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Crypto Winter Is Over, Bitcoin Breaks Out

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Story by: Clem Chambers

Bitcoin has broken out of its sideways trend and this is highly likely to spark a rally to $6,000. There is apparently no acute reason for this move and people always want to know who caused something and have a pressing reason why.

Sadly this is a trap. The Greek philosopher Socrates didn’t know anything about bitcoin but indirectly he had a lot to say about speculators and the implications of his quote is one I embrace: “Strong minds discuss ideas, average minds discuss events and weak minds discuss people.”

The who and the what is only often superficially why and the current rapid move in bitcoin is a perfect example of that.

The ‘why’ is simple. A huge group of people, including myself, love crypto and want to own it. Bitcoin and its ilk is not a niche craze. There is as much interest in it as equity trading amongst the man/woman in the street. This interest is particularly strong among young people, the so called Millennials. They love crypto. If they were not in the ‘poor’ period of their economic lives, bitcoin and ether, etc. would have gone even more ballistic in 2017 and as they age into prosperity cryptocurrencies will ascend with them.

This passion for crypto is not going away and it is only a matter of time before we experience another ‘bubble.’

Unlike the clueless that say bitcoin is not useful money, people who have used bitcoin for B2B transactions will affirm that it has a strong use case and this will slowly allow crypto to seep into day to day usage. Private issued money is just not something that is new. Be it Green Shield Stamps, travelers cheques, Western Union numbers, laundromat coins, gaming tokens or frequent flyer miles, the model is well established. The only difference with crypto is that the barriers of implementation are a lot lower.

However, let’s not waste more “hash power” preaching the intuitively obvious; what now for the price of Bitcoin and crypto?

I wrote previously that whichever way the bitcoin price goes from the recent second occurrence of sideways trading, would define a big move in that direction. Now it has broken out to the upside:

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Bitcoin has broken out to the upside

Bitcoin has broken out to the upside

CREDIT: ADVFN

This is an extremely strong chart and you would expect a rise to $6,000.

Bitcoin can be expected to rise to $6,000

Bitcoin can be expected to rise to $6,000

CREDIT: ADVFN

For me the question is, not will it hit $6,000 but instead, is this the end of the Crypto Winter?

I think that this is now highly likely. I should say we have seen the bottom of the market now but in reality I bought a nice chunk of BTC recently but have yet to invest what I would if it was $2,500. That said, I’m back to about my crypto position in terms of BTC when I sold out between $16,000-$18,000.

I think $10,000 for BTC in the coming year is quite possible, then the question will be, is this a long-term rally to the $100,000-plus levels the true believers predict or will it follow a more disappointing path, one followed by commodities in the 1970s?

When the commodity bubble of the early 1970s kicked off, all kinds of instruments went to the moon only to collapse back. This was merely a first instance and over the following decade commodities repeated this boom/bubble cycle in ever decreasing scale until by the 1990s the commodity market was comatose. This is a potential fate of bitcoin because markets often express similar bubble behavior as we can see from the similarity of many markets when they bubble and bust.

I think bitcoin will not suffer this fate as, unlike commodities and equities, you can not dilute BTC. In crypto in a new bubble, new coins would be created, but this value ascends into BTC as it is the key trading currency in crypto and the key offramp to ‘fiat.’

A proliferation of altcoins in a bubble will therefore not dilute the value of bitcoin, only enhance it.

So my general expectation of the future (and naturally my hope) is expressed by this old bitcoin crash chart:

The old Bitcoin crash

The old Bitcoin crash

CREDIT: ADVFN

My general strategy is unchanged. Acquire regularly and buy bigger chunks when bullish, buy a lot on any significant dip.

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Clem Chambers is the CEO of private investors Web site ADVFN.com and author of Be Rich, The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide.

In  2018, Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards.

Original story: https://www.forbes.com/sites/investor/2019/04/03/crypto-winter-is-over-bitcoin-breaks-out/#1028c4713e1a

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