05/09/2018/11:10CET
Positive steady growth is much better than a crazy moon shot - BTC shows solid market foundation building.
With each passing day we have this steady upwards movement, #BTC shows its maturity as a market. The more crazy a run up in price, the more fragile the market structure underpinning this price is.
This is not a crypto thing, it is throughout all human markets. We as humans like regularity and stability. When an asset or commodity (whatever you want to call cryptos) shows stability, its price becomes the normalised in the human psyche.
What do I mean with this: If I were to offer you a bitcoin for 5000 USD right now, you would consider it cheap. What about 500 USD? You would grab as many as you could afford.
We can apply roughly the same thinking to a roll of toilet paper or a liter of petrol.
Whenever we have volatility in prices of things, we start to distort the behaviour of the market for these things. Anyone who has lived, or is living through hyperinflation does not need this elaborated. Runs on products are common, overstocking by vendors also occurs. Basically running any kind of business becomes a nightmare of risks.
If we go back a year and ask the same question about btc, it was trading for between 3900 and 4400 usd! It was a volatile day on the markets that day in comparison to today, but back then this was just a normal day for BTC. You would most probably thought it quite expensive.
Really. Any asset that appreciates 20x in 12 months has to be volatile. And we are not talking about a roll of toilet paper, we are talking about a future replacement to fiat currency. The product that underpins all others in the market. It aims to be the product that is the most liquid and most sought after by the largest portion of the population. 20x volatility in 12 months is not compatible with this goal.
The 20x on the upside was complimented by a 70+ % drop on the downside till just recently as we seem to be finding mushy floor under btc at the 6000usd level.
We are investing and trading in volatile cutting edge emerging technology. Though for these technologies to function as intended, they cannot fluctuate in price as they do today.
Imagine a crypto that supplants a mobile phone carrier. In this example you need to buy this token to pay for your mobile phone bill. What if the value of the token goes up 20% in a month? Your bill is 20% more expensive in the space of 1 month. That is some savage inflation!! This will definitely hamper the adoption of the technology itself.
I am a free market guy and it may well be that the supply demand dynamic that underpins the free market will be redefined for cryptos as the dynamic between the volatility of a token vs the utility of the token as a function of its price volatility. (not sure if that makes sense even to me). The argument has to take into account that some users of said token may also stockpile the token when price is lower.
This is a sticky economic theory that we have little empirical experience with. So few of these tokenized services exist in a functional way yet.
Of all this, I feel most certain that lower volatility will create a more conducive environment for the rollout of these technologies, though conversely affect the speculative quality we have today which in a form of funding for
What will be a stable price for btc in 5 years? I will not venture a speculative amount because too many have already done so and many of these pundits ignore the other side of the market, what is the USD worth in 5 years time?
A big Mac may cost 30USD in 5 years, so what is the prediction of 1 million USD per BTC worth?
I have gotten philosophical here, but I call this a "snap" crypto update, so let's get into it.
At press time #btc is trading at .....!!
(damn covering BTC markets can be a tail chasing exercise. BTC is having its free fall momoents right now. As I started my rant, we had a nice green candle forming for the day and now this...)
and on the 15 min chart...
Well that screwed what I was about to write about btc.
I will leave this post with more or less a focus on my thoughts than a crypto update since the update path will be irrelevant in the space of minutes...
As always guys, leave comments, have fun and trade safe.