Posts

How low can you go?

avatar of @tarazkp
25
@tarazkp
·
·
0 views
·
3 min read

Do you like to sell for a loss?

I was asked by some colleagues today as to what value I think Bitcoin (they are invested predominantly in BTC) could reach in the near-term, year or so. But, I think the more pertinent question is post spike, what is the lowest it will fall after.

I know neither the highs or the lows and don't offer any kind of prediction, but for the purpose of this post, let's say that the spike high of Bitcoin is going to be 200,000 dollars. There will be some happy people for sure.

How far will it fall?

What my colleagues had probed more specifically, was how high institutional investors could push the price up and then after, what they might do in the fall.

Do you think they like selling at a loss?

Me neither.

For Bitcoin to rise to the 200K level, it would need to go 4x from here in marketcap, but that doesn't mean that all the Bitcoin in the world has to move. People will sell for sure, but how much they sell will likely decrease for the largest holders the higher price goes, as they can sell increasingly less to satisfy their needs. This means that the earliest buyers who were able to acquire the most, will not have to sell their entire stake to take large gains. However, those who buy later will have less, even though they are putting in increasingly high amounts.

This sets up an interesting dynamic, as because no one wants to make a loss, as prices fall, those who were last to buy (other than the panic sellers) will likely become holders and, the more it falls, the tighter they grip. But, the last buyers don't collectively hold that much, so they can be easily dumped on by those who bought well before them and those dumping will still be making a significant profit. Someone who bought today, could sell at 200K and all the way down, still making a profit on their purchase. But as they sell, they need buyers of course, and those who bought late might be willing to risk selling at a small loss, hoping to make inroads on the downside fall, thereby picking up more token.

This sets up the struggle to find the floor and as we saw recently when it dropped to 29 and is now a full 60% up in 5 weeks, the turn can move rapidly. This is because scarcity matters and at the lows, even the whales who are hundreds of millions of dollars up, don't want to sell at the bottom and, they can afford to hold.

The 29K "low" is 50% up on the 2017/18 bullrun high, which is because in order to reach 65K like it did a few months ago, people had to buy well above the last highs and all the way up to the very last purchase at the peak, before the fall.

That last buyer at the top, do you think they are still holding?

I don't think they sold at 30K at least.

Again, I don't know about what is actually going to happen, but I figure that if the price does get to 200K or so, it could be that the prices today might be the future lows, post-peak. The price will peak as there will be increasing scarcity on the markets until large dumps and then, it will drop down with high volume until scarcity reigns again and the floor is found.

That could mean that those buying Bitcoin for the first time today, could be the cheapest they ever get it - and everyone who has bought in the past, will never make a loss on what they hold. That is kind of cool, isn't it?

Of course, this is just my thinking on this, but there are indications that the future might be very bright for crypto in the coming years and that will mean a lot more small holders getting in on the action, and not wanting to get out again. It is fun to go through the process of thinking about what might happen, even if it doesn't.

How how will it climb and how low will it fall?

Can you tell me?
Because I don't like to lose either.

Taraz [ Gen1: Hive ]

Posted Using LeoFinance Beta