Well it looks like Tether has once again tried and failed to make an attempt on our lives.
With a consolidation period drawing to a close, BTC looked ready to attempt another breakthrough of the light resistance at $5600, and possibly to make its first assault on major resistance at around $6200.
Sadly Tether pulled another one of its old tricks and temporarily ruined the faith in the market.
There are many indications of new money being in the crypto market. (Sadly) we once again see rather immature market behaviour and overreaction to crypto market events. We have very strong volume now, more stable at this strong level than ever before in the history of crypto. One would expect a major price rise, the BTC ATH was reached at similar volume levels. That fact that we are not back at BTC ATH shows that we have new, scared money in the market. I don’t blame new investors for being cautious or timid, the 2018 bear was a most fearsome beast which has left a lasting impression. However, this means that we are once again forced to deal with volatility and the FUD and FOMO which causes it. Expect a bumpy ride!
The latest BitFinex/Tether scandal is a big one, with a figure of $850 million in missing money being reported. This is not the first such scandal. Tether was previously accused of a practise analogous to Fractional Reserve Banking (which no crypto should ever want to be accused of!).
Personally I don’t trust Tether. I have never used it and I don’t intend to use it unless I reallyhave to. I have said before that I don’t trust stablecoins in general, especially now that there are so many of them. I question their very raison d’etre and wonder why anyone would want a “crypto” which is intrinsically linked to fiat. Tether doesn’t have the deflationary characteristics of a good crypto, it’s not a sound long-term investment and it’s joined at the hip to an arch-nemesis. I consider stablecoins to be unnecessary middlemen, the kind who are there to skim profits off the top of the money exchange process. I consider them to be way too close to fiat
I also don’t like the way that BitFinex does business, so much so that I closed my BitFinex account about a year ago. I think that the latest BitFinex/Tether scandal proves my suspicions in this regard. I will continue to avoid that exchange and I will continue to avoid stablecoins.
On the plus side, I think that the market has reacted well to the news, even if it has reacted in the immature manner mentioned earlier. Instead of the outright bearish crash this might have caused three or four months ago, this market has indicated just how strong its bullish outlook now is. All the market did was dip back to the previous Fib level (diagonal). This is shown on the chart below:
At the time of the bad news, BTC was consolidating on the 1.0 Fib support level. When the bad news hit, it broke downwards, dropping briefly below the 0.786 level before immediately correcting back up to and above that level. The diagonal 0.786 Fib level (measured in an ascending direction) is now being used as support. A one Fib level dip is a very minor consequence for such a large event.
With such strong support and only a single level drop, I expect BTC to jump back up to the 1.0 Fib level very shortly ($5500 – $5600 region), probably this weekend. I still see BTC making a first assault on the $6200 level soon, though this will depend on how much fuss the Tether/BitFinex issue causes and how much FUD it generates.
Though that attempt is almost certainly doomed to fail (as discussed in “Bitcoin – 10 April”), the sooner we start making those attempts, the sooner we can break through the $6200 – $6500 resistance and the sooner we can have a final consolidation before the big bull run begins.
Nothing has changed in my long-term BTC projections, I still expect a bull run to begin in the third quarter (as I have been saying for months).
For those of you who are newer to crypto: when FUD happens, my advice is just to think long-term and to hodl. Don’t let Fear, Uncertainty or Doubt affect your long-term crypto holding plans.
Yours in crypto (excluding stablecoins)
“The secret to success: find out where people are going and get there first”
~ Mark Twain
“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”
~ John Maynard Keynes