Bitcoin price went down together with the stock markets. But will BTC and other cryptocurrencies, altcoins be still correlated with financial markets and what will happen after Bitcoin halving? Chris from MMCrypto answers Coinstelegram team questions!
Hello Guys! Today is the 17th of March and the Bitcoin price is $5288 and now we are here with Chris from MMCrypto. We’re gonna discuss the current market situation. Hi, Сhris, how are you?
Yeah, I’m doing well, thanks for having me. We have panic in the whole world, we escaped to Koh Phangan, Thailand to escape the panic as well, create some content, and be here to follow us, because in Germany it would be simply impossible to work. So thanks for having me, I hope you are well also. I think you are in Moscow, and I hope the panic is not too crazy over there. Let’s talk about Bitcoin.
Yes, we now see this massive crash on all markets: oil, stock and as well cryptocurrency market. Do you think, that such sell-offs are due to coronavirus panic?
Yeah sure. Two weeks ago people blamed it on the sell-off of this Ponzi scheme Plus token and now it’s obvious. I mean the coronavirus has a severe impact on the Bitcoin price, on the crypto prices and of course, primarily on the primary markets, they are on the secondary markets and on the equity markets. And I think we can’t blame it on that, however, this will be not forever. Every virus comes to an end. If we look at the distribution curves of viruses they like an S-curve, they are going parabolic in the beginning and then they are flattening out, especially if we have control over it. But yeah, I would blame it on the coronavirus, however, we have to face the fact that bitcoin is somehow correlated to the stock market, but I think we will come to that point later on. And to answer your question: yes very much. So indeed the coronavirus not only pulls down the stock markets but also the whole economy and Bitcoin.
Actually, before everybody considered Bitcoin as a safe haven, but now we don’t see this. We see that Bitcoin follows the drop in the traditional markets as well. And you mentioned now, that bitcoin is a correlated asset, so can you evolve more, how Bitcoin is correlated with the traditional economy and is it gonna become a self haven in the future?
First of all, I think bitcoin is correlated with the economy, the financial markets are something like a derivative of the economy. So the economy was doing bad already before the financial crisis right now, but we weren’t able to see that in the traditional markets. First of all, I think that we cannot deny that right now Bitcoin is correlated to the financial markets, and it’s positively correlated, so whenever the stock markets are going down now, we see Bitcoin going down and whenever we see small cut balances in the stock markets, we also see a recovery for Bitcoin within the trading days of the traditional markets. This is, of course, not what a Bitcoin believer wants to see and this is something, that we actually also said we didn’t predict it to crash that much. I have to say for sure we did not foresee that coming, we did not foresee Bitcoin crashing below 5500$, we actually thought 5500$ would be already a very-very bad case scenario and everything below has a very small likelihood. This caught us by surprise. But we always said: whenever there is a financial crisis coming, we think that first of all we will see a sell-off of Bitcoin. Yeah, the “safest thing” right now is the US dollar. So we actually expected a sell-off but not that bad. However, I think Bitcoin is not a safe haven for traditional equity, for stock markets, for businesses around the world, it is more a safe haven for fiat currencies. So what we expect in this financial crisis and also economic crisis to happen is that the stock markets, what is already happening right now are crumbling down first, and then we might see something like a deflation, but this will not last as long as in Japan, and then in the second step we see people losing trust when the debt bubble eventually explodes, losing trust in the fiat currency system. And this is actually what bitcoin was made for, this is what bitcoin was designed for. Bitcoin is money and bitcoin is a hedge against the fiat currency system. So whenever we see people losing trust in the US dollar, Euro, Singapore dollar, Swiss franc, and all of that. I think this will be the momentum when Bitcoin truly takes off. We talked about it over an hour on the MMCrypto channel, this might happen even towards the end of the year already, which is bullish for all Bitcoin holders out there if that might come into place.
Yeah, and currently as well the Federal Reserve cuts the interests, how will it influence the economy, how will influence fiat money?
Right now they are trying everything to keep the system alive. We just recently have seen in the United States by the Federal Reserve an interest rate cut from one to one point two five percent, that was the previous rate. Usually, they cut it by a quarter percent, by a maximum of half percent, they cut it by a full percentage point by 100 percentage points by one percent to zero to 0.25. I think it was the biggest rate cut we have ever seen, and this was actually very crazy. I think with this happening and the most important thing is the second step. The first step was the interest rate cut, the second step was actually them require and putting the requirements of depository for banks to 0%. For example, before when a bank had liabilities of a hundred billion, they had to deposit at least five billion or a rate of five percent in their accounts. Right now it is lower to zero percent. So this gives infinite leverage for liabilities and for debt, and whenever this happens, and this happened right now, we don’t have a fractional reserve system, we have a zero reserve system and they have infinite leverage to lend out money. And the impact on that is that first of all they get the money for very cheap because the interest rate is at 0%, and second of all they can do as much as they want because they don’t need any reserves to back that up. This will give a massive-massive blow up on the monetary base, so what we might be seen is just in a massive exponential increase in the monetary base this is M1 in the economy, and this will maybe prop up the asset prices for a very short term, but the exponential curve will be so crazy that this system will collapse much-much sooner than expected. And we actually think this might even happen in 2020. So maybe we see a debt cap bounce and the stock market’s anytime soon, once the coronavirus enters maybe towards the middle of the year. let’s see how it goes. But then eventually the system will collapse, it has to collapse especially with these requirements. And I think this will give the fuel for people losing trust also in the fiat currency system, and for Bitcoin to gain momentum.
