Bitcoin’s recent price crashed from ~$4900+ to $3300 over the course of the week sets up a nice entry point for buyers and here’s why.
China’s ICO Ban Not Fundamentally Negative
China’s ban on Initial Coin Offerings (ICOs) does not negatively impact Bitcoin fundamentally. Unlike Ethereum, Bitcoin’s price is not propped up by the ICO craze. In fact, it was not only inevitable but probably a good thing given the number of ICO scams that exist these days.
China Exchange Ban
The price of Bitcoin slide further today when BTCC announced that they will be suspending trading at the end of the month confirming rumors of China’s exchange ban. The ban on Bitcoin exchanges would indeed be set-back to Bitcoin. With that said, we are likely in oversold territory and there is a good chance that the price will bounce back from current prices ($3300) pretty soon.
Furthermore, it’s unlikely it to be a permanent ban even though it may seem so at the moment. It wouldn’t make sense for regulators to permanently ban exchanges as this would make regulation of crypto currencies even more difficult as people move into OTC markets. My prediction is that the ban is temporary, and either followed by stricter rules or replaced by a state controlled exchange.
Long-term Fundamental Trend is still Positive
Finally, the recent China ICO ban and rumors of a crypto trading ban in China has overshadowed other positive developments. But if you were paying attention though you would have noticed positive Bitcoin tidbits during the week as well.
- Russian Finance Minster embracing crypto currency
- Reports of Russia’s plan to subsidizes domestic miners
- Chiasso (Swiss Municipal) to be accepting Bitcoins for tax payment
I believe the trend for government acceptance is only the beginning for crypto. We’ll see a lot more countries moving to legalize and regulate crypto currencies within the next 2 years. And although not everyone may like greater regulation, it’s will help take Bitcoin and crypto currencies mainstream.
For these reasons, I am a buyer at current levels (~$3300) and see significant value in the risk to reward ratio at current prices.
Disclosure: I am long Bitcoin. I am financial advisor and this article merely expresses my own opinions.
Update: China’s restriction on exchange trading may shake the crypto markets. Tighter restrictions or ban on exchanges are seeming increasingly more likely. I would be looking to enter larger position on back of any sizable price drops. I remain positive on Bitcoin’s long-term outlook. – (Sept 13, 2017)
Update 2: Article has been updated once again. I had suggested taking an initial position @ ~$4200/per BTC on (Sept 12) and adding to the position if the price were to slide further. Today was the day I bought in the rest of my crypto position. Momentum could drive the Bitcoin price down to $3,000 but I do not see it breaking that level. Negative news have largely exhausted for now. – (Sept 14, 2017)