The previous bear market came in parallel with a period of a lot of extremely good news. There is a huge divergence between fundamentals and price over the last months (Read the title sarcastic, I have no Idea what the price will do). The fact that the market makes no sense is annoying when you try to trade, but it opens up a HUGE opportunity for investors!
Divergence between fundamentals and price creates huge undervaluation
What happens when the price tanks and the news is extremely good? The good news indicates that the Bitcoin protocol gets further improved and adoption grows. This means that the Bitcoin network becomes more valuable overall.
The fact that the price is going down while the value is going up means that it becomes a better buy every dollar that a bitcoin becomes cheaper! Investors shouldn’t be full of fear these days, but the greed of the end of 2017 would make way more sense!
But Bitcoin is not getting better……It is dying……..
Something that is dying goes backwards right?
I think 2017 was the year of mass attention and 2018 will be the year of mass adoption!
As you can see the real value of Bitcoin in 2018 is way higher than the real value in 2017, but the price is lower. The price could go lower over the weeks or months to come, but I am extremely confident that it will go up in the long term, and not just a little bit……
Some other interesting indicators
There are some indicators that suggest that Bitcoin is extremely cheap now. I pick some that are created by people in the space I really respect. Also these indicators make a lot of sense to me.
Mayer multiple
Take the price and divide it with the 200 day moving average. The result of this is the multiple. This multiple filters the noise out of the trend and makes it easy to visualize wether Bitcoin is overvalued or undervalued. Yesterday I published a protocol to invest in Bitcoin and gold. It will allocate your funds to Bitcoin when it is undervalued and to gold when Bitcoin is overvalued:
The multiple is 0.92 and this is cheap. The moderate multiple of the entire history is 1.47, so 13.637 USD per Bitcoin should be a fair price according to this measure. Furthermore, the pricing has only been lower than this 25% of the time. You can see the figures here:
Bitcoin misery index
This index is created by Wallstreet strategist Thomas Lee. This indicator measures how misery bitcoin holders feel. It’s not needed to say that holders are more misery when the price is low. When the index is extremely low, this signals a huge buy signal.
Be fearful when others are greedy and be greedy when others are fearful…..
And that is exactly what you do when you trade on this index. When the index is extremely low others are fearful, so you should buy! You can see that in the past the price has rocketed after this signal:
So, what is the outlook?
For the short term I don’t dare to make predictions, but for the long term I am very confident. The markets are very unpredictable because they are not reacting to fundamentals at all, but eventually the price of an asset will always follow the true value. This means the price will have to go up!
And what is the good news today?
This:
Wordpress websites can now accept instant bitcoin payments
This is super good news because around 30% of the websites is build in Wordpress. There are already plugins to accept cryptocurrencies, but because of the confirmations this is complicated to use and thus legacy payments are often more user friendly.
Lightning payments are as good as free (fraction of a cent fee) and instant. The fact that it is instant means that the customer don’t need to set a fee, wait for the confirmation (s) and watch the block explorer. This will greatly simplify the proces and make it MORE user-friendly than legacy payment methods. Half way this year Lightning wallet are expected, then this could really take off and lead to mass adoption!
And also some less good, but hilarious news came out:
This:
bitcoin,com wallet not support bitcoin core anymore, only Bitcoin Cash
Will Bitcoin,com go under together with Bcash?
In the previous months some influenzal Bcash proponents that were shilling Bcash and attacking Bitcoin have quit this activity. Jihan Wu started to accept USD for his miners beside Bcash and Jeff Berwick came out that he was bullish BTC again and didn't shill for Bcash since. There are many problems for Bcash at the moment, I recently wrote about it HERE and HERE.
Also the price is tanking and bullish fundamentals for Bcash are hard to find. You should expect more people to leave the sinking ship, but Roger Ver and his Bitcoin,com did exactly the opposite: They went all in LOL.
Looks like the hartbeat of a dying patient (The orange line = against BTC). The few beats are pump and dump events to keep this useless coin alive. There were a few pathetic efforts in the last month, but they terribly failed. Bitmain and Coinbase can’t misbehave anymore because of upcoming competition and fundamentals are weak. Bitcoin,com will go under with Bcash alone? RIP
Disclaimer
This is not investing advice, just my view on the market.
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