OMG…Another Bitcoin Correction!
It’s simply not realistic for the price of BTC to continuously increase at such a rapid rate.
This past Monday, we experienced another plunge in the price of Bitcoin, dropping down to a little over $30k. At Celsius, we don’t trade Bitcoin or take market positions, but we’re always ready for any kind of market movement and volatility as we manage risk for the loans we issue, so we provide notices and share information we have to warn and protect our community. Take a look at what we did in the past few weeks:
1. We warned the community a correction is coming (multiple times) and suggested they lower their exposure and pay down debt.
2. We lowered the Loan-to-Value ratios (against our own best interests) to protect borrowers and the community from taking on too much leverage while others used the runup to provide record incentives for users to borrow on margin.
3. We made sure we timed our market buys (We have to buy CEL and other coins to pay interest) to minimize the impact price of CEL token on the community during the flash crash.
Before this correction, I had been predicting a significant price drop. Last week when Bitcoin was topping $40k, I told CNN that prices could plunge even further than 25%. After experiencing a year where BTC was up over 300%, it’s simply not realistic for the price of BTC to continuously increase at such a rapid rate. While I own BTC and see it going over $50k later this year, it was important to voice concerns and warn others.
Why Did We Expect This Correction?
As I told Cointelegraph this week, Bitcoin is going through a transition in the type of investors holding it. We see the traders and short-term speculators depart and sell their coins to a growing group of long-term corporate buyers and institutions who plan to HODL and continue earning yield on their BTC (BEST EXAMPLE: Celsian fast growing Community of over 341,000 users).
There is a major adoption taking place on the institutional level. As we mentioned in our previous column, Bitcoin is simply too big to ignore! That’s why many banks like Goldman & JP Morgan, who initially saw Bitcoin as an “enemy,” are changing their tune and now proactively predicting and hoping for higher price points. They would not recommend Bitcoin at $5,000, but they “must” recommend it at $35,000 because they see higher and higher redemptions going into an asset class they do not offer or support.
Where Does This Leave Us?
With USD continuing to plunge to new lows and banks continuing to offer interest income close to zero to its customers, we will see dollars migrate into assets that offer protection from monetary inflation (gold & other commodities as well as real estate) and assets that offer high yield like stable coins and staking coins.
The US economy is going through a digital transformation which will result in many old guard zombie companies and a prolonged recession.
I continue to see Bitcoin as our greatest protection against the USD’s debasement and a source of yield and our doomsday insurance policy against the continuous money printing and zero rates.
In conclusion, the world’s savviest investors are betting on Bitcoin long-term, so should you. The strategy I use is to invest a little bit into Bitcoin every month instead of trying to time the market to find entry or exit levels.
And then, just like every other Celsian, I sit back and enjoy the additional 6.2% APY yield we earn at www.celsius.network for being the best HODLers community in all of Crypto.
Last year I was off by ONE DAY on my BTC price predictions. Listen to my 2021 BTC price predictions in my AMA: Celsius AMA January 22th 2021