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Crypto Report - Dr. K's Crypto-Corner - The Crypto Correction

Dr. K's Crypto-Corner

by Dr. Chris Kacher

Riding the Revolutionary Rocket with Cryptotechnologies... Entirely Evolutionary™ 


The current crypto bear market is due much to the network value well exceeding the number of transactions at the end of last year. The last time this happened was in late 2013 and resulted in a correction that did not find it's low until Jan 2015. It then took until 2017 for bitcoin's price to regain old highs around 1100. Once this happened, bitcoin skyrocketed for the remainder of 2017:


The current correction is the steepest correction since 2014 when bitcoin corrected -85%. Bitcoin has corrected beyond 75% four times since 2010. This is nothing unusual.


I believe bitcoin will find its major low, possibly around 5000, sometime later this year, and could happen much sooner than anyone expects, ie, on the order of weeks. Numerous major tailwinds are headed its way:

1) Institutional capital is coming online with various platforms being established by major institutions such as CME and Goldman Sachs.

2) Major governments are aligning themselves with blockchain technology

3) Bitcoin's killer app is its store of value. Bitcoin's superior network effect gives it a superior store of value, even to that of gold: https://www.virtueofselfishinvesting.com/reports/view/market-lab-report-bitcoin-vs-gold 

4) 3 billion of the world's unbanked and another 1 billion partially banked are starting to use bitcoin via mpesa/bitpesa

5) Rootstock enables bitcoin to emulate ethereum as it enables smart contracts on the bitcoin platform making it competitive to ethereum. Bitcoin also brings along its superior network effect and hashing power, thus should maintain its lead as the more secure network.

6) Bitcoin's Lightning Network

7) A major devaluation in fiat potentially within the next 2 years due to unprecedented levels of global debt. The US Federal Reserve will find they can no longer hike rates beyond the next few rate hikes, thus will have to reverse course. Bridgewater's Ray Dalio, bond king Bill Gross, legendary investor Jim Rogers, and even former Fed Chair Alan Greenspan are all saying quantitative easing has flooded the financial system with some countries such as Germany and Japan sitting with negative rates, thus will not end well with a material devaluation of fiat likely.

8) Decentralization of the financial sector.

9) Bitcoin's maximum mint of 21 million coins makes it deflationary as opposed to all fiat currencies which are inflationary.

10) Tim Draper and Twitter CEO Jack Dorsey have said cryptocurrencies will overtake fiat in 5 to 10 years. As shown in the chart below and as I wrote in an earlier piece, given the exponential price rise of bitcoin, it should exceed the US M1 money supply by 2022. In other words, it will overtake the world's reserve currency by 2022. Note, Bitcoin Money Supply = Bitcoin Market Capitalization. The steep exponential trajectory shown below is equal to the rise in price of bitcoin. While the slope of the chart below has been slowing somewhat, other factors may sustain or steepen the current slope.


If 2015-2016 is any guide, it may take another 1-2 years for bitcoin to regain old highs around $20,000. But given the major tailwinds at bitcoin's back as shown above, it may reach its old highs of around $20,000 before the end of this year.

(͡:B ͜ʖ ͡:B)


This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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