The bitcoin market cap for the past year looks pretty bad:
One way to look at this is billions of dollars in perceived value just disappearing from the space. The reality, I think, is a bit more nuanced.
Too much attention is put on market cap numbers. Depending on liquidity and market participation, things can change quickly if enough people refuse to sell or decide not to hold. Cryptocurrency enthusiasts who also trade justify their selling and shorting during bear markets in a sort of "everyone else does it, and I need to protect my upside" way. Is this short-term thinking?
What they don’t talk about as often is how much influence they have as part of "everyone." Their shared story is what creates the reality of the market actions and eventually the market cap. If their market actions reflected their actual beliefs, wouldn't they hold since their ultimate goal with selling isn't to exit the market completely but to accumulate more at lower prices?
From that perspective, finding the floor price is really about the point where the actions of committed cryptocurrency advocates match their actual beliefs, irrespective of short term gains through shorting or selling and buying back in.
Or to think of it another way, if you own 10 BTC, would you rather sell at $6k and buy back at $4k (hurray, 5 more BTC for you!) or HODL and see new entrants buy in to increase the purchasing power of your 10 BTC and increase the global distribution and network effect which translates to real, long-term sustainable value? If holding could mean $10k BTC or even $20k BTC in a sustainable way, isn't that better than you having 5 more BTC but never reaching those valuations?
Some say, "But I know the value increase is inevitable in the future, so I prefer the option which increases my holdings now so I can take further advantage of the inevitable future." I wonder if this is really true. If price stability can’t eventually be found, will the future we envision ever happen? Will the network effect increase or will people stay away, not wanting to be the next sucker who buys at the top, only to see their purchasing power disappear?
As always, this isn't trading advice, just some random thoughts on the cryptocurrency markets. If you're interested in similar posts I wrote last year, take a look. For extra fun, compare the bitcoin prices (which are really a proxy for the value in the whole cryptocurrency space) at those times.
- Short-term Profits and Long-term Gains - September 14th, 2017. 1 BTC = $3,689.61
- Are You Waiting to Buy Cryptocurrency? - September 7th, 2017. 1 BTC = $4,635.60
- The Big Question: Should You Sell or Hold During a Market Correction - May 26th, 2017. 1 BTC = $2,244.89
It's also worth thinking about what financial value actually is anyway (hint: it's just a shared story we tell ourselves): What Is Financial Value?
In related (and contrary) news to my thoughts posted here, you might also be interested in this article by SFOX: How to Short Bitcoin. I'm not going to say I'm not tempted to use these methods to increase my holdings... maybe I should. Maybe we all should. It just feels wrong. It feels like we're playing the very financial games we're hoping to improve on by having stores of value not owned and controlled by violent governments. When we play short-term games, we win short-term prices. When we play long-term games, well that's when we start investing in the future instead of just speculating on it.
On a personal note, I had an amazing time at Steemfest3. I haven't put together my pictures and thoughts in a post yet, but I hope to do so soon. I've been really busy lately working with @eosdac to try and build the decentralized tools we need for a voluntary, DAC-filled future. We're also getting ready to move to Puerto Rico on December 4th, so things have been a bit crazy. We started getting serious about this move when the cryptocurrency markets were at all-time highs. Now, a year later, I find myself wondering, "Is this a crazy decision to move my family to an island?" Time will tell.
Let me just put this here:
Timestamp is 5:05.
TL;DW: If you don't own crypto/bitcoin in the best 10 days of the year, you're down -25%. But if you're in it on the top 10 days of the year, you'll gain an average of 500%.
Now, it's obviously smart to sell some of it at the peak and buy into it while everyone else is selling, but selling right now? I don't think that's the move.
But anyway - great post, luke!
I love finding posts like this and presentations which make me feel better about my holding. :)
Investing is a long term strategy that absolutely involves being in the market on the best days.
Speculating is fun too, but it feels a like lot gambling. It's more about the fun. I keep trying to get interested in learning that, but to get really good at it, I think you have to devote your full attention to charting and watching the activity constantly. I'd rather build value than try to find moments to extract it.
I also realize that's just myself talking to myself to justify why I've held instead of sold.
I also agree with many who think the price could go much lower. Maybe I'm just trying to convince myself not to sell.
no, you should not sell (btc 3860 at the moment)..I wrote sell at 15,000 and stay out..if you must trade...there were clear chances..and I wrote sell at 8000 twice since..sorry so many are taking a massive beating...BTC is likely to survive and smart money will start to nibble here....steem at .347? that is another story.
