Listening to a phone interview by Mike Novogratz, he came out and said that the pullback we had on Friday (yesterday) caused too much damage for prices to make new highs any time soon.
So much damage in fact, that he decided to postpone his Galaxy Digital Assets Fund launch, which was scheduled to launch by the end of this week.
If you are not familiar, Mike Novogratz is a former Macro Fund manager on Wall Street that has been one of the bigger bitcoin bulls over the past year.
He was quoted as saying;
"cryptocurrencies will be the biggest bubble of our lifetime."
To capitalize on those thoughts, he went about setting up a $500 million dollar hedge fund, the largest such hedge fund in the industry. Not only that, but the fund would be backed with a good portion of his own money.
That fund, Galaxy Digital Assets Fund, was the one that got put on ice after the latest bout of volatility in bitcoin.
In his defense, this was more than your normal run of the mill bitcoin volatility.
Prices dropped close to 50% in less than 4 days. With roughly 35% declines coming in a 12 hour stretch yesterday.
Bitcoin markets haven't seen price action like that since 2013.
To put it bluntly, it was downright scary.
Novogratz's thoughts on that price action...
"When you get kicked this hard, it takes a lot of ice to get the swelling down."
For that reason...
"It will take the market a while to recover and bitcoin prices will probably consolidate between $10,000 and $16,000, and won’t approach $20,000 again for at least three to four months."
That is quite a long time before he thinks bitcoin will see new highs again, which is why he doesn't want to launch his fund right now, when he thinks there is a good chance bitcoin might have to go lower for a bit before it can go higher.
Why I think he's wrong:
For one, if you read my piece yesterday, you will know that I think most of that drop yesterday was manipulation. It wasn't "normal" market activity, though I will be the first to admit, there isn't really such a think as "normal market activity".
Either way, I think the drop was done intentionally by a small few as opposed to market forces taking over.
More about that can be read here:
Also, there has been strong correlation between the price of bitcoin and it's network. How strong of a correlation you might ask?
Well according to research published by Tom Lee, there is a 94% correlation between the price of bitcoin and the number of wallets and number of transactions being done per wallet. IE, as the network has increased, so has the price, almost in direct correlation.
Which means that anyone calling the price of bitcoin pure speculation, hasn't been doing their homework.
The price is simply increasing as it's network grows, which doesn't seem that crazy at all.
A model of what Tom Lee is talking about looks like this:
Since November, wallets and transactions have been increasing, but the price had been increasing at a faster rate, which would imply that a pullback in price was needed or a huge surge in network activity was needed.
We got the price pullback.
Currently new wallets and activity is continuing to increase but the price is now going sideways/slightly lower, which is likely coiling the price like a spring for the next move higher.
Finally, the 3rd reason I think that we will hit $20k again a lot sooner than Novogratz thinks is simply because of The Thanksgiving Effect!
Over Thanksgiving, everyone went home to their friends and families and talked about how much money they were making in bitcoin.
Then all those friends and family members went out and opened accounts on Coinbase and bought bitcoin. That is basically when this whole massive upswing in the crypto markets started.
I expect we will see the same thing again over the Christmas/New Year's holidays.
People will be telling all their friends and family about how well they have done this last year in cryptocurrencies and people will be eager to join in.
For that reason I would expect to see a huge surge in buying basically starting after Christmas to a few weeks after New Years.
Overall, I understand why Novogratz is a bit cautious at the moment, but buying at $10k was likely a great entry point if he would have continued along with launching his fund. If he decides to wait a couple months, he may end up paying double that by the time his fund is ready to roll.
Plus, if you check out prices right now, it looks like bitcoin has already peaked above his $16,000 upper limit of his consolidation range.
We will know more in a few weeks.
Stay informed my friends.
Sources:
Image Sources:
http://blog.startwithwhy.com/refocus/2015/11/wrong-vs-missing.html
https://news.bitcoin.com/how-to-explain-bitcoin-to-your-family-this-thanksgiving/
Follow me: @jrcornel
High transaction costs and a transaction backlog may just magnify the design flaws in BTC. Time for another fork???
Hey ,
Thanks for the great content
The truth is that nobody knows which way the price is heading. There are so many big players on both the up and down sides.
And right now, it seems fair to talk about the greater crypto market, as all the top coins seem to be swinging in the same direction (up or down), day after day. If there's a bull run on crypto in general, sure BTC might hit 20k again, but it wouldn't be shocking to see a month of crypto consolidation after a run that still feels like a dream. Might even be a little healthy.
Absolutely. Who knows how "big" the crypto market is going to get. This might just be the beginning of the growth. I think Bitcoin is going to stay below the 50% dominance of the market from now on. There are just too many other alt-coins that have great features.
