Why I sold all my Bitcoin for stable tokens

By looking at chart data, sentiment data, and volume, Bitcoin is entering a bear market. This bear market could last for 4 or even 6 months. The halving is around 6 months away. In addition, I do not think alt season is going to happen this time around and I'll explain why.

In 2017 we had a bull run which brought Bitcoin to almost $20,000 and brought Ethereum to over $1400. The bull run was very short lived though and peaked within a course of 30 days. The bear market correlated with the launch of the cash settled futures. Some believe that the launch of these futures allowed institutional investors to enter the market and short Bitcoin but this is all speculative. There are also some who think Tether was used to fuel the bull market but also at the same time others studied the same data and reached a different conclusion.

In my opinion the bull market was actually triggered by the ICO boom not by Bitcoin itself. The ICOs started taking off prior to Bitcoin going to $20,000 way back in 2016 and by 2017 ICOs were the major trend. The theme I keep here is that trend analysis is important for making my decisions and back then ICOs were that trend. Ethereum in my opinion rose to over $1000 because of ICOs and then fell once ICOs started to be cracked down upon. When Ethereum fell below $1000 eventually all of crypto started to fall along with it because ICOs were the main use case of both Ethereum and of crypto in general for the mainstream participant.

2018 was a bear market as crypto had lost it's primary use case. In that year Tether came into it's own and a lot of volume started to flow into it. This made perfect sense because wealth seeks preservation and Tether was a way for crypto holders to preserve their wealth during a bear market. Many ICOs got out of Ethereum and into Tether, and many altcoin holders cashed out into Tether, during 2018. In 2019 we saw the market improve but in an unusual way.

In 2019 I saw the market improve but I saw something else happen which was concerning. The market consolidated around Bitcoin dominance and the volume distribution pattern did not match that of an authentic retail driven bull market. It looked like some big money was deciding to pull out into Bitcoin for no apparent reason. What I tracked was the total volume coming in from fiat into crypto and not the Bitcoin price. This allowed me to see if the total size of the crypto economy was growing or if it was just manipulation.

I think we did see some growth but nothing close to the levels we saw in 2016 or in 2017 among retail investors. In other words retail investors just don't seem interested in Bitcoin and who can blame them when Bitcoin has been in a bear market for a long time and many got in at 2017 levels? That said there was an opportunity for people to get out in 2019 at those same or similar levels so this in my opinion is good news for surpassing the all time high the next time around.

The complications are that there is now a lot of regulatory crackdown on US participants. Whether it is the SEC cracking down on ICOs, or it's the IRS giving super confusing guidance, or if it's just the situation with Libra being banned or questioned by congress. The assumption many people made (based on fantasy) was that institutional investors would lead the next bull run once Bakkt launched. This similar assumption existed back in 2017 prior to the futures launch and it is very possible that the opposite can happen. Bakkt in theory could be used as a sort of weapon to contain the price of Bitcoin and all of crypto if crypto remains correlated to the price of Bitcoin.

Looking at current volume, and current information, I do not expect Bitcoin to go on a bull run any time soon. In fact I expect Bitcoin to be shorted and the price to reach a range between $6000-7000, and perhaps dip even lower. I think it will not likely recover until 2020 spring time and I think alts will likely take the biggest hit during this new crypto winter. For this reason I predict the growth of stable tokens which pay interest.

Market participants likely will seek to preserve their gains. Stable tokens provide the means of preserving gains and growing wealth slowly over time.  In a bear market or in a crypto winter with a lot of regulatory uncertainty, low volume, and low interest among retail investors, suddenly 5 or 10% annual interest on whatever you earned in crypto begins looking attractive. I expect many to seek to put their wealth in these forms and I commend @blocktrades for supporting Tether in anticipation of this possibility.


Bitcoin is not dead, it's just taking a rest for a few months. I'm also going to take a rest for a few months in the stable token economy.