Bitcoin (BTC) has crashed. No one really knows why but in my model we should be in for “good” news on the China trade war or some such China-related information that is strong for the Chinese currency. This is only a theory but if it is correct, bitcoin will either rally vertically if no news breaks or the news will appear very soon. This is being written at 12 p.m. GMT September 25 and the news ought to be out there by no later than the end of the week.
If I’m wrong and there is no such news and the price stays down or falls more still with no positive trade war news then my bitcoin theory, which has served so well, will be severely challenged. In any event, bitcoin has crashed. The dreaded flag has broken to the downside and the bottom is anyone’s guess. The decision what to do next comes back to the schism between believing BTC will be worth $100,000-plus a coin or $0 a coin. You have to pick your side.
Way back before this year’s rally, I stated there is another way of looking at this price action. In commodities a big bubble is followed by a series of smaller and smaller echoes of the initial price shock which erupt over time as the years pass.
Each new price eruption is smaller than the last until the original bubble is all forgotten about. If this is your model, this BTC bubble echo is now dead and BTC will fall back to the $2,000-$3,000 range or even lower. Then after a year or two there will be another small vertical and on this pattern will go, until bitcoin is all but forgotten.
The alternate model is the tech boom, where the original bubble was replaced by another bigger rally, one we have still not seen the end of. Is bitcoin a commodity or a value added instrument? Bitcoin isn’t like gold or copper, where a price rise creates a glut.
The flag got broken to the downside and it’s clear as day that a lot of people took this as a cue to get out, causing a panic. I’ve put some levels equivalent to some zones where the price might settle. I will be buying a little in the coming days and more if we hit $6,000 and a lot if we see $4,000.
If you do, you hold forever and buy the dips. The only thing you mustn’t do with the position is let that put your finances at risk or hurt your sanity. As a believer I will buy this dip, in the same way as I bought the last, little and often. For those who don’t believe in the long term you should stay well clear.Be among the first to get important crypto and blockchain news and information with Forbes Crypto Confidential. It’s free, sign up now.
—-Clem Chambers is the CEO of private investors website
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.