Cryptocurrency Correction

Cryptocurrencies have been correcting since June 12 when Bitcoin price reached $3000. The bounce out of the May 25-27 correction produced a new high but had a lot of internal weakness. Bitcoin is leading the entire crypto universe down, with Ethereum correcting even further than BTC.

Left for its own devices, the correction may last a few months at least. The big unknown is the UASF on Aug 1, meant to address the scaling issue but may leave Bitcoin irreversibly split. That would be a nightmare scenario.

I sold a chunk of coins on June 24 and a quick summary of my crypto experiences so far is as follows: Mar’17, deposited 0.1X; withdrawn so far, 0.068X (68%); coins left, ~0.28X. When I first started, I saw the outcome as bi-modal: it will either take-off or crash to zero. The realization justified a small allocation (~1% of the active accounts). The table below shows the peak and correction so far in BTC, ETH and LTC. Also shown is what I consider as the likely correction targets, as well as my cost basis. It’s amazing that Mar’17 can be considered early here and disaster will have to strike for me to lose money.

Longer term, if one considers Bitcoin to be a competitor to gold and that current monetary gold total about $3-4 trn, it wouldn’t surprise me to see BTC increase 100X. That would bring BTC to about parity with today’s monetary gold marketcap which will surely increase by that time. Of course, I don’t know for sure and I don’t know if another crypto will supplant BTC. There is plenty of evidence that institutions are getting involved, which makes it either 4th or 5th inning using everybody’s favorite baseball analogy.