I know that I am giving away a bunch of crypto this Christmas and spreading the word about Bitcoin :-D
I dressed up as "Bitcoin Man" for Halloween so my friends have been hearing about this for MONTHS. Now they are finally jumping on the wagon too.
Wow. $50 bucks a pop to give away $25 bucks worth of BTC.
Nice! I thought about giving crypto as gifts this year. How do you intend to do that? Will you create a wallet for them?
I'm going to send coin to people that already have wallets and help the ones who don't set one up. If they don't want to use Coinbase or a private wallet I could just set them up with a MyEtherWallet in a matter of seconds and they can send or receive any number of ERC-20 tokens and Ether.
I plan on doing this for my mom. She always wants money for Christmas so I'm going to give her an investment rather than liquidity. She'll probably be mad on Christmas but next year or the year she'll be thanking me LOL. Plus this way I can keep filling her wallets for every holiday. The gift that truly keeps on giving.
https://steemit.com/@muhammadqaiser
More worrying to me: Bitcoin is BROKEN!
It can't handle the transactions of the people buying and selling. By wide margin.
A look at https://blockchain.info/unconfirmed-transactions
shows that who invests in Bitcoin is investing in a BROKEN payment system. Litecoi, Ether & Co. Don't have the problem yet. Because they don't have the load to handle.
Blockchain is 1.0
I know you won't remember Rockwell's words.
Good luck! People are very stubborn!
Come Jan end, 20K+
I think he right.
With current scaling issue, Bitcoin not very usable...
Indeed, today may be the best time to buy to capitalize on the Christmas sharing of bitcoin/crypto success, which should drive friends and family members to invest their own money into the markets.
I divested from bitcoin around $8,000, and my altcoin holdings are doing just fine.
I appreciate the network effect model. These coins seem to due the opposite of past trends (example - Bitcoin Cash and B2X reactions). I hate to say it but Mike could be right.
I think that you're spot on when you say there is going to be a Christmas effect.
Those of us who are involved in crypto tend to lose sight of the fact that to the vast majority of the world it doesn't exist at all, or is only some vague thing that they've barely heard of.
Bitcoin itself is finally gathering enough steam that mass media has mentioned it enough times that people at least recognise the name. Do most of them really understand what it is? I doubt it.
Add to that the fact that way less than one percent of the population has ever even heard the names Cardano, Iota, Monero, Qtum, etc.... much less understands that these are the technologies that will be directly impacting their lives in the very near future...
It's a recipe for truly explosive growth. This is 1994 of the dot com boom.
Another corporate psychopath. He made $250000000 already. THats enough for ten lifetimes. Why doesnt he do something good for the world rather than setting up a shitty hedge fund and trying to manipulate crypto prices
I'm cautioning everyone I know to keep most of your portfolio out of bitcoin. Why? It's already a dinosaur. The first massive use of the network clogged it up, just like it's designed. It's slow, it's expensive and after paying someone $5, they know exactly how much btc you have in your wallet. Not exactly ideal.
The drop in bitcoin was matched by a surge in coins which have more privacy, much more capable networks and significantly quicker transaction times. Bitcoin is showing it's first signs of death, right as it looks like it's hitting prime time.
Hey BTC developers... what's your response to fix Bitcoin?
I think Novogratz is right. We need some time to regroup and shake out weak hands. Perhaps these 2 months will also bring the release of Lightning Network and perhaps some other things that may shine a new light on the scaling/fee debate.
In other words, 2-3 months above $10k would serve us fine. No need to hurry.
Good article. I also see a strong correlation between the massive amount of people already entering crypto markets - this will likely continue at eve higher levels. Everyone wants to join the party. That will positively impact Bitcoin price in the upward direction.
I agree that a major reason for the recent drop was manipulation. My 71 year old Mom called me about a week ago saying she wanted to invest in bitcoin. Mom knows nothing of cryptos, so word is spreading. I think we’re just getting started.
I think bitcoincash will be the new one to go way up and make money with this year, with the holiday season going on and the start of the new year I bet it will take a few months for bitcoin to bounce back.
Possibly so—there are so many new people who don’t know anything about ‘why’ Bitcoin was created, and then seeing a coordinated sales push by Bitcoin .com based on ‘low fees’ rather than independence from the legacy money system. Soon enough, those aspects of any crypto that are truly important will win out, and on-blockchain scaling will prove itself to be impossible—as Bitcoin itself is proving. Only second layer scaling can really scale and offer privacy. If you still think Bcash can scale on-chain, you haven’t done any research at all. Listening to Ver is NOT research.
I think as long as people keep putting money in you can make really good money, most of the people putting money in are not doing research or a lot of it. I m not saying bitcoin cash will be a cash cow forever but for this next year there will most likely be a lot of money to be made. The whole blockchain thing may die out and get replaced with hashgraph eventually but that doesnt mean you cant take advantage of the system while its still around.
You see the CNBC takedown today? Bcash is “just two guys!”
