Wall Street traders know it, day traders know it even pokemon card traders know it. So why do so many people not follow the simplest investment advice of all: buy low, sell high. The short answer is simple, people panic and when they panic they do irrational things. Despite the fact that crypto is intended to be a disruptive technology, its story has played out much the same way as other markets; unsophisticated investors rushed in on the December/January highs then got burned when Bitcoin crashed.
Sentiment now is very negative and the market bearish, but one question remains, should you get in now while the price is relatively low or avoid Bitcoin like the plague?
So we're seeing a little bit of volatility creep back into the market. But you know we've become we've grown complacent and all of that time when Bitcoin was was trading flat. Why did the volatility come back in? So basically we had a breakout of the level of six thousand dollars per coin. That level had been building up for quite a while and providing support to the market. And once it was broken there was a there was a chain reaction of stop loss levels that had gotten triggered basically all at once and that type of price action has a way of perpetuating fear starts building up and then people say oh it's because of the Bitcoin Cash hard fork. Oh it's because of the SEC oh it's because of Tether. All of those stories add to the fear. But really what we're seeing is simple technical breakout to the downside and not a break of the crypto industry which is very strong at the moment. The stock market is also getting hit really really hard.
Half of the names on the S&P 500 are down between 25 and 50% since January. So it isn't only the crypto market that's getting hurt it's the stock market. Also as far as the crypto market goes we've been down this road before. We have parabolic moves and 80% corrections every couple of years and every time we have a parabolic move we knock out the high from the previous cycle. I don't think the parabolic move that I am expecting next year will be any different. If you look back on the history of crypto and the stock market people that sold at the bottom of a crash ended up regretting it shortly thereafter people jumped off bridges. In 1929 when the stock market crashed they did the same thing in 1987 2002 and 2008. The people that bought that panic did very very well for themselves and I believe anybody that buys this panic in the crypto market is going to do very well for themselves. I can't justify the gold market at seven and a half trillion dollars trading at one hundred times where Bitcoin is today and 60 times what the total crypto market cap is today.
We are at the beginning of this game we are in a price discovery phase. There are weak hands getting shaken out. People who’ve never been in a situation like this before are acting as if Bitcoin is going to zero I don't think that's happening. We have two different major factors which is playing into the market. Number one is a Euro regulatory issue and that is a huge one. Everyone knows that because regulators are not friendly. And as long as they maintain the same stance then that we won't going we won't see that huge rally for Bitcoin and we all know that. The second element that I've said many times in any of the articles that I've done or any of the public speaking or television is that the main reason that feed their Bitcoins or Bitcoin Cash or anything of that nature is being used is that there's a limited supply of it. But now we have this element of one fork another fork and another.
Remember Bitcoin Cash is a fork of Bitcoin. Now we have a fork coming out of the Bitcoin Cash. We continue to increase the supply this is not really a good sign for the industry. When you are going out there and then you say you know what the entire supply is actually limited to this amount. But then you create another fork and then you create another fork. I think this goes against the major core elements and core values of it. Global markets are down more than 10% between October to November.
And while crypto actually initially had a negative correlation, in the last six weeks has flipped to one of the highest levels of correlation to global markets. So I think the macro meltdown actually finally, hit the crypto market and I think that contributed to essentially panic selling. I believe very strongly that the market or the crypto market recently has been driven a lot by the technicals rather than the fundamentals. So meaning what we're seeing is price action which is influencing sentiment and not what's going on in the news. I think the key psychological levels are breaking as we've gone below the 6000 5000 4000. Now the big one is at three thousand and after that two thousand five hundred but I think we are not far off from finding a bottom. I think this is where you start preparing yourself it’s Okay now start rubbing your hands that everything is so cheap and then I'm about to jump into the industry.
