Since peaking December 17th, the “Bitcoin Roller Coaster” has been on full-tilt mode. Even for OGs used to the violent ups and downs, the past five months have been extreme; first, enduring a violent bear market correction; and subsequently, four more price plunges - each time, raising the question whether the bear market was indeed over.
In my view, the bottom was achieved February 6th, when the Mt Gox Trustee – having already sold 27,000 Bitcoin the prior seven weeks - bombed the market with a last batch of 8,000, in what strongly resembled a capitulatory event…that “coincidentally” bottomed at EXACTLY the $100 billion market cap level where Bitcoin becomes investable to the world’s largest institutions.
I of course can be wrong, but given Bitcoin’s best-ever fundamentals; nearly lowest-ever Mayer Multiple; and likely, increased institutional support, now that major financial institutions are introducing custodial Bitcoin services; I stand by my April 12th proclamation that that bear market is over.
The good news is, all of the above. The bad news, that the Mt Gox Trustee is still a major factor in the Bitcoin market – and consequently, the entire cryptocurrency space. To that end, given what I have observed since he moved 16,000 Bitcoin from his cold wallet on April 25th; and 8,000 more on May 10th; I have essentially 100% confidence he was the primary reason the price plunged from $10,000 to $8,000 between May 6th and 17th.
Assuming those 24,000 Bitcoin were sold – which there’s no way of knowing – he still has 137,000 left, worth just under $1.2 billion. Which, if he were selling responsibly, and transparently, would not only have prevented the price from falling from $10,000; but perception-wise, would be seen for the “chump change” it truly is, in the context of the $300 trillion legacy financial markets.
However, since he clearly intends to continue selling irresponsibly – thus, keeping already skittish traders in constant FUD mode; it’s possible that, until he sells a significant portion, the Bitcoin price will remain under pressure. In other words, it could in hindsight, be the “biggest Bitcoin story of 2018.”
That said, the beauty of financial markets is that they are living, breathing beings – that cumulatively, process information extremely efficiently. In the case of Bitcoin, I ASSURE you the preponderance of retail and institutional investors realize how undervalued Bitcoin is – both absolutely, and relative to its historic valuation levels; and going forward, there are nothing but bullish fundamentals, as far as the eye can see. Most importantly, not only is the Mt Gox “bear whale” selling a small amount of Bitcoin (0.8% of the total) in the big scheme of things, but doing so in a manner disrupting the market’s equilibrium value, for decidedly non-fundamental reasons.
This is why the price did not get below $8,000 this week, in my opinion – and why, with each new wallet withdrawal, the market will discount a little more, the upcoming, inevitable end of the selling. To that end, the way I understand it, a major court decision is due in September…which, if it involves a final case settlement, means the Trustee will likely sell the rest of his stash this year. Which I ASSURE you, will prompt institutional investors to swarm like sharks to chum – knowing full-well that the biggest non-fundamental “overhang” in Bitcoin’s history is about to be lifted.
In other words, we appear to be in the later stages of the biggest “chess match” in Bitcoin history – between a decidedly NON-FUNDAMENTAL seller, and the best FUNDAMENTALS ever seen. Due your own due diligence, and determine the best course of action. As for me, I think I’ll just HODL!
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