Much Needed Medicine…


Sell OffI had an opportunity to speak to 2,500 wealth enthusiasts on November 18th in LA at theMegaSuccess 2017 conference, and I recall that the cryptocurrency market cap that day was sitting at $235Bn.  Less than 45 days later, the market had grown to $600Bn or an increase of 255%. 

I think we can all agree that growth at that rate represents unusual behaviour and there was certainly going to be a correction, we only didn’t know how bad and when.  Well, it’s here.  On Monday of this week, the market cap was $700Bn and currently it’s at $425Bn.   So a whopping $275Bn of fiat currency has left the cryptocurrency markets.

Here’s my take on what has instigated the sharp decline.

Firstly, the correction was always going to be severe.  Too much, too fast happened between November and December.  That kind of growth is never real and long lasting.  I particularly like Vitalik Burterin’s twitter rant back in December about how the blockchain industry had not earned the $.5T valuation.

But I think a few more factors are at work.  Bitconnect, which earlier this week was valued at $1.8Bn is down nearly 100% due to closing its exchange and lending businesses because of legal warnings issued by both Texas and ……    Let’s think about that….  Valued at $18Bn 2 days ago and gone today.  Stories such as Bitconnect and OneCoin hurt the bona fide cryptocurrency projects that are working to bring about impactful change in the world.

Another factor affecting capital flight are continued rumors from both China and South Korea that further regulatory pressure is coming to dampen speculation in cryptocurrency.  Both of these markets represent mature markets for cryptocurrency activity, and so any dampening of activity in the APAC geography – for the time being – will have a more than proportionate impact on the rest of the world.

And then when panic selling sets in and stop losses are triggered, as prices decrease further, more loss orders are triggered and you have the spiral downward.  Sophisticated investors who have taken profits at a higher level aren’t going to come back into the market until it turns. And so we will wait.

On the plus side of the news:

Nasdaq opened up trading of cryptocurrency ETFs this morning, so that’s continued endorsement from the institutional investors

IBM and global shipping and logistics company Maersk announced that they will team up to create a blockchain-based shipping and supply company.

A South Korean petition to oppose crypto regulation has received more than 200k signatures

The world’s fourth largest bank, Mitsubishi UFJ, announced it would release its own cryptocurrency in 2018

My advice is, if you didn’t sell earlier in the week or maybe even some of you sold out last week – now is not the time to sell but instead sit tight and wait for the money to come back into the market.  This is my 7th significant correction since I started on this journey, and so far, it’s always returned, it’s only a matter of time.