Always amazed when I hear a snippet of truth on the tube.
A lot of what I posted above is about why crypto is even a thing in these times. If you agree with why Satoshi created Bitcoin, why would you put any money into Bcash or any other scamcoin? You are at that point no different from any other polluter—and can’t claim ignorance as an excuse.
I more view this like a similar thing with the internet bubble, there will be a lot of money to be made before things come crashing down. Most people dont do research so if you can stay ahead of the curve and cash out before the system fails you can do great, but at the same time nothing is guaranteed so you definitely dont want to put in anything you cant afford to loose. As long as people keep pumping money into these newer coins the ride will roll on for a bit.
Only those coins with real use cases and potential to truly scale will thrive. Which ones are those? That is the question, and since it isn’t clear, I have some portfolio diversification. But mostly BTC... smartest people, best shot at truly scaling. Antifragility & privacy are the other needed things any crypto —and it’s hard to say which others have them.
completely wrong ! This system has one way Finally.... its a matter of time, where we trust on.
following you
https://steemit.com/@muhammadqaiser
follow me
now a days investment in cryptocurrency is too much risky. You can become a hero or zero in a moment. By the way Thanks for awesome info
good information in cryptocurrency keep it up
There is no sure prediction. Cryptocurrencies are very volatile and can go up anytime. Saying that in 4 months, something can't happen is just odd. I personally prefer Ethereum for investments, but Bitcoin grows responsibly as well.
Good
We will see 25k + in February; there are many experts that try to predict where the price of BTC is going and and very few of them have been correct. Ironically, no one can predict what the BTC price will be in months from now. We certainly didn't see 10k+ and we ended up with 20k... anyways, I agree with you; he is wrong. He prob just wants cheaper coins xD
Amazing post!! Thank you for taking the time! If you get a chance check my post out at https://steemit.com/cryptocurrency/@seikatsumkt/scam-el-petro-the-new-cryptocurrency-announced-by-the-venezuelan-government
I definitely believe he is wrong. It will bounce up to well over $20,000 in my opinion as earl as January or February 2018. Sooner rather than later in my opinion. Though it may drop again once it reaches those marks
it already crossed 16k mark in india....
Yes, it crossed it on Coinbase a couple hours ago as well. He's already wrong. ;)
Anything is possible with BTC!!
you are right sir @jrcornel, i think after next 3,4 months it crossed $30k, i always hope for the best. new year is cryptocurrency year. love BTC. cheeeers.
Hello @rabeel. Please see my review of what the Big Boys ave been doing over at the CME: https://steemit.com/bitcoin/@lestatisticien/bitcoin-will-not-show-another-explosive-price-jump-before-june-2018-cme-futures-forecast
bitcoin btc best
*The spirit does not diminish *
Although the price is slightly sideways but the Steemit world I did not leave. for me Steemit is very useful for my family ,, 😁😁😁. before I thank those of you who have given the price picture.
Good night
@jrcornel
Unfortunately I agree with Mike Novogratz. The bounce we are having right now probably can carry us to 16k to 17k area, but I do think we will see second leg down quite soon. It is the second leg determines if BTC will break down or consolidate further.
Yes, @itsok, I agree that how that second leg turns out will be very important as a signal for buying strength over the intermediate term. Please see my review of CME action here : https://steemit.com/bitcoin/@lestatisticien/bitcoin-will-not-show-another-explosive-price-jump-before-june-2018-cme-futures-forecast
On friday ... Many friends got to me and asked if this is it? Is it the end? And I told them ... I just bought some more BTC. Buy when low, sell when high or even better ... Just hold especially when you see it dropped 20, 30 %
BTC will touch 20k before the end of Jan. We'll see if it breaks it. FOMO is bigger than FUD at the momment.
completely agreed with u.
helpful post for everyone. thanks
Good job
Have a nice day
The whole crypto market was not n the red yesterday, I thought the white one thing would come me down low prices of 7000-8000 bItcoin and bitcoin cash down to 1000.00
Litecoin again held its own as it really did not get slammed.
With so many getting slammed at once, not sure if manipulation or something many people saw the t going downhill wn a nd panicked.
Those who put a lot into one coin, say bitcoin and thought I was about to disappear all we’re trying to get their money back out, I kept saying it was a buy in opportunity!!!
Anyone looking to buy some crypto should only put in what they can afford to and not a lot at a time, also deversify will not many different ones.
Your absolutely right though, bitcoin will double.
Wonderful publication greetings to you and wish you happy year
I have been tracking bitcoin all day on bittrex and the highest selling point was at around 14,900. Could it be a discrepancy in the exchanges?
Coinbase has been listing slightly higher prices than bittrex for some time now.
