels or any other medium are for entertainment purposes only and should not be received as legal or financial advice. We are not legal experts or financial planners so please, exercise proper due diligence and do your own research.
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