That just made my day, thank you.
Tom Lee was on CNBC recently as well, not sure what to think about $15k btc by year end though... maybe year-end 2019.
Well, I'm not sure either, but you can see that Lee is quite uncomfortable with the people he's talking with. In any case - Steempower should be cold Hodlpower.
I just can't see it happening. Market sentiment at the moment is still overwhelmingly negative. Without some sort of big time manipulation BTC just can't make it to 15K in 2018. Personally id be surprised if it was worth even 7.5K at the start of 2019.
Hey Luke, great post and a big question.
I prefer to hold what I have and buy a bit more while „I think the price is down“
Your @detlev
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Buying more is a great option if you still have fiat to do so. I'm all-in on cryptocurrency and have to sell each month to pay fiat bills. I wish I could buy the dip, but there's nothing to buy with. :)
This is why we shouldn’t put more money than you are willing to lose in these assets as it is a long term play on a developing and immature technology which creates inefficient markets. These markets will always go too far in both sides, up or down. Be careful with shorting as unlike going long, you have in theory the ability to lose an infinite amount of money whereas long investors can only go to zero! Myself, I bought in 2016 and took some off the table early this year and diversified and found Steem... Looking forward to a decentralized future!
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This is an excellent post @lukestokes!
We had the idea that we were gonna HODL things out this bear market, but when bitcoin looked like it was going to go below$6,500 - $6,000 we sold into True USD. So in only a matter of weeks we can almost buy back twice as much if this keeps up which is highly enticing. We have a lot of love for and STEEM but we are powering down to buy back even more because the price is practically in free-fall despite the bit of resistance it has gotten. In the end it’s kind of a beautiful thing that with a bit of sleight of hand you can end up with more than what you had. When prices are volatile like this it is best to think in # of coins and at this point, every weekly powerdown is ending up with an opportune time to buy back in and end up with more coins. After all the smoke settles and we buy back into BTC, part of me wants to scatter all our BTC into 0.001 paper wallets all over the house so that it’s just on HODL forever
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Interesting strategy! Maybe a fat stack of paper wallets with too little of value to mess with right now in a fireproof safe....Hahhah Problem is you would get chewed up in fees if you tried 0.001 BTC. Maybe Nano Paper wallets each worth 1 Nano right now. I would say EOS or STEEM but it sort of cost to create accounts.
Once again sorry about the NuBits thing. It busted my ass too and at the time it seemed like a better option than Tether because it appeared that would break the peg at some point which it did but not too terrible. BitUSD is an issue because you have to keep buying BitShares as collateral if the price goes down and SBD has had a hard time keeping the peg. Hopefully TrueUSD can hold up.
you should meet up with my buddy that is over on vacation in Puerto Rico till March. He is an active blogger here. @davedickeyyall
I’m still willing to help with eosdac
I HODL my BTC and trade my alts to gain more BTC. At least that is what I attempt to do. Resteemed
I am buying other cryptos, not steem, and cashing out of here, as I do not like the mind set, ouch shoot me now!
Everyone buying and selling creates price discovery and ultimately our shared understanding of value.
I won't give you trading advice, but I would suggest you don't under estimate the real value of utility: Do Cryptocurrency Speculators Fear Utility?
Also, don't confuse STEEM with Steemit: STEEM Is NOT Steemit. STEEM Is More Valuable Than Steemit.
When you say "the mindset" I assume you're talking about Steemit and people's comments on a social media site. STEEM is so much more than that.
Riddle me this Luke, and do not take this wrong, just take as is.
If steem is so much more then that, why is it 37 cents and sinking?
I know on this place realists are not much liked or appreciated, just saying!
Did you read the post I linked to in my reply? If so, you have your answer. The Steem blockchain is providing real functional, utility value. Most cryptocurrencies are just speculations about some belief in a future value.
I’ve met Val, by the way. He is (or was) an early Steemit employee. It’s funny you think he’s Ned or that one person controls all the value of this blockchain. Yes Ned has a lot of stake, but he doesn’t vote with it. He also helped organize the people who built everything you see here. I’m not personally a fan of how he does some things, but I respect the result.
Sell away if you think that’s a good move. I remember buying STEEM at $3 and $4 in 2016 and watching it go to $0.07. I have no regrets. I see the value here.
