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After another negative press release this morning, the major
cryptocurrencies fell towards crucial support levels. According to a
Zerohedge article, quoting CNBC, Japan’s chief regulator launched a probe of
crypto-exchanges, prompting the largest to halt new account creation,
thus sending the crypto market considerably lower.
The press release stated that Japan’s largest crypto-exchange, Bitflyer,
needs to make improvements to its business model, especially in regards to
anti-money laundering. While the press release had a negative impact on
the crypto market, it will likely not be a big issue going forward. So,
the cryptos may recover and shrug this newest downturn as just more FUD…
Fear, Uncertainty, and Doubt.
Or, the crypto market could continue lower towards crucial support levels.
Today, Bitcoin fell 9%, to a low of $6,100:
Crypto investors need to understand that there aren’t too many
assets that fall 9-10% in a day. However, Bitcoin is actually holding
up better than the other cryptos. For example, Litecoin was down more
than 13% today. For cryptos to be taken seriously, they cannot
continue to experience this sort of daily trading volatility.
Now, some of the Crypto-Aficionados are saying that the cryptos are being
manipulated by the POWERS-THAT-BE. Well, I thought one of the
key reasons to own cryptos was due to them being decentralized… thus not
subject to manipulation. However, all assets can be subject to manipulation,
even by the “Whales” who control a large percentage of Bitcoin. So,
manipulation can push prices higher or lower.
Regardless, it seems as if the crypto market will experience more selloffs
in the future as the largest bubble in history continues to deflate.
I say this because even with the positive news releases on the crypto
market, (SEC ruling that Ethereum was not a security), the crypto prices
continue to trend lower. Thus, the negative press has more of negative
impact on the crypto market than the positive news. We can see this
taking place in the following charts.
I started warning about Bitcoin and the Cryptos late last year in my
article, SELLING
OUT OF PRECIOUS METALS & BUYING BITCOIN… A Very Bad Idea.
At the time, Bitcoin was trading at $8,000, on its way to $19,000.
Since its peak at the end of 2017, Bitcoin has fallen nearly 70%.
Today, it fell to a low of $6,100, but the critical technical level is
$6,000:
Bitcoin has fallen below its previous low of $6,468 on March 26th. The
last time Bitcoin was trading below $6,100 was last year on Oct 16th.
While $6,000 is the next key support level, the important
psychological level will be $5,000. If Bitcoin falls
below $5,000, it could head back towards $3,000 quite quickly. Not only
would this be bad news for Bitcoin HODLers, but it would also be detrimental
for the Bitcoin miners.
However, it is possible that Bitcoin could shrug off this bad news and
move higher for a while. But, I doubt this would last long as the
overall trend seems to be lower.
Now, even though Ethereum is experiencing a big selloff today, it has a
bit more breathing room to reach its next key support level. Etheruem
is now trading down 11% at $470, but needs to drop below $400 to puncture its
key support level:
As we can see in the chart, the Ethereum price touched $400 three
different times. Well, the price was actually $360, but I am just using
$400 as a key psychological support level. If Ethereum falls
below $360-$400, then its next significant level would be $200.
The third crypto that is very close to a critical support level is
Litecoin. At it’s low today, Litecoin fell by more than 13% to
$83. This is extremely bad news as Litecoin’s key support level is $80;
Litecoin is closer to its key support area that Bitcoin or Ethereum.
Currently, Litecoin is down 72% from its high of $300. If
Litecoin falls below $80, then it could quickly fall to its next support
level of $50. But, as I stated, nothing goes down in a
straight line. So, the entire crypto market could experience a
correction higher for a while.
Another major crypto that is also very close to its key support level is
Ripple. Ripple, was by far, the biggest bubble in the group. At
its peak, Ripple touched $3.00 and is now trading at $0.50… 83% lower:
I highly doubt Ripple will ever surpass its previous high of $3.00.
If you were lucky enough to purchase Ripple at a fraction of a penny in 2017
and sold it anywhere above $0.50, you did very well. However, if you
continue to hold onto Ripple as it falls back towards a penny, you have my
condolences.
Now, I want to make something perfectly clear. I am not
anti-blockchain, but I am anti-bubble. Yes, it is true that
some of these cryptos could survive and be around in the next 5-10 years, but
I don’t have a lot of faith in highly complex technical systems when the
world is getting ready to hit an ENERGY BRICK WALL.
Our highly complex technological infrastructure takes a great deal of
energy to maintain. Unfortunately, we are running up against the limits
of our energy sources right now. Besides the fact that the cryptos are
still in the process of deflating from their bubble highs, we will not have
the energy to maintain an advanced cryptocurrency system in the future.
I posted this chart on the “Fragile Nature of Currencies.” I highly
recommend you understand the fundamental reason to own physical gold and
silver to protect your wealth in the future as they are the strongest and
most durable currencies in the world:
Even though a gold coin can wear its face off after 35 years of use, the
coin can be remelted and minted into a new coin for another 35 years.
However, the typical Federal Reserve Note only lasts eight years on average
and the servers that run the Digital Banking system only last four
years. With the average Bitcoin miner lifespan of 2 years, we
can see that a Gold Coin, versus all others, is the best quality store of
value.
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