Spencer Bogart, a blockchain VC says that bitcoin may soon experience another round of selling.
Except this time the selling could be forced.
Bogart goes on to explain why he thinks we could be on the verge of some forced selling saying that many crypto hedge funds came on the scene during the summer of 2017.
Many funds have a one year lock up period.
Which means, we are right on the cusp of one year presently.
Why the forced selling may happen?
As Bogart mentioned above, hundreds of cryptocurrency hedge funds were created in the summer of 2017 when bitcoin prices were booming.
Traditionally, many hedge funds have a one year lock up period were investors cannot get their money out.
Now that prices have run way up, and come crashing back down, Bogart speculates that some investors will want to pull out their funds as soon as they have the option to withdraw, trying to ensure they lock in that last bit of profit before prices fall lower.
This is what is known as forced selling as people will be taking money out whether it is actually a good time to sell or not.
Is this going to cause bitcoin to tank further?
In my opinion, that is not very likely.
Yes I think some people will redeem funds, but there are more funds being created that are stepping in to take their place.
Also the amount of money in these funds is still relatively small compared to the amount of money in the crypto space.
That being said, we might see minor drops here and there as hedge fund clients opt out of funds.
Overall, I think this is likely overblown and anyone hoping to buy artificially lower prices will end up missing the move back up.
Also one thing to note...
Even though Spencer Bogart says that we may see some forced selling in the near term, he still says bitcoin will likely be over $10k by the end of the year.
Which means, anyone buying today still gets roughly a double in less than 6 months, even if this isn't the exact bottom.
That is a pretty good return in this environment, no matter how you slice it.
Stay informed my friends.
Image Source:
https://www.ccn.com/bitcoin-price-hits-2018-low-at-5825-where-will-it-bottom-out/
