The crypto winter of 2018

There may be a silver lining to the long, cold crypto winter of 2018.

The probability of another (worse) Global Financial Crisis is increasing. In the last crisis the price of the safe harbour asset, Gold, initially fell with all other asset prices.

This was due to a liquidity squeeze,. The price soon rebounded and went on to all-time highs. In addition to gold, we now also have bitcoin as a safe harbour.

In the lead up to the GFC, gold had been in a bull market which made it the only source of liquidity for many investors. In the age of HODL, it could be argued that BTC may be the only real source of liquidity for many people when the next GFC hits.

But the popping of the crypto bubble and subsequent >80% price decline means that a lot of the weak hands have left the market. And with it, a lot of potential selling pressure.

Whilst there may be a slight drop in the price of #BTC at the start of the next GFC we don’t expect it to be as significant as the drop in gold was. We also expect that the rebound may be much better than gold’s subsequent 200% rise.

Leave a Reply

Your email address will not be published. Required fields are marked *