It's black Wednesday in crypto
It's carnage in the crypto space today, with bitcoin down $4600 to $38,165. It tried to bottom at $43,000 on Monday and Tuesday but couldn't hold and flushed afterwards.
As I wrote, "keep an eye on bitcoin as it tests the lows from yesterday. Eventually, if you keep on knocking, they let you in."
In typical crypto fashion, bitcoin kicked down the door and tumbled down the stairway.
It's even worse elsewhere in cryptoland where coins jumped from the metaphorical fire escape. +20% declines are typical with ethereum down 22% t o$2690. It's down 44% from last Wednesday. The daily chart is a picture of fortunes won and lost:
China is getting the blame but telling people not to use digital tokens for payment isn't something new.
The lesson in all this is that traders trade. There are no true believers in trading. Follow price and price action, don't fall in and out of love. I liked bitcoin a lot at the start of the year but when Elon bailed, you could see which way the wind was blowing.
If you look at the history of crypto, this isn't over. The peaks are incredible but the drawdowns are fierce. I think (hope?) there's about to be a period of deep self-reflection about utility and that the most-useful coins that are well-structured and energy efficient gain market share. Or maybe there's an even-stupider meme coin to pile into.
I also think there's a broad warning here about speculation and it applies to broader markets. Look for many of the most-speculative assets to slide with bitcoin as a rotation to quality and value continues.