A Perspective from Blockchain Company CVO, to Bitcoin support of $7,500 as discussed by an analyst in this CNBC video.

Without being a technical trading analyst, I beg to differ Bitcoin will hold at $7500 support level from it's circa $20,000 all time high. Bitcoin is clearly here to stay and indeed has a great long term upward trajectory. In fact, I would not be surprised if bitcoin trounces its all time high of $20,000 towards $30,000 to $50,000 by the end of 2018. Where I differ with the analyst in this CNBC video, is his almost certainty that Bitcoin will find stable support at $7,500 and everyone will want to pile in from then onwards.

Bitcoin out of all the cryptocurrencies and tokens has proven its resilience as as a digital store of value asset since 2009/8, therefore it has a lot of merit considering all the bad news and batterings thrown at it, almost every month from the likes of Jamie Dimon of JP Morgan and others who simply don't understand the nature of bitcoin and cryptocurrencies in general.

That said, it is also not a good idea to be over optimistic in the interim about an asset that has clearly run up exponentially, within only the last 12 months

Now the reason I suspect Bitcoin may not essentially hold at $7,500 support is something I've spotted that no else appears to be talking about at the moment. Take a very close look at the Bitcoin price in November 2017 and you will notice bitcoin has actually pulled back quite considerably below $10,000 at the time of this writing. Bitcoin closed at $9,888.61 on November 29, 2017 before taking off towards $20,000.

So what is the problem?

Now go take a look at almost every other cryptocurrency listed in the Top 100 Coinmarketcap, and trace their prices all the way back to that same period of November 2017. Ethereum is an exception for fundamental value reasons. They have a proven product, albeit scalability problems at the moment.

Do you see the problem? Most of these cryptocurrencies, many barely 5 months old with no product, are all trading in the many billions of dollars in marketcap terms... therein lies the catastrophic problem potentially, not essentially Bitcoin!

Reason being, lets suppose Bitcoin starts to rebound aggressively from $7500 support, it will mean all these cryptocurrencies will surely follow, in the very same pattern before the mini crash as I correctly suggested in my Jan 3rd, 2018 Linkedin article you can read here. This is the biggest conundrum problem, not bitcoin itself.

Fund Managers are simply looking for a fair value entry point to start buying aggressively, however if they were to start buying bitcoin at $7500 support, then the bubble is highly likely to be even more exponential and dangerous for other reasons I explain in a Quora comment here.

So What Needs To Give?

I say this cautiously, considering Blockchain Company, our startup will soon start releasing a variety of crypto asset tokens, digital currencies and blockchain applications for our ecosystem. In no uncertain terms, without being a technical analyst myself, I suspect the crypto markets look more like 1929!

You don't have to be a math scientist as long as you care to look, unless you are the sort of person who believes in grand illusions. The simple fact is, like any market, no matter how innovative or exciting, there needs to be rational common sense. If we were to believe in these current crypto asset valuations, then within only the next 12 months, assuming bitcoin surges all the way towards $50,000, it would mean a lot of these companies may have market valuations soon surpassing facebook, google, tesla, uber, airbnb, amazon and several fortune 500 companies with real fundamentals.

Now I'm not suggesting this is not possible over the next 10 years, in fact it is highly likely that may well happen, as the paradigm shift of the blockchain ecosystem matures towards $7.8 trillion as suggested by the World Economic Forum. It is what is currently happening that is most disturbing and simply looks like pie in the sky.

The only question is, how does the market correct itself considerably and in the process clean out crypto scams and hyper valuation, just as it did in Web 1.0.

This is why I suspect we may be living in 1929, where they also believed those valuations were all very real, at a time when Wall Street became  accessible to many consumers and investors for the first time.

The only difference as I see it, assuming I am correct, while it took Wall Street 25 years to recover a 90% decline, it should only take the cryptomarkets 12 to 24 months to recover, because of the new underlying blockchain paradigm. At this point a more sensible and orderly market should ensue.

Therefore, as long as you are a long term holder of cryptocurrencies you believe in, JUST HOLD! For the long term.

Non the less to my perspective above, there is also a school of thought regulators will not step in aggressively until total cryptocurrency marketcap hits between $2T to $6 trillion. The problem herein, could be a systemic risk to the wider economy as money flows from fiat into crypto. If the bubble were to burst at these trillion dollar levels, that could be an even bigger problem than if it corrected by itself today.  BTC support looks more reasonable between $4500 to $1800. Rallies between $7500 and $10,000 BTC might be dead cat bounces. While that may look alarming, it shouldn't be as long as you are a long term crypto investor. At these supports in my opinion, other cryptocurrencies should re-align around $1 billion marketcaps on average. This brings us more into alignment with non cryptocurrency startup valuations, who have products and real business models.

The good ones with real business models solving a problem always come back. Look at the history of AMAZON! Over time.

Written By:

Robert Haastrup-Timmi
CVO @ Blockchain Company


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