Bitcoin Update - March 25, 2020

What a difference a week makes.

After dropping below $4,000, bitcoin’s price went as high as $7,000 before settling down. It sits as $6,600 as I write this update.

I expect the price will drop down to that 200-week moving average again. As I write, that price is about $5,550, though it will go up as time moves on.

Two reasons to expect a sell-off:

1. Prices usually don’t go straight up, they almost always “retest” an earlier price level. Most people consider this a healthy action. Retests correlate strongly with nice, long, extended bull runs. They confirm that weak holders have a chance to panic-sell. Once you get rid of those sellers, you create a strong foundation to move up.

2. Miners will want to get one last chance at fiat. While many probably already dumped during that big crash a few weeks ago, I suspect at least a few will try to squeeze out a little extra cash before their rewards get cut in half, or even shortly after. Many miners need local currency, not bitcoin, to pay for workers, services, and equipment, and they may worry if they wait, they will miss out on their “last best chance” to bolster their reserves.

No predictions. Just be prepared and don’t panic if we get that drop. I keep my eyes on the data and network activity. I’ll let you know if things start to deteriorate. As long as metrics like HODL patterns and aSOPR show strength, and that price level holds, we’re all good. That’s where we’re at right now and that’s what we saw with this most recent dip.

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Don’t Forget the Little Things . . .

In other news, U.S. regulators clarified some technical details about how custodians deliver bitcoin to customers. While this means nothing for the price of bitcoin, it clears up some operational issues for businesses trying to serve large investors and institutional bitcoin HODLers. These businesses play an important role in bitcoin’s adoption as an investment asset, so any regulatory clarity is a good thing for them (and, by extension, bitcoin).

Here’s the press release: https://www.cftc.gov/PressRoom/SpeechesTestimony/tarbertstatement032420a?utm_source=govdelivery

To all the Armchair Epidemiologists

Last, I want to address another narrative I see circulating among the cryptosphere, namely, that we need to all get back to work and let Coronavirus take its course.

Here’s the problem with that approach.

Coronavirus is not a type of flu. It’s not even related to the flu. It’s a version of the common cold, the same disease your average person gets twice each year, on average. Almost everybody on earth will get this Coronavirus. For most people, it’s actually milder than a cold—many don’t even show symptoms.

Why the fuss?

Because unlike the common cold, Coronavirus sometimes attacks the lower respiratory tract. When this happens, your body starts to suffocate. Sometimes, the virus spreads to organs around your lungs, causing catastrophic failure (mostly from your body’s immune response going haywire).

While only a small percentage of people get this reaction, the raw number is potentially massive. And it grows exponentially with every human contact.

What’s one percent of 7 billion people? 70 million, all getting sick within a few weeks, perhaps a few months of each other.

Look at Wuhan. Italy, Spain, Iran, and the U.S. have just started getting a taste of the carnage—despite extraordinary (but late) measures authorities have taken to reduce the spread of the disease. They can’t keep up. It’s a medical horror show, with people dying on the hospital floors and bodies piling up in morgues.

If we all go back to our normal business, imagine how much worse it will be. Many millions more people will suffer life-threatening complications within months, possibly weeks. Our hospitals and morgues will be overrun. Crucial workers will fall sick, leaving our security, supply chain, transportation, and manufacturing industries understaffed.

People complain about canceled flights. Do you want your flight canceled because humanity is fighting against pandemic disease or because your pilot is too sick to fly (or dead)?

For the “herd immunity” crowd, do you really think our economy will recover more quickly when our most experienced, knowledgeable workers and business leaders are dead or hospitalized? When entire industries are shocked and disrupted for weeks, maybe months?

Do you think that “normalcy” will not hurt the economy just as much as telework and social distancing?

Right now, many people can work productively from home or isolated settings. Those who need to work in close contact with other humans can still do so. With every interaction we don’t have, we reduce the spread of the virus exponentially. As a result, people who get sick will have a chance to get life-saving treatment from doctors who have enough supplies and equipment to treat them.

It sucks that so many people are losing their jobs. It’s shitty as all hell. Governments are doing the best they can to weather the storm, at the risk of creating new problems. It seems like there’s no end game, but until the rate of infection tapers off, we need to stop spreading the disease while ramping up the production of medical equipment, therapeutics, and vaccines. We can’t go back in time and fix the mistakes that got us to this point, we can only deal with the present and persevere.

It all sucks but consider the alternative—economic havoc, mass hysteria, and widespread human suffering, all at once. There are no good options.

Things will get worse before they get better. Bitcoin will be ok. Maybe the moonshot will get delayed, maybe not. Maybe the price crashes again, maybe it goes full FOMO.

If there’s anything to NOT worry about right now, it’s crypto. As long as bitcoin stays above $5,550, everything should be ok. If it goes lower, we have a plan for that, too.

Take care of yourself and your family. Worry about your loved ones. We’re all in this together.

As far as bitcoin goes, relax and enjoy the ride.