CyclePro Outlook

Fundamental and Technical Market Analysis
For All Markets: Stocks, Commodities, Currencies, Cryptocurrencies

Updated At Irregular Intervals


I would rather be prepared and wrong
than to be unprepared but right!

Current Commentary -- Where Are We Now?

Sunday, July 16, 2017 PM:

Bitcoin SegWit Fork vs GDXJ Rebalance

Click chart to enlarge.

Although I have not yet been a very big player in the cryptocurrency frenzy, I think what is happening right now may be a very similar ordeal to what happened recently with the GDXJ Rebalancing. I think it is a very good time to increase my crypto-exposure.

Bitcoin's future is currently at odds between two hyper-determined sides debating about how to handle the problem with scaling Bitcoin for future expansion, called SegWit. Depending upon how this gets resolved, it might mean that Bitcoin does a "hard fork", meaning, Bitcoin may get split into two different development paths.

Although all of the players are different, the impact this little Bitcoin hissy-fit is having among nearly all major cryptocurrencies, has a striking similarity to what happened after it was announced that the GDXJ ETF was going to undergo a very major "rebalancing." In this event, a wide swath of gold mining stock prices were pummeled as investors "front-run" the rebalancing effort and sold the effected stocks early -- and therefore hoping to buy back during the "carnage" that they were expecting as the prices would "certainly" drop 50% or more! Well, the front-running did indeed occur, but the subsequent "carnage" did not.

What I am seeing right now in Bitcoin (and most of the other major currencies) is that people are "front-running" the possibility of the Bitcoin "hard fork". Which means, it is very possible that the current prices for many of these currencies are at, or soon to be, their lows for this spiral down. Even if I am wrong and prices drop significantly from here, the current prices for many currencies are already 35% to over 90% below their prior peak price (which for many currencies was only a few weeks ago.)

Here are several examples:
Bitcoin (BTC) is down -38% from 2997
Ethereum (ETH) is down -66% from 399
Ripple (XRP) is down -71% from 0.408
Litecoin (LTC) is down -35% from 42
NEM (XEM) is down -67% from 0.274
Etherem Classic (ETC) is down -46% from 23
IOTA (MIOTA) is down -76% from 0.653
Dash (DASH) is down -44% from 213
Monero (XMR) is down -51% from 60
EOD (EOS) is down -61% from 4.19
Digibyte (DGB) is down -87% from 0.064
Doge (DOGE) is down -68% from 0.004036
Etheroll (DICE) is down -91% from 34
and so on...

I dunno if this is anywhere close to the bottom, but at an average of 50% drop, I think it is time to begin accumulating the better quality currencies at these prices. I also believe the vast majority of the existing, but lower quality, currencies have no real basis for existence, so many of them may not recover from whatever low price this spiral goes down to. Choose wisely.

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