Today is the "perfect storm" for Bitcoin. But I think "smart money" is buying. There is a lot of mainstream news out about Bitcoin "crashing." For perspective, as of this writing it's trading at about $4,290 - basically the same price as its new all-time high 7 days ago.
In any event, there are two reasons I believe Bitcoin is sharply lower:
Today, China announced a stringent ban on ICOs. This is actually a great thing. Scams need to be stopped and an aggressive announcement like this is appropriate. NB: China is NOT banning Bitcoin (and thankfully it's impossible for anyone or any government to ban Bitcoin or prevent Bitcoin transactions from happening). In fact progressive governments like Japan have declared that Bitcoin is legal money and BTC can actually be used as legal payment in over 1/4 million stores in Japan.
Today is a major holiday in the US, so financial markets are closed. Sure, individuals can "buy on the dip" but major financial institutions like Goldman Sachs (who, by the way, are getting wrecked by Bitcoin and the disintermediation enabled by blockchain technology) have been waiting to find an opportunity to buy in, but companies in the US aren't transacting today.
I'm not interested in day-trading nor trying to predict short-term moves in the market. Nor am I predicting that the volatility in BTC will be over - - in fact I expect upward and downward volatility to increase going forward. But Bitcoin is unlike any other investment in the history of mankind -- and it's key value propositions are not going away because it crashed to 7-day lows:
1- Bitcoin created the first-ever capability in the history of mankind to send value to anyone else on the planet, instantly and without the need for an intermediary. And it can't be stopped - by anyone.
2- Bitcoin is fully decentralized unlike newer cryptocurrencies and ICOs.
3- The tools for mass adoption are just emerging. 2.5 billion people now have the ability to buy Bitcoin on a smartphone - though most don't yet know about it. This is very different than even 2 years ago when only a couple of thousand geeks knew how to obtain, mine, or store Bitcoin.
4- Less than 5% of the world population has even heard of Bitcoin and less than 0.2% have ever purchased it.
5- People who have invested in Bitcoin aren't going away, but others are coming in. Institutional interest, where the big money currently resides, is spiraling.
6- There's a finite supply. There's increasing demand with a hard-coded supply. Bitcoin is the first deflationary currency ever - a completely new paradigm. Compare the US dollar - the supply of which has gone up 190,000% since the Federal Reserve was created in 1913.
Fiat? -- virtually none of the above.
I'm very interested in hearing your thoughts. Please comment / resteem if you're so inclined.
Please note: I'm writing about my observations of events impacting Bitcoin and blockchain technologies. I'm not providing financial advice nor would I ever encourage anyone to invest more than they can afford to lose. Bitcoin is highly volatile and you could lose everything. You should always do your own due diligence before deciding to spend or invest your money in anything.