Well that would explain it. :)
Hello @chris-yoder! How much is the psychological impact of the action over that CME, where the pattern of forward-month futures prices is not bullish? See here please: https://steemit.com/bitcoin/@lestatisticien/bitcoin-will-not-show-another-explosive-price-jump-before-june-2018-cme-futures-forecast .
I am not claiming that the CME action is driving the spot market price pattern all by itself; but there is a ton of literature out there (from outside the crypto market) which says that keeping an eye on the futures trading is a good idea.
I am honestly not informed enough to make a cogent response beyond this: this week is not the end of bitcoin or cryptocurrencies.
Hello and thanks @chris-yoder . May I invite you to check out my responses to the comments of @ab12345 and @safetony at https://steemit.com/bitcoin/@lestatisticien/will-bitcoin-surge-upward-again-in-the-near-future-cme-futures-price-curves-say-no . My responses support your comment. Let’s pursue the dialogue, please.
I will but later tonight because I am at work which is not conducive to a thoughtful discussion.
I don't think that the bullish CME's are wholly the cause for this drop nor do I think that if the bullish CME's were the only news to affect bitcoin and other cryptocurrencies over the past week that they would have driven the market as far down as it has fallen.
However, I do include the fact that bitcoin started being traded in a futures market as one of the causes of the dip.
Apologies @chris-yoder, if I left the impression that I was attributing the drop to what was happening in the futures market. I was looking at the futures data in terms of what the futures traders’ main sentiment might be concerning the price pattern over the January to June period of 2018.
More generally, it is an interesting subject to get into what caused a drop that took place in the past (for Coin X or Stock Y), given that almost always multiple variables are at play in generating a particular outcome in terms of a price change pattern of a certain sort.
It is extremely common, as you know, for writers to jump behind a change and quickly pronounce what was its cause. Their analysis is usually premature and oversimplified (IMHO), and I have come to the conclusion that their personal incomes require that they produce these “analytical articles” whenever a big price change takes place.
You will see a related discussion in my article here: https://www.marketstatsanalytics.com/marketspeaktrans.html Here I take apart the media discussion of the August 2015 flash crash in the stock market.
I will go with novogratz and wait for further dip rather
I really do notagree with Mike Novogratz too but I must admit it was a scary drop and you won't blame him for not going ahead with the fund because that drop was enough to make someone loose faith momentarily
I think there was a perfect storm of events that caused the selloff and not necessarily anything fundamentally wrong with Bitcoin or cryptocurrencies--unless you ascribe the price manipulation theory. But its his money if he doesn't want to set the fund up yet that is his prerogative.
You are hitting something important here, @joeycrack. Big institutional money does not play around with this kind of volatility, unless they are gun-slinging hedge funds (armed with their trading robots, of course).
Nice posting
yes you have right, and now is not late to invest in crypto and double your money
haha My 1 weak experience says its wrong.
Whenever i play any Youtube video, there is must Tai Lopez ad about bitcoin. His confidence says its wrong haha.
I think you are right @jrcornel, the market has already recovered almost half of the value lost in the dip, and the rebound only began yesterday, I think people are going to take the opportunity to buy while the price is rising, and this will push the price back up at least to where it was before.
Good analysis, and i agree that he wrong. As you mention, the holidays will get even more people familiar with bitcoin and they might even have more time off work to dabble and check out the hype compared to other times of year. I think we will be back to 20k in no time.
I am not sure about the price but I will keep buying as much as I can
I like your post,,your post is very good, how can you get an idea like this?
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One notable "implication" of the manipulation hypothesis is the ease with
which a few Big Boys can pull off a nearly 50% price drop in a virtual few hours. We are far from having an asset that will "go mainstream soon", IMHO. (Yes, I own BTC with no plan to sell, so my remark is not intended FUD.)
What the Big Boys have been doing over at the CME is also relevant, andI have captured some aspects of that here: https://steemit.com/bitcoin/@lestatisticien/bitcoin-will-not-show-another-explosive-price-jump-before-june-2018-cme-futures-forecast .
Cheers, and thanks for your well layed-out argument.
Cant wait for the crypto halloween effect during Xmas. In any case this correction was needed as you stated in your article with regards to wallet usage and transactions, but also in everyone's mindset. everyone was fearing the correction. now it is here and we can go further. Nice piece mate.
I hope he's right.
I want to buy some while it's (relatively) cheap.
and I don't have the Steem to do so at the moment.
mike is pretty smart for the most part, but I think hes assuming the hype will die down in the new years. Im hoping all the apps and things people were working on in 2017 start to show real life and the space continues to grow.
well, i truly appreciate your insights and the thanksgiving effect was a really good one which we may also experience the xmas and new year effect. i was thinking the decline was due to huge withdrawals or cash out due to holiday money, i did updated two related posts which may be of interest to you if you find the time to take a look however, currently, we had bullish effect and slight decline now except for our dear steem which is showing good signs now. thanks for sharing this great insights