NEW TOWN, EDINBURGH – Crypto crunch? It may as well be a breakfast cereal – for I’ve tasted it many a time. The carnage which has beset the crypto market over the past week has set the press screeching – but for anybody familiar with the space, washouts such as these are just par for the course.
The question is, what happens next? I’ll be sharing my own thoughts on this later in the week, but before I do, I thought it’d be best if you heard from the Southbank Investment Research editor who is closest to this particular coal face – Sam Volkering, who runs our Crypto Profits Extreme advisory service…
Welcome to the wild west
By Sam Volkering
Around this time two weeks ago, bitcoin was trading at around $59,000. Then, this time last week it was around $44,000. That’s already a sizeable decline… but more was to come.
By Wednesday 19 May, bitcoin had slumped to around $34,000. There were some exchanges reporting that bitcoin had touched $30,000!
At the time of writing, bitcoin is 43.1% down from its all-time high of $64,863 just over a month ago.
This is a major crunch for the crypto market. It is not just an arbitrary 10% swing that we often see, but a full-blown, eye-watering, punch-to-the-gut crunch in bitcoin’s price in terms of the most widely used fiat currency (i.e. the US dollar).
Now I’m referencing bitcoin here mainly because it’s the leader (still) for most of the crypto market. While I talk about bitcoin, and when you look out across the board at everything else, you see the same kind of price crunch.
There have been 30%, 40% and 50% falls in the space of a week. It’s terrifying. Even for me, with over a decade of experience, it’s still nasty to see.
However, and this is the most important thing I’m going to explain to you today, it’s okay.
Sure, you don’t want to see your portfolio value ripped in half on paper. But at the same time now is not the time to test “paper hands” which means panicking and selling out of your positions for a big loss.
As I said at the top, now is the time to polish your “diamond hands” which means the strength of your ability to hold your mettle and your positions through a very challenging time.
These sorts of swings are very similar to those that I’ve seen time and time again in this market. For the last decade this has been a feature of the crypto markets.
These big swings often mean a shakeout of junk crypto that’s clogging up the crypto networks – the “poocoins”, as they’re often referred to. There’s literally even a site that tracks many of these “poocoins”, which you can see here.
These tend to be crypto that are no more than a copy and paste of an existing established crypto. They’re rebranded, often with a silly name, based off a meme or slang, like CHAD or Dogelon Mars. They’re actively pumped on social media, all the while suckering in people who have no idea they’re really about to get dumped on.
On some networks like Ethereum the rise of these junk poocoins can also drive transaction fees astronomically high, as I say, literally clogging the operation of the network.
Crashes like these can clean out this junk. People get burnt on the way down and out.
But that‘s why you’re here to avoid that kind of junk.
These crashes also see the liquidation of a lot of leveraged positions – where people have actually borrowed to buy crypto. What you should know is that I never advocate using leverage (debt) in crypto markets.
In my view if you want to survive this market long term, don’t borrow, don’t use credit cards, don’t use any form of leverage. You don’t need to and often when action like this happens, you can get “rekt” being overleveraged.
However, because there is so much leverage in the market, by traders, punters and what’s known in crypto as “degen” gamblers, market crashes like this can wipe out a lot of those positions in an instant.
It’s estimated this crash wiped out $8 billion worth of leveraged positions. Which is exactly why I don’t recommend using leverage.
Yet for all of this, I believe this “crash” has been no more than a correction, a shakeout, a goodbye to the “paper hands”. While the fiat money-converted prices may be lower, the innovation and development doesn’t stop in the crypto world.
In fact, it won’t stop.
That’s why you need to widen your vision, look up and beyond the volatility of the last week to the bigger themes in play.
You will find people pointing to Elon Musk, China, and the US Treasury in searching for reasons as to why this all happened in the last week.
To tell you the truth, it could be that all of those things had a role to play. It could be that none of those things mattered.
This is just what happens in this market, and why, no one really knows. It’s a feature of a market that’s still experimental, still early stage and still trying to figure out its position and value in the world.
That means volatility or, more precisely, sharp swings in prices that are denominated in fiat currencies. It means uncertainty and fear. However, it also brings immense opportunity.
At a time like this, it is the opportunity at which you should be looking. And it’s there, in the opportunity that swings like this present where I think you should be looking.