That is my whole point Luke.
This place is cult like, regardless of reality, regardless of people losing millions of $, you have to sell the cult!.
I moved away from the city, because the moral majority agreed with being watched by big brother, I even moved 4 countries away from them, I do not like following them, the moral majority, If the product was so fantastic it would indeed sell itself, it does not, and a lot of the apps do not even function.
New users have to pay to play, if they join now they are limited as to what functions they can do (hardfuckup 20) & That will stunt growth to the point of no repair will be doable.
The comment police on here got their day, achieved their crowning glory, and that ultimately reflects directly in steem price. which is 31 cents today and falling faster than the titanic sank!
Thank you for the confirmation regards to VAl, as he was bragging early days about investing all of his money here to get others to buy in, Interesting to now know 100% he worked for here.................
You have to remember that every crypto is falling sharply as well but I do get the cult part and often think that Steem will have finally "made it" when such posts aren't on trending even if Steem price itself would be falling. Quality content should matter more here, not "Please buy Steem now when it is cheap, this is not financial guidance though" posts. It just irks me as well and makes me want to jump the ship rather than aboard it.
I guess the biggest shareholders don't see it that way though.
Otherwise bid bots wouldn't been allowed to exist in the first place
Superb comment thank you, I think very much the same way.
Though not all cryptos are falling you see, this from bittrex today.
PAX
Biggest % Gain
Paxos Standard (PAX)
24.19 BTC
11.6%
NEOS
Biggest % Gain
NeosCoin (NEOS)
5.29 BTC
40.9 %
BSV
Top Volume
Bitcoin SV (BSV)
1082.81 BTC
10.7 %
there will be a few Crypto survivors..very few ...and steem likely not one of them.
Steem has no value added whilst ned holds all the tokens in his alt accounts like mrdelegation, val-a val-b etc etc etc he has multiple account syndrome.
And his vision of networking in the white paper being a joke, when hf20 made it impossible for new people to have a voice, ned had his money, and seriously he needs to "fuck off!"
Val-a and b are not Ned.
I see links, have you looked? transfers etc. Or can you vouch for them 30 month old, mined accounts, not being ned?
How about freedom, whilst I have one of you original devs?
This times are hard especially for hodlers. However, I see a new angle from your discussion. What if we are all shorting?, That is something worth thinking about. I wrote on my blog 6days ago on dollar cost averaging and I wish, I can get them at these prices and lowers prices to come, since CT has precited 1800 usd is near. But already out of fiat. Will look forward to what the future holds regarding crypto.
Can you please clarify who CT is? Just curious...
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Cryptotwitter
Nice to meet you. I am Japanese steemian Yotaro
is.
I also joined the other day SteemFest.
On the third day, I was playing a demonstration of steemfest special coffee in the lobby so maybe I had met you.
Well, participating in SteemFest, I felt a very future for the possibilities of Steem.
That is because the force of the Steem community was the driving force, and I was able to ascertain the current situation of the development of applications and others with my own eyes.
It was a wonderful post, so I resteemed.
Reasonable - day-trading, trying to squeeze every cent out of a holding backfires more often than not. Holding Steem, in particular, is a statement of trust in the platform and its uses beyond simple crypto holdings.
Powering up is the way for whoever can afford it.
If every active account powered up only STEEM 10.00 - what would happen?
Hang on a bit. Nate's buying 100 as soon as coinbase gets their shit together. I haven't bought any since I started this account around $5 steem. Now I can't help but buy. Nate's here and he's not leaving. Even though 100sp isn't really that consequential in the grand scheme, but it means a lot to me.
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The reason I Hodl - I have a faith with Steemit
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My $6,000 of Bitcoin is now worth about $300 .....good thing I Didn’t need that $6,000
maybe more room to fall as the total market cap get lower and easier for big money volume to manipulate.
Like you mentioned, there's always those wanting to sell/unload to accumulate more and massess who going with the flow directly/indirectly. And there will always be those that HODL ,the market is mix with various group of ppl. Ultimately market is a reflection of ppl sentiment, and price is reflection of those with money power(likely just handful with the power to swing). Just as in steem that handful that's keeping steem price down =)
Many people here are looking to you for direction in this extreme bear market. Thanks for sharing your thoughts and it was a pleasure meeting you and your family at steemfest. Have a great day. From Pai Thialand! -Dan
This is a brilliant post. 👌🏼