What about halving? It’s almost two months away. Do you think it still will be a catalyst for Bitcoin growth and how will this crisis impact halving?
So usually halving has a positive effect on Bitcoin
s price, but we cannot see this positive impact right now. Yeah, this is time for sure hurts every Bitcoin as hard and it most certainly also hit my heart. Because everyone wants to see a front running of the halving, wants to see the Bitcoin price skyrocket. I think it is(halving) the end of April or the beginning of May it is coming a little bit earlier because of the hash rate increasing. Everyone wanted to see the bitcoin price skyrocketing, everyone wanted to see high prices, because this is what happened before. We saw a front running of the halving is selling, the news event, and then the prices skyrocket thereafter. Right now the exogenous risks are coming into place the coronavirus, the economy slowing down or the safe quarantine out there, and I think this is not only pulling down the stock market prices but also the bitcoin price. So the positive impact of future inflation being cut in half. And as everybody knows, Bitcoin halving cuts future inflation of Bitcoin, so lower inflation, of course, works deflationary on the underlying asset, which is Bitcoin and should increase the Bitcoins price towards the inflationary. Right now we see the exact opposite happening. However, I think in the long run so over the next one-two or three years we will still see the positive impact on the halving, but we have to overcome this coronavirus and the fear on the markets because the humans holding stocks, for example, equity and the humans holding Bitcoin are the same persons, and they are scared right now. So, they are selling everything they have, they may buy gold, but even gold plunged down. People are hoarding stuff, people are selling everything they have to put food in their fridges. So we have to overcome this, and I think then in the mid or long run, at least when people lose their trust in the fiat currencies, and this might take another half year, one year, and then we will see also the positive impacts of the halving on the Bitcoin price. As a Bitcoin holder, you have to just lean back, wait a little bit, have some caution. We are here for the long run, and yeah we should remind ourselves on the properties of Bitcoin, so this waiting will be a little bit easier to do to bear.
Yeah, I agree with you. In one of your latest videos, you mentioned that we for the first time saw buy indicator since 2018, so do you think that we have already reached the bottom?
Yeah, what you are referring to is one of our last videos, where we talked about two specific unchained indicators, and they actually hit the same levels, as we saw them at the end of 2018 in November-December 2018, when we were going towards the 3150 US dollar low. And this was the one thing was the net unrealized profit and loss, it is an on-chain indicator directly pulled from the Bitcoin blockchain, and this one showed severely oversold levels for Bitcoin. However, this does not mean that we are not going lower, this means that we are already at massively oversold prices. So, in the long run, this indicator points
towards the fact that if you buy Bitcoin right now, within the next few years you will see outsized returns. Because what you are doing when you are bid to buying bitcoin right now is you are buying the fear. It does not mean that in one week-two weeks we are maybe at 3,000(price), this is possible, I`m talking about the long term. This net unrealized profit and loss ratio actually shows massively oversold prices, it shows extreme amounts of fear. And the second one was the spent ultra profit ratio for long term holders. So this one shows right now that even the long term holders on average right now holding and trading in a loss, which is also “bullish” for the long term, even though it sounds a little bit paradox it is “bullish” for the long term. Because right now it means that not only the short term holders but also the long term bitcoin holders are trading and holding in a loss. And what we said in that video is that the market overall is designed to take the most amount of money from the most amount of people most of the time. And this is actually what is happening right now: most of the people right now have already lost their money. And this specific indicator is pointing towards exactly that effect. So, in the long run, these prices are extremely cheap for Bitcoin when it comes to our own personal opinion, and this is why we said it flashed by the indicator. It’s not for the immediate short-term, it’s for the long-term.
And what is your price prediction for Bitcoin, what price can we expect this year?
As I`ve already said, we didn’t expect that plunge, and we had a higher price prediction before because we saw actually the financial market scrambling towards the end of the year. Right now it’s happening earlier because we did not foresee this virus coming and this virus most certainly acts as a trigger. Yeah, it let the financial crisis happening earlier than expected a little bit earlier than expected. So we have to decrease our price targets and we have actually two scenarios. We have a bearish scenario, if this virus weakens, then we can see even lower prices than we are seeing right now in the immediate short-term, and also in the short mid-run. However, if we are able to close above the 200-week moving average, which is currently located at 5500 US dollars within this week or the next week, this would be actually bullish. Because we never saw Bitcoin closing below and now in the last week, we saw a bitcoin closing below. However, it only closes below one or two weeks, we consider that being fine and not necessarily breaking the key market structure, because it’s only a week break down. If we see Bitcoin within the immediate short-term closing above the 5500 US dollar level, and holding above, the bullish scenario could come into place, and in this case, our best-case scenario would actually be 14 000 US dollars. But please, guys, don’t buy Bitcoin just because I said that. We have to see some things happening, we have to see Bitcoin closing above, we have to see Bitcoin actually decoupling a little bit off the financial markets fear, and we have to see people losing trust into the fiat currencies for these prices to come into place.
Let’s see and let’s take these opportunities during the crisis. Thank you for the interview, Chris!
Sure. Guys, be greedy when others are fearful, and be fearful when others are greedy. Right now everyone is fearful and may keep that in mind for the long run. Thanks for having me, bye-bye!
Watch our video interview: https://youtu.be/SqNhWFMUt_0