Historically for crypto, September is by far the worst month of the year, as noted four weeks back: “A Good Argument to Sell, Then Buy Right Back.”
Right on schedule, everything tanked:
Bitcoin is flirting with $10k, after starting the month at $12,000.
Ethereum has gone from a high of $470 down to low $300s.
And finally, the folks over at Messari produced this spaghetti-sauce chart of Defi tokens:
But of course, there is nothing new under the sun. Check out this chart on bitcoin from 2017:
|And the chart of Ethereum: same time frame (the price of both cryptos currencies are the green line):|
We all know what happened in November and December of 2017: Bitcoin boomed to nearly $20K, and Ethereum broke the $1000 barrier.
This September correction is not exactly a surprise.
Prediction for the (Near) Future
First, we should state the obvious:
The market hates uncertainty. And two things are uncertain.
One is COVID. The smart money thought by now that the epidemic would be winding down. But it is not. Ergo, fear has crept back into the market. Fear of the unknown.
No vaccine on the horizon. No flattening of the curve (not yet at least). Everything sucks again.
Secondly, the upcoming US election: It is going to be close. Real close.
Sure, the polls say Biden has a huge lead but so what, the polls said that about Hillary Clinton in 2016.
The market does not trust the polls.
If there is a decisive winner in November, then great, market rally. But if we get another 2001 Bush-Gore election-tally-dumpster fire, lookout.
There might be a Santa Clause rally after the fuss about the election has died down. Maybe.
But I think sometime in 2021, earlier than later, there’s going to be another massive multi-trillion-dollar bailout by the US Federal Reserve because…. why not?
And another bull run in gold and crypto will begin.
Having said that, I still didn’t sell any Bitcoin or Ethereum. I gave up trying to time the market on crypto years ago. I’m not planning to buy anymore sooner.
But I did sell most of the free-trading gold stocks in my portfolio, locking in profits. I had a great summer.
I may buy some Defi tokens in the next month or so. More on that later.