In general, it's a sound mindset. The parabolic ramp for bitcoin just keeps getting steeper and that must ultimately come to a head. I think the issue is that the head must be way above where we are at. In a 3 year timeframe, 10,000 for BTC is cheap if we understand that it is used for a currency to back most all cryptocurrency trades. In the end, this sort of prevents or limits the impact of a flippening event.
Tether needs competition in the market, I think. We need a more decentralized alternative, or a less risky alternative.
Like let's say BTC hits 14k.... it could then crash 50% and be at 7k... at which point, I think the buying resumes. Certainly good to take some off the table if this does happen, but I would just add that I am not expecting a long-term 6+ month lull in the market for cryptocurrency. 3 to 4 month lull is maybe the max I would anticipate.
So certainly some of the issues you mentioned could blow up, we get a pull back, but 400 bil for a market is kind of like small potatoes. I think the market is very heavily centered on bitcoin which is not great. Ideally, the crypto market broadens its diversification of offerings into many realms and doesn't have 1 vehicle holding most of the wealth. In other words, what we see is indicative of an immature market that has a lot of room to grow, because it is centralized into a few products that people are beginning to grasp, without a more broad-base of understanding and market interest which happens as a market matures into the multi-trillions.
Thanks for the solid comment.
I guess I am questioning the role of BTC as a "Reserve Currency" or "Store of Wealth" it is being promoted as. I think it only has that position at the moment because it is part of all the alt-coin trading pairs. As the crypto market matures and diversifies I don't think we need that function in a properly decentralised crypto market.
You've nailed the issue though, it is about the immaturity of the market. Dumb teenagers make dumb mistakes and come unstuck, but they learn from it in the long run :)