“Bitcoin Was Overpriced All Year”
While some industry savants expected crypto’s recent crash for months on end, many ‘common Joe’ investors were caught off-guard by this rapid bout of selling pressure. Aiming to clear the air surrounding this sell-off, which sent Bitcoin (BTC) freefalling to $4,500, CoinTelegraph recently brought on a number of industry leaders to weigh in on market conditions.
Tone Vays, a former institutional trader turned Bitcoin maximalist, first noted that in his opinion, that was no factor that catalyzed crypto’s recent crash, nor was there a catalyst behind Bitcoin’s monumental run-up throughout the year of 2017. Simply put, the trader noted that BTC was “overpriced,” and it has been for the past year.
The guru then pointed out that BTC’s rapid parabolic price fluctuations are a common sight, due to the fact that a majority of crypto traders often lose focus on what makes Bitcoin so important. Vays explained:
BTC constantly drops 80 or 90% to make sure people know what they’re doing, that they understand why they’re in BTC. And I think there are so many big buyers of Bitcoin and they weren’t buying it for the right reasons. They were buying it to make a quick buck and to be famous and to make money for their investors.
He then added that those looking to turn a profit, and a profit only, should exit the market completely. Anthony Pompliano (Pomp), echoed Vays’ point that crypto’s recent sell-off wasn’t catalyzed by a single factor, not even the contentious Bitcoin Cash hard fork or an early-adopter liquidation phase.
Pomp explained that he doesn’t care about the day-to-day price action, but rather, the long-term price trend.
Again, Alex Tapscott, the co-author of Blockchain Revolution, crypto’s de-facto bible and primer, echoed this sentiment that BTC was evidently overvalued, adding that the current correction hasn’t been fundamentally based. Instead, 10-month bear market and recent downtrend can be chalked up to flight to liquidity, as traders start to realize that the cryptocurrency market has been well overbought. Interestingly, Tapscott, a Canadian entrepreneur, brought up another astute point, stating:
And then what’s compounding that I think is that over the past year, a bunch of people went and raised a lot of money for funds which are nearing the one year maturity date where typically investors are able to redeem. So it wouldn’t be surprising if I saw a lot of those different kinds of investors redeeming now.
“Not Enough Pain Yet”
When asked about Bitcoin’s short-term prospects, Pomp noted that the psychological argument points towards the fact that there hasn’t been enough pain yet, meaning that a true bottom/capitulation phase hasn’t been achieved yet. The Morgan Creek Digital Assets executive, a centralized bank hater, then explained that from a technical standpoint, $3,000 to $4,000 per BTC is a likely possibility.
From a historical perspective, Pomp also explained that a $3,000 price bottom could also be logical, noting that historically, Bitcoin’s drawdowns have been 80%+, before adding that this year’s has ‘only’ been ~75%.
Keeping this in mind, $3,000, or an 85% decline from 2017’s all-time high, could be in Bitcoin’s short-term cards, so to speak. Vays closely echoed this sentiment, explaining that $3,000 is a price point to watch, telling CoinTelegraph viewers that once BTC reaches the $3,000 zone, it would be a good idea to start accumulating.
While the two aforementioned claims didn’t paint the most beautiful picture for Bitcoin, all three industry savants maintained their long-term belief in this industry and ground-breaking innovation.