Cryptocurrency: Are we there yet? Is this the bottom?

Cryptocurrency: Are we there yet? Is this the bottom?

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Dare we use the “R” word yet?

 

No, I’m not talking about Recession. I’m talking about Recovery.

 

There’s a small recovery underway in the cryptocurrency market today (Feb 6).

 

That is, if you can call losing 64.5% of your value from Dec 17, 2017 and then gaining back 14.2% or so in the past 24 hours a recovery.

 

But it’s possible we’ve now reached the bottom of the market and are trending back upwards though many of the virtual millionaires are still looking a little nervous right now.

 

Can we move on from the ‘burst bubble’?

 

Some experts, however, think we can now move on from “When will bubble burst?” to “How far will the recovery go?”

 

On CBC TV, Standpoint Research analyst Ronnie Moas said bitcoin’s value could reach $100,000 if it maintains its current market share.

“We have $200 trillion around the world tied up in stocks, cash, bonds and gold. All four of them are overvalued. The fact is the Dow Jones has dropped 2000 points, just in the last week, and it dropped 1200 points today. If just 2% of that $200 trillion finds its way into cryptocurrency, you would be looking at a $4 trillion market valuation, thirteen times where we are today. And it would put the bitcoin price at $100,000 a few years from now if it holds on to its current market share of 36%.”

 

 

Moas says nobody should hold more than 20 to 40% of their cryptocurrency in bitcoin. There’s always the risk that bitcoin could get knocked out and he says you need to be diversified.

 

“I’m sticking with my target of $28,000 for the end of next year. I think there might be a little bit of a problem getting there, but if it goes back to $15,000 or $20,000, I think a lot of people are going to cash out and played on the safe side. So, we might have a little bit of resistance and selling pressure as we get back to the old mark of $20,000. But I’m not changing my target.

A year is a very long time and I think we will be okay. This is a buy and hold, add-on VIPs position that I have and you either believe in this or you don’t. If you believe in it. It’s going to $100,000, but it would not surprise me if we go to zero. Currency is based on consumer confidence and supply and demand, and that will change like the weather.”

“Bubble has burst”

 

Speaking on the BBC, Fran Boait, from campaign group Positive Money said:

“Well, if you look at the actual trajectory of bitcoin from around 2011 when it first came on the scene, the real hype and the hysteria and the real growth over the last year and then the fall again is unprecedented. You know, up to £14,000 for bitcoin at its peak, and were already down to £5,500 after just a month. So, it’s looking like this is definitely the bitcoin bubble bursting, and unlikely to happen on this scale again.”

Is a bitcoin recovery ahead?

 

Based on Ronnie Moas’ perspective, I think there is potential for a bitcoin recovery. His target of $28,000 by the end of the year is possible.

 

The flaw in his argument about the possibility of trillions of dollars moving from traditional stock markets to cryptocurrency is a huge leap of faith. Traditional investors are used to “value investing.” I’m not sure they can handle the high volatility and uncertainty that’s baked into cryptocurrency.

 

That hasn’t stopped younger investors from testing the market, but they have a longer horizon to get a return on their cryptocurrency investments. If they have the patience.

 

Maybe the best “R” word we can hope for in the short-term is Resilience?

 

You can see Ronnie Moas’ complete interview on CBC TV or read the full transcript CBC TV “Bitcoin Sells Off”.

 

Author: Jeff Domansky,  Managing Editor

Visuals: Courtesy CBC TV