Update On Financial Markets And Bitcoin

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Bitcoin and the financial markets situation

Just after writing about a possible financial crisis, triggered by Bitcoin, the markets around the world dropped and the Bitcoin price finally stabilized at 40% of its all-time height.

What a drop!

Thoughts about the current market

Observing different factors during the price drop of all Cryptocurrencies I came to the conclusion, that the market capitalization of the Cryptocurrencies market was still not big enough to make the current bubble at the financial markets burst.

We still don't know, what exactly triggered the market correction of last week, but it looks like, this can be associated to the outlook of rising interest rates in the US after a long period of cheap money.

After the financial crisis, we have built an economy based on cheap money through low interest rates and the federal reserve and central banks printing cash to stabilize the economy. All stock market indices rose and the economy is just at a point where employment got stabilized.

A correction of the stock markets was overdue but what we currently see is not the crisis I was talking about in the other article!

In the modern financial markets, a drop of 3-4% triggers system traders like Quant Funds to act aggressively on their own but it looks like if they calmed down again and adjusted.

Overheated markets and volatility

Watching the current development I think we have seen a correction to an overheated market, but the economy as such seems to be running fine. I can not see a big bubble or a fraud, able to trigger a real crisis and initiate a strong bear market.

Even so, it looks like investors woke up and will act more carefully over the next time and I think, we might see quite a lot of volatility.

Concerning Bitcoin and the Cryptocurrencies I now think, we will see another big rise over the next several months and we might get to 1 Trillion USD market capitalization of the Cryptocurrencies.
There might be less ICO's due to the fact that mainly Venture Capital investors will be more cautious about investing in anything, based on blockchain but I think, there might be blockchain products in other sectors (contracts, commodities) being established.

This does not change my point of view concerning the blockchain and I will provide another perspective on this issue in a next article.

Getting to the size of 1 Trillion USD for all Cryptocurrencies will then be a significant market share. At the time the industry built around the blockchain technology will be even bigger.
Some of the Crypto fans and so called experts think of this new speculation vehicle as Punk-Rock but if the lights get switched off we will be in the next recession and taxes will have to cover the disaster ...

If you like to speculate, now it looks like a good moment to buy Crypto like Bitcoin Cash. Do whatever you have to do. I will not buy hot air.

Another Scenario - Market Crash

In another scenario, if stock markets crash now, while Crypto did not crash yet, I think, many investors would see Crypto as a safe place to invest together with the more conservative gold investment, while equities and bonds seem to be highly risky in such a market.

This would possibly drive the Crypto market to another, even more dangerous level ...

Agree - Disagree?

Leave a comment below about what you think about the current market turbulence and the outlook for our economy.

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