If you’re going to invest in Bitcoin, you have to be prepared for the volatility.
The Bitcoin price action over the past week has been a prime example of Bitcoin’s roller-coaster nature.
I’m going to go over what happened and offer a bit of advice about how to handle these sharp, sudden changes in price.
On Wednesday (Aug. 28), BTC was trading at about $10,250 on the Coindesk Bitcoin Price Index. That was down from about $12,000 as recently as Aug. 7.
Just 30 minutes later, the Bitcoin price had plunged $600, or about 4.5%. For context, an equivalent drop in the Dow Jones Industrial Average would slice nearly 1,200 points off the index.
Bitcoin continued to fall into Thursday, eventually shedding about $890, or 8.7%, in less than 24 hours. (Imagine a one-day drop in the Dow of 2,265 points!)
If it were anything but crypto, that would have been a scary moment. But as we’ve seen so many times before, Bitcoin investors didn’t have to wait long for a rebound.
It started Sunday as BTC climbed up off its lows. Then it shot up $610 in 14 hours, back over $10,000 to $10,354 – a 6.26% gain.
Over the next 48 hours, the rally continued, taking the Bitcoin price as high as $10,741. It represented a jump of $1,381 in five days for a gain of 14.75%. The Dow equivalent of that would be a one-week gain of 3,600 points.
In crypto-land, though, it’s just another day at the office.
Self-styled crypto analysts tried to make sense of it all, offering up a variety of causes that all probably had some part in moving BTC prices.
A likely cause of the sell-off last week was the looming expiration of CME-traded Bitcoin futures on Friday (Aug. 30). Futures expiration dates are known to cause volatility and higher volumes in the stock markets.
It appears the Bitcoin market is no different.
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It’s also possible that some “whale” traders were making moves to position themselves in advance of the start of Bitcoin futures trading on the Bakkt exchange Sept. 23. Those futures will differ from CME in that they will be settled with actual bitcoin.
Whales looking to position themselves ahead of the Bakkt launch new may have taken advantage of lighter trading volumes last week to push prices down as they add to their holdings.
As for the rally, it’s possible that the whales positioning for Bakkt started buying back in.
There were also several positive news announcements, including Bitfinex announcing two new Bitcoin-based derivatives with up to 100x leverage and Binance acquiring crypto exchange JEX, which offers options and futures trading in Bitcoin and Ethereum.
In addition, Argentina imposed capital controls Sept. 1. Because Bitcoin can move seamlessly between borders, it’s popular with citizens seeking to circumvent capital controls (one of the reasons Bitcoin remains popular in China despite government restrictions).
But whatever the immediate causes of the Bitcoin price fluctuations, the larger lesson here is that it’s unwise to focus on these short-term gyrations unless you’re a trader who knows what they’re doing.
Long-term Bitcoin investors are best served by ignoring these price fluctuations. I continue to believe the Bitcoin price will rise over the next couple of years to $100,000 or more.
It’s not worth sweating over moves of a few hundred dollars here and there.
Now let’s move on to a news item that involves a whopping $4 billion worth of bitcoin and a man who would like you to think he’s Bitcoin creator Satoshi Nakamoto…
Craig Wright Is Not Satoshi
The man who claims to be Satoshi Nakamoto, the mysterious creator of Bitcoin, suffered a major legal setback in a court case in Florida last week.
Judge Bruce Reinhart said that Dr. Craig S. Wright had submitted false documents and lied, and the judge ordered him to turn over 410,000 bitcoins – valued at more than $4 billion – to the estate of a former partner, Dave Kleiman, who passed away in 2013. Prior to Kleiman’s death, the two men had mined more than 800,000 bitcoins together.
The Kleiman family sued Wright for half of the bitcoins, and the judge ruled in their favor.
Wright, for those who haven’t heard of him, is an Australian computer scientist who in 2016 claimed to be Satoshi Nakamoto. He also is the primary force behind one of Bitcoin’s forked versions, Bitcoin SV (Satoshi’s Vision).
Because Wright has been unable to prove his claim by moving any of the earliest-mined bitcoins, few cryptocurrency enthusiasts believe him. Most consider him a fraud.
The Kleiman case was another chance for Wright to prove his claim – and he failed miserably.
“Dr. Wright’s demeanor did not impress me as someone who was telling the truth,” Judge Reinhart said. “There is a strong and unrebutted circumstantial inference that Dr. Wright willfully created fraudulent documents.”
Wright’s antics are a concern to the crypto community for several reasons. The real Satoshi would have a tremendous amount of influence within the crypto community, especially in matters concerning Bitcoin.
Satoshi’s true identity also matters because the real Satoshi controls hundreds of thousands of bitcoins – a stash with the potential to upend the market if any significant quantity were sold.
We’ll probably never learn the true identity of Satoshi Nakamoto. But we certainly don’t need charlatans like Craig Wright sowing confusion and making trouble in his name.
Crypto Goes to School
I often see items on crypto news sites or on Twitter that tell me cryptocurrency adoption continues to make slow but steady progress.
Usually, it’s about a large company expanding its use of blockchain technology or a financial institution taking new steps to integrate cryptocurrency into its operations.
But one story I saw last week really screams “Crypto is here to stay.”
According to a study made by the cryptocurrency exchange Coinbase, 56% of the world’s top universities now offer blockchain or crypto classes. That’s up sharply from 42% last year.
And 18% of students has taken such a class – twice as many as last year.
It won’t be long before cryptocurrencies are considered a routine part of academia, much as computer classes started to become pervasive on campuses in the late 1970s and early 1980s.
And we all know how that story ended.
America’s 1% Are Converging on the Next “Gold Rush”
The Fortune 500, big investment firms, and the Wall Street elite are all pouring billions into a new agribusiness market.
It’s an investment strategy that’s already worked for them before – for example…
Vanguard, Credit Suisse, and RBC were behind an IPO in this industry that shot up 659% in under one year…
Deutsche Bank and UBS were behind the scenes of a 641% windfall…
And Goldman Sachs, Black Rock, and Morgan Stanley lined their pockets with a whopping 3,813% profit…
But the biggest gains are yet to come. As medical research in this area trucks on, this could become a $1 trillion global industry. Individual investors could become millionaires practically overnight.
I know the numbers are big, but the research backs it up.
What’s more, we’ve picked three stocks in this industry with the biggest upside potential.
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