Recent weeks have seen a massive surge in the price of BitCoin with it surpassing £24,000 on Coinbase's listings. I can't begin to describe how I regret selling my BitCoin when it finally started moving at the beginning of November when following the age old wisdom of taking a profit early. Ethereum too has followed suit and while it sounds more dramatic in US Dollars in breaking the $1000 threshold it also sounds impressive in seeing that this represents a push through £700.
After investing for a few months in crypto, the pattern I have observed seems to be that where BItCoin goes the rest follow even if they lag behind a bit and while this is not true of all Crypto it is a good general rule of thumb. It was BitCoin that led the surge in prices in November after the early September slump and slowly, very slowly, much of the rest began to move in the same direction. Many commentators were wondering why Ethereum was being so sluggish in following BitCoin into the stratosphere. There were probably a multitude of reasons, but the one we are most familiar with was that it became well known that its gas fees were becoming increasingly more excessive and thus making it a less attractive investment proposition. This issue is well on the way to being dealt with and the Ethereum landscape is beginning to look much brighter.
However, when there is a surge there is always a correction. In the last few hours since hitting its peak BitCoin has fallen more than 12%. Honestly I had expected the correction to come sooner and it may not yet be a correction.
Let me explain. The drop in BitCoin price may just simply be a case of investors cashing out and simple supply and demand dynamics will lead to a fall in prices. However the drop in prices might make BitCoin more attractive to buy again. I am certainly watching its price much more closely and personally I am interested in seeing it drop. Once it flips it might once more drive another surge in prices.
I don't believe this will be the case.
A greater than 10% drop in just a few hours seems to be a strong indicator of a dip and remember my proposition that where BItCoin goes the rest follow?
So I postulate that there is a dip coming and it will take down in the short term the prices of many of the currencies. So this leaves us with a few basic choices
- hodl for dear life and wait for the storm to pass - please bear in mind some prices do not recover quickly or even at all. Look at Cosmos / OMG Network / TEZOs prices since September for example.
- hold your investment value (allowing for gas fees) in stablecoin
- stake where possible and that might well mean in stablecoin
In a future article I am considering doing something on the advantages and disadvantages of staking vs. hodling and the role of stablecoins, but watch this space.
This is my first post of the new year so finally for today I want to wish you well. Stay safe and stay well and I will leave you with a question.
Is there another big dip on its way?