I believe. That the smart people bought Bitcoin at 9000, 8000, 7000, 6000, 5000, and four thousand so their break-even point on the averaging down the last few months is somewhere around six, seven thousand dollars. If Bitcoin goes back to twenty thousand they tripled their money.OK. And that is usually what happens when markets collapse just like what happened in the stock market 10 years ago. People that added to the positions had conviction and when the market was going down and capitulating have done very very well. They made 300, 400% on their money in 10 years and the people that sold in 2008 missed a 300,400% move.
And on top of that they got out at a loss. The problem with individuals is they like to buy high and sell low. When Bitcoin was at twenty thousand dollars in January two thousand five hundred people signed up for my service at the top of the market. At 4000. Nobody wants my service. You know what they will call me back when we go back to twenty thousand dollars on Bitcoin. They will want to sign up for my service again and that is exactly when the people at the top of the market will dump their Bitcoin on you and people don't learn from history. History repeats itself and if you look back at financial market history going back 100 years the time that people made the most money is when markets crashed and the smart people took advantage of an overreaction and emotional selling that we are seeing right now.
Well I can't make a general statement like that. What you need to understand first of all I'm not always right. OK. I could be wrong on this. That coin could go to 15 dollars. Six weeks from now If somebody wants a second opinion from someone who takes the opposite side of the argument as I'm taking they are more than welcome to listen to someone else but the way I see it I mean I know a company that is spending one hundred million dollars on mining works right now. I think they know where Bitcoin is going. Better than the average person who is selling right now.
So first of all relax. You know making money with investments is a waiting game more than anything. And it's the same as in the stock markets it is the same as with any other type of investment. You don't make money when you open or close trades you make money while you wait. I think people need to be patient but I think one of the most important things that we advise our clients is you know crypto as an investment should really be 1 to 2% of their allocation. So that number one they're not worrying about it every day. But also that's 2% could become 50% in a decade it can grow dramatically.
I think the other thing is to realize that some of the crypto projects are probably hopeless. But things like Bitcoin and Ethereum or XRP have staying power. And these are the ones where unless you think the protocols actually completely broken you’re seeing price distortion caused by panic selling. Well, this is the simple math of long-term investing that If you look at the equity markets the only time you actually earn better than historical average returns. So the stock market has returned roughly 7% a year. The only times you earn better than 7% is when you buy in a bear market. So for instance, if you bought the S&P in October 2008 at eight hundred it still went down another 200 points for six months. Right so in the short term, we lost money.
But. S&P is now at twenty-eight hundred. A lot of people waited till the S&P went to sixteen hundred which was a new high to buy it. They made a lot less money in that person that bought it at a low. So to me, crypto is exactly this moment that Bitcoin may have a downside in the near term but does this change the fact that it's still the earliest days of crypto and it's about to become an emerging asset class. Well, those are going to carry much higher prices.
So the fact that we've had some volatility recently I believe that the institutional players the more experienced people and investments are actually coming in right now and seeing this as as an excellent opportunity to buy in at cheaper levels. Whenever there's a panic of this momentum it is almost certain that we are close enough to bottom and then this is what I have said before as well.
So we are very close to finding that bottom wherever than bottom lines. And one thing is for sure only a few less than 1% would be able to cash that bottom. But I think now is the point where you start preparing yourself and be in a position to start participating. So Bitcoin has gone through various boom and bust cycles over the course of its short history and a lot of the time we see bull cycles where we see the market going up by a 1000%, 10,000% in a single year or even within a few months. And then after that type of growth, you generally need to see a pullback as you mentioned during those times during those periods of growth.
You do get a lot of newcomers into the market and then after that during the retracement and then the relaxation period. This is an excellent time for people to up there knowledge to learn more about the industry learn more about crypto assets learn more about how things work and then you know during the next the next great rush they'll actually become the experts and be able to teach all of the newcomers at that time. So this is what we've seen play out many times in the past and very likely that can continue until we reach full adoption I think Bitcoin is going to do very well next year. If anyone is even worried that Bitcoin could go down in the next few months it's possible it doesn't change the fact that adoption is going to grow and that we have institutional investors that will have opportunities to invest. And I think that you want to be in front of that investment wave.
So I think 2019 is a great year for Bitcoin. .
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