At the beginning of this year I wrote about what I learned coming into the crypto space. I wrote about my mistake of going heavy on Eth because I thought the market was mature enough to stand alone from bitcoin and boy was I wrong. I liked bitcoin but I felt there was superior technology but my biggest hesitation was when the futures market was approved. I speculated the futures market was going to be bad for bitcoin and good for Eth and the other alts. Several months later I see I was 50 percent right the futures market was ripe with manipulation as I suspected it would be and it helped pull the market down although I don’t think this is the biggest reason for bear market maybe I will expand on that in another post.
So early on in my crypto Journey I decided to exit the market to learn about it more so I don’t make the same mistakes and re enter at a good level. Opinions are like yesterdays everybody has one and I would like to share mine. This is not financial advice in any shape or fashion you would be ridiculous to read what I’m writing and base your investment strategy on this.
So in my opinion drum roll please……..I believe now is a good time for me to re enter the markets. I believe the market will rally and it’s not because of the possible upcoming ETF although the CBOE’s ETF proposal can be a catalyst I believe there is a much bigger catalyst that I’m not sure anyone is talking about. The light bulb clicked for me watching Vitalik’s techcrunch interview. Everyone focused on his “centralized exchanges can burn in hell” comment but he revealed so much more. Vitalik mentioned Bitmain holds around 43% of bitcoins hash power and another entity ViaBTC holds another 10% so combined they could theoretically work together and cause a 51% attack. Now I don’t believe Bitmain would do this as they have too much at stake, but Bitcoin’s dominance is based on its reputation. Maintaining a reputation of being the most secure imputable digital ledger at this stage in bitcoin’s evolution is imperative. If any single entity or group of entities with close ties achieves the ability to control 51% of hash power then institutional investors will simply walk away from bitcoin and possibly crypto. These guys are experts at managing risk and at that point it becomes to risky. We need incentivized miners to properly secure the network. Now the avg cost to mine 1 bitcoin is around 5,000 with some countries already at a deficit. If this crypto winter continues miners who can’t whether the storm will turn their machines off thereby giving Bitmain who has the money to continue to mine, more hashing power which could eventually lead to 51% control of hash power by default. If this happens malicious intent or not Bitcoin’s claim to fame is over and gone with it the potential Billions if not Trillions of investment dollars.
A lot of smart people understand this and I believe this is why so many people are confident in 25-60K bitcoin by the end of this year 2018. Bitcoin is the beast that needs to be fed in order to secure the network. Reputation in this space is everything and with billions already invested in bitcoin I don’t see Bitcoin maximalist and institutional investors letting Bitcoin go to $3000 because if Bitmain does achieve 51% and mainstream media gets ahold of this we could see bitcoin go back into the hundreds and never fully recover. The risk reward of driving this market further down in this manipulated market at this time has reached a pivotal time.
If for some reason the price does keep dropping and miners stop mining and a 51% hash rate does occur at that point I think two scenarios can play out. The first and a very likely outcome is a crypto ice age the second is that another consensus algorithm becomes the golden child like proof of stake, delegated proof of stake, proof of reputation etc. and I’m willing to bet ETH would now rule the kingdom. Don’t get me wrong I love a lot of the protocol layer projects but in my opinion you have to be 50-100 times better than ETH to dethrone them. Their network effect is to large at this point. EOS is the only other real ETH threat I would consider and I believe it would take at least a year if not two for this to happen and by then sharding, casper, side chains and whatever else they have up their sleeves will be here. Network effect sometimes trumps technology. Anyway I went off on a little tangent.
Well this is just my opinion and as for myself I will be dollar cost averaging weekly for now and if in August we do get good news from the SEC I will invest more aggressively until the ETF goes live. The ETF if approved will be enough to keep the momentum going until the years end and 20K maybe 30K bitcoin but it’s not the true catalyst I’m waiting for. Like I said I don’t think market manipulation is the biggest cause of this bear market but rather something else Vitalik tweeted about months ago and when this happens forget the moon we are going to another planet.