The One Graph That No One is Paying Attention To

If we’re being honest for a moment, we were all mesmerized by the hockey stick shaped exponential growth charts in crypto token prices on in November and December of last year, and for some strange reason we all thought the party would never end.

Recently however, we’ve been brought back down to Earth with a persistent and relentless downturn in prices, which even the granddaddy of them all, Bitcoin has not been immune from. So what’s going on here? Why is this happening?

First a little history lesson. After every boom there is always a bust. Always! The early investors always profit from the late investors. It’s that simple.

We don’t even have to go that far back to remember what happened to property prices and the economy as a whole less than 10 years ago. And this time it will be no different, trust me. Only in crypto-land it will take place much, much faster. In fact it’s already here, since the recent drop in prices is no ordinary “correction” and here’s why:

“Buy Bitcoin“ search volume on Google Trends.
“Buy Bitcoin“ search volume on Google Trends.

The only reason the prices of crypto tokens were going up like crazy throughout November and December 2017 was because there were tons of new buyers pouring in by the hundreds of thousands every single day. Bitcoin and other cryptocurrencies were the most talked about subjects on TV and at dinner tables across the word. But guess what? As the above chart shows, this is no longer the case.

The interest in Bitcoin has dropped very significantly after the new year and as the prices began to fall, new buyers were were no longer interested and this precipitated a further fall in price, which motivated “hodlers” to start selling. Here’s a quick chart to explain basic market psychology, that has proven true time and time again.


Classic market bubble chart
Classic market bubble chart

And now ask yourself, do you see any similarities between the two charts above! Do you think history is about to repeat itself?

1 Year Bitcoin Chart 1st Feb 2018.
1 Year Bitcoin Chart 1st Feb 2018.

Since its all time high price of $19,909 on 17th December 2017, Bitcoin has lost almost half of its value and now the altcoins are feeling the pain too, with most of them loosing around 30-50% recently. Many new entrants into the crypto market have bought at all time high prices and have suffered devastating losses. Their stories of financial ruin will scare away many new investors and a bear market is now likely to follow. Keep in mind though that this “crypto-bear” won’t last as long as it does in traditional markets.

It’s moments like, when all hope seems lost, and when prices are in what seems like a perpetual free-fall,  that will define you as the investor in the crypto economy. Are you a true believer in the blockchain revolution or did you just come along for the quick buck?

If you are the first, you will see this as a huge opportunity to add to your positions, whereas on the other hand, if you are the latter, you will run like the wind, until the next hype phase comes back. You will of course have missed the big opportunity and will again place yourself in a weak position by buying late.

Remember what Warren Buffett, one of the most successful investors of all time has said:

“Be fearful when others are greedy, and be greedy when others are fearful.“

This is not financial advice. Always do your own research. If you need help with the technical aspects of trading, please don’t hesitate to get in touch. We offer one on one consultations at very competitive rates.

Will Tether burst the Bitcoin bubble?

Teather is unique cryptocurrency, it’s like a bridge between crypto and fiat. The idea behind Tether is for every 1 Tether that exists there is 1 USD to back it up, sitting in reserves somewhere in Tethers bank accounts, always ready to be redeemed at  1:1 ratio.

This makes Tether basically digital cash bypassing financial institutions and regulations, money build for internet is perfect for traders and individuals trading cryptocurrencies, exchanges, and blockchain companies.

So far so good, but here is the tricky part, they started to print a lot of new Teather without proof of US dollar backing it. If in the near future it is found out that the newly printed tether doesn’t have 1:1 USD backup there will be a major problem.

How can this effect Bitcoin and crypto market?

Tether sends minted USDT directly to Bitfinex. While it’s unclear what exact transactions take place with them after, what was observed is that once these USDT enter the Bitfinex exchange, the price of bitcoin jumps, as has happened multiple times recently. That means it’s likely the new tethers are used to buy bitcoin. As demand for bitcoin surges, its price goes up, investors see that and want to get in on it, more bitcoin is bought, and the cycle continues. If there is no real USD backup of Tether these prices are pumped artificially. That means that when people find out about that there will be a massive dump in a price ob bitcoin from 30 – 80% and the whole crypto market will be crashing as well.


Bitfinex and Tether are essentially sister companies with overlapping ownership between the two

It was confirmed via the Paradise Papers — confidential electronic documents relating to offshore investments that were leaked to the public in Nov 2017, that Bitfinex and Tether are essentially sister companies with overlapping ownership between the two.

This confirmed long-held suspicions that a relationship between the two existed because whenever new USDT is printed out it is often sent straight to Bitfinex.

Summary of Tether investigation report

  • Author’s opinion – it is highly unlikely that Tether is growing through any organic business process, rather that they are printing in response to market conditions.
  • Tether printing moves the market appreciably; 48.8% of BTC’s price rise in the period studied occurred in the two-hour periods following the arrival of 91 different Tether grants to the Bitfinex wallet.
  • Bitfinex withdrawal/deposit statistics are unusual and would give rise to further scrutiny in a typical accounting environment.
  • If there is questionable activity, the author believes a 30-80% reduction in BTC price could be forecast.

How to get ahead of the crypto game

If you are new to crypto or just gathering more info to get ahead of the game this article is for you!

First thing first, first you have to gather info, best way is to get on social media like Twitter, Telegram, Facebook, Steem
then go register on forums like BitcoinTalk and Reddit

Follow influencers on Youtube

Read whitepapers of the projects, or at least onepagers (short wersion of WP)

Then you have to evaluate the project, this is my evaluation process:

  • Innovation  1-10
  • Value of the project in real-world use case 1-10
  • Progress of the project / Road map 1-10
  • Buissnies sector (market worth) (needs for the project) (competition) 1-10
  • Price, circulating supply – max supply, 24h volume, market cap 1-10
  • Team 1-10
  • Community 1-10
  • Google search 1-10

Then do the technical analysis when is the right time to enter the market, and remember :

“Be fearful when others are greedy, be greedy when others are fearful”

Do through investigation, this is your money you are putting on the line, and remember only invest money you are willing to lose!

This is not a professional advice, it’s my personal opinion, and I don’t encourage anyone to invest in cryptocurrencies.