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October 16, 2018

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Winter is coming- to Hold or not to Hodl

The often predicted correction that stops Crypto’s wild ride with a crash that wipes out half the market, might be closer than we think. In a report by CNBC today, it was stated that there’s a logical chance that up to 90 percent of the Cryptocurrency market’s value could be wiped out in a year.

 

The idea and the rationale for this came from an investment bank called GP Bullhound’s report titled, “Token Frenzy: The fuel of the blockchain.” 

 

The mention of this correction is quick and couched between predictions related to good times to come in the Crypto-space, at the tail-end of the report. Just after declaring that such a large correction in the market is essentially inevitable, the bank moves on to add that the losses of most of the market will lead to exponential growth for the remaining firms. 

 

In addition to its optimistic conclusions, almost the entire body of the report consists of optimistic predictions. For example, Joseph Lubin from Consensys and Prof. Emin Gün Sirer, a Blockchain researcher from Cornell University, offer up their industry experience related to Ethereum and public vs. private blockchains. In addition to this, known-figures like Tatu Kärki, the communications lead from the Aragon project, talks about the importance of governance in the Blockchain space. 

 

With the involvement of these three as well as other industry insiders taking up the bulk of the report, it appears less like an impartial audit of the current state of the industry and more like an industry-approved set of predictions on the future of the Blockchain.

 

In the end, the summary leaves out the rationale for said market crash, but it does appear that CNBC interviewed Sebastian Markowsky, the lead author of the report, to clear this issue up.

 

In short, Markowsky reportedly said that the beginning of the troubling times for the market will be when institutional investors come in full-force, later this year and drive the prices up in a way that we have never seen before.

 

Following this, buying will occur at all-time highs when people see trusted investors showing confidence in the crypto market. Effectively, this will be yet another instance of massive buying in a short amount of time, simply due to fear of missing out.

 

Markowsky then adds that the market will experience a flurry of selling in response to this, which will lead to the previously mentioned crash. After this, he simply states that exponential growth will begin again.

 

All in all, Markowsky and GP Bullhound’s report leaves a lot of questions unanswered. Are there any more logical explanations as to when and how these rapid periods of buying and selling will occur?  Is there any privileged information that GP Bullhound has on any of these subjects that the average investor is not yet privy to? Is this all simply wild speculation? 

 

As the year goes on, keep your finger on the pulse of this prediction. It remains to be seen whether it will happen like GP Bullhound claims it will or whether a crash will occur at all. The only point that can be said with a relatively high level of certainty is that the market has a history of volatility. Therefore, taking a second look at your portfolio and making rational adjustments might not be a bad idea at this point. 

 

 

 

By: BGN Editorial Staff

 

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