Far too often, crypto investors hyper-fixate on short-term price actions and miss the forest for the trees. Don’t get me wrong, short-term price action is important, but much more so for traders than investors.

The vast majority of investors would be much better suited to long-term strategy than impetuous trading. To excel at long-term investing, you must remain focused on the larger movements and general market trends.

A Personal Note from Alex Benfield:

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I’d love to hear your thoughts on my writing style and any additional subjects you’d like me to explore. Please share your questions, feedback, and any success stories you’ve had with my advice.

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Bitcoin Update

The crypto market has admittedly been extremely annoying over the last four months. Ever since hitting a new all-time high in mid-March, Bitcoin (BTC) has been unable to break above a month’s long downtrend. After hitting a high above $73,000 BTC slowly fell all the way to $53,500.

Whether or not you believe that $53,500 level was the bottom of the correction would determine your overall stance on the market right now. Believe me, many investors are split. I for one lean heavily to the belief that the July 5th low was the bottom of the major 2024 correction and that BTC will not trade below that level again in 2024.

Now, just because the major price correction is over does not mean that BTC is going to fly back to new all-time highs. What typically follows a month’s long correction like what we just saw is a few months of choppy price action. A little up followed by a little down, and no real short term momentum sustained in either direction.

So far that’s exactly what we’ve seen. After forming a bottom in early July, Bitcoin managed to climb over 25% as it hit the $68,000 level. However after just a few short days BTC was unable to hold steady in that price range. After briefly breaking above $70,000 on Monday BTC has slipped back to $62,300. A lot of the recent fear has to do with some movements of some very large Bitcoin wallets.

Movements of Big Bitcoin Wallets

On Monday, the U.S. government wallet holding the 200,000 or so Bitcoin seized from the old dark web black market, The Silk Road, transferred the Bitcoin to another address. That had many investors worried that the 200,000 BTC might hit the open market.

The market just finished absorbing the 50,000 BTC sold by the German government which sent the price of Bitcoin lower for over a full month. So far none of those Bitcoins have hit the open market.

Additionally, much of the Bitcoin held by the old defaulted Bitcoin exchange, Mt. Gox, has also been on the move.

It is believed that the Mt. Gox creditors will receive a large portion of their Bitcoin in the coming weeks. Should that Bitcoin hit the open market it could also add to the selling pressure.

However, many analysts believe that the Mt. Gox creditors are unlikely to dump onto the open market. Many of these creditors were early believers of Bitcoin and by now are also seasoned investors. It would be unwise for them to panic sell into a weaker crypto market.

Suffice to say, there is some major potential selling pressure that may or may not be heading for the crypto market. However, you must contrast that with the possibility of a much more favorable political and regulatory regime that could be coming next January.

Multiple U.S. politicians have floated the idea of a national strategic Bitcoin reserve. That also guarantees that other countries are also having these talks and are coming up with their own plans to stockpile Bitcoin. It all boils down to game theory. While very few countries want to be the first, absolutely none want to be the last nation to buy Bitcoin.

Final Thoughts

Over the next few weeks we will see what plays out with these large Bitcoin wallets. If I had to bet, I would say that the US is unlikely to sell its Silk Road Bitcoin. The Mt. Gox creditors are likely to receive their Bitcoin sometime before the end of this year, perhaps in just a few short weeks. It would be naive to think that none of those creditors will sell.

However, I think the overall impact on the market will not be catastrophic at all. Many of those creditors are the biggest believers in Bitcoin and crypto and have now lived over a decade of life since they lost their Bitcoin. Why sell as soon as you get it back?

In the meantime you can expect some more chop in the market as we close out the summer. Unless Bitcoin breaks down below $53,500 in the coming days the question is not if Bitcoin breaks to new all time highs this year, but how soon.

Editor’s Note: Cryptocurrency has been the best returning asset class of the last decade and is know for its parabolic bull markets. It is also a key to a truly diversified portfolio and one of the best hedges against the potential risks that lie ahead in markets. But you need to act now before institutions gobble it all up.

If you’re worried you can’t figure out crypto… don’t be. Our in-house crypto expert, Alex Benfield, will walk you through everything you need to know about crypto, step by step.

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