You should be seeing these moments as a chance to accumulate or to add to your portfolio. That is to say: a chance to continue to build your crypto wealth.
I do not say this flippantly. There are still great risks here for all the reasons I’ve just mentioned.
However, my view hasn’t wavered on the potential of the crypto revolution in over a decade.
The events of the last week haven’t changed and aren’t going to change that.
They’ve been laughing at me for a long time
My long-term view on the crypto markets hasn’t changed over the last week for a good reason. I’ve been here before. Many times.
And along the way, every time these kinds of wild swings hit the market, I have maintained my view, and yet I continue to be ridiculed for it.
In fact, I’ve lost track of the number of times I’ve been laughed at and criticised for my views on crypto.
Within the last week, I even had someone refer to me as providing “snake oil advice re: crypto”.
When I get this, I just take a deep breath and remember the following…
In 2013 I wrote to my subscribers,
Digital currencies have arrived. Their growth is unstoppable. And their impact on the world’s monetary system will be revolutionary.
I went on to also say,
The way I see it is that bitcoins will serve as a new “reserve currency”. In a similar way that US dollars and gold do now.
And I then predicted Facebook would develop its own digital currency. Which that company is now doing.
Bitcoin was trading around $105 when I wrote this in 2013 and people thought I was crazy.
And in February 2014, when I was a guest on the Rick Amato Show on US TV to talk about bitcoin. The host Rick Amato described bitcoin as,
“It sounds like a bunch of bored high school kids who are very smart, trying to have a good time with something.”
They also surprise attacked me with a guest – software entrepreneur, and “tech expert” Andrew Blount. They did this because he wasn’t a fan of bitcoin either. His sage words were,
“[Bitcoin] started out as a scam. It has run its course as a scam. And it’s going to end as a scam.”
They then laughed at it (and me) and compared bitcoin to “bubble-gum wrappers”.
Bitcoin was trading at around $600 at the time.
And then, in October 2016, I wrote to my subscribers again explaining, “How to profit when digital gold [Bitcoin] hits US$50,000”.
When the world is on the brink of financial collapse, it’s not gold, not currency, not even stocks that really flies. It’s bitcoin.
And then said,
… bitcoin could soar from US$639 now to $49,618, another 7,765% return. I wouldn’t be surprised to see it top US$50,000 for just one single bitcoin.
I repeated this $50,000 prediction in 2017 in the original version of my book, Crypto Revolution: Bitcoin, Cryptocurrency and the Future of Money. And it stayed in there again when we updated the book in 2019.
Then, on 18 March 2020, as bitcoin was crunched 50% (again) to a “low” of around $5,300, I sent an urgent alert to my subscribers in Crypto Profits Extreme telling them to, “halt on all action… except bitcoin”.
Then on 3 December 2020, as bitcoin was now around $18,000, the Financial Times (FT) wrote a piece where it said,
To be completely frank, we have never heard of [Sam Volkering], but it turns out he has written a book called Crypto Revolution.
The FT went on to say about my book,
You know when you do a £5 Secret Santa with colleagues and you end up getting someone you secretly don’t like very much? You’re welcome.
That pretty much summarises my entire career in the crypto world, which now extends over a decade – I’ve been laughed at, ridiculed, and made fun of for my views and advice on the future of bitcoin and cryptos.
Whether I’m presenting to a crowd of 1,000 people or simply tweeting about my views on it all, someone always tries to take me down.
I present you these facts to let you make your own judgement as to whether to laugh at me or listen to me.
I have repeatedly said through all the ups and downs – including all the higher highs and lower lows – that we sit on the brink of the biggest fundamental revolution in human history.
That revolution means that, right now, you have a chance to build generational wealth for you and your family over the next century and beyond.
When you see wild volatility in the market, just like we’ve experienced over the last few weeks, it is not a time to panic. It is a time to look for opportunity in a long-term view about a fundamental change to the world.
I don’t shy away from the fact this can be a terrifying, scary market.
But I’ve seen it all and have never wavered from my view on the potential it holds.
Don’t be scared. Don’t buy into the misinformation. Don’t leverage, borrow or use debt to fund your investments in this market as I explained earlier.
Act smart, listen to sage advice, and remember the long view of the crypto revolution.
Amen to that!
All the best,
Editor, Capital & Conflict
Category: Investing in Bitcoin