Hi folks,

Last couple of days we have witnessed quite a huge correction. Bitcoin drop in prices by nearly 50% and it’s all over the news. There have been massive media coverage on whether has the bitcoin bubble burst. The answer is NO

My views:

There is no need for panic, the correction has bottomed last night when bitcoin was around USD9.5k and if you have not sold off earlier when bitcoin peaked during end Dec17, there is no reason to sell at prices between USD10k-12k.

This could possibly be one of the lowest price points of bitcoin for the next few months and is a very attractive entry point. The reasons are as follow:

There are many people who have missed out on the bitcoin bull run in FY2017 and are eager to get in. Corrections like these are ideal for new investors to enter the market. In fact many are queuing to get bitcoin for below USD10k yesterday. In my view for the next few months there is strong support for bitcoin at USD10k due to new buyers entering the market.

Bitcoin has survived rounds of negative news and has stayed resilient as ever. Government regulations and clampdowns on bitcoin is not new . In Jan17, China crack down on bitcoin to control capital outflows. In Sep17, Jamie Dimon called bitcoin a fraud coupled with ICO ban in China and Korea. In Nov17, Vietnam ban bitcoin and other crypto payments. Governmental clampdowns has historically been one of the biggest risks to digital currencies but despite tough measures from even the biggest countries like China, it merely cause a notable correction but insufficient to burst the bubble.

Price rise over the last 3 months from Nov-Jan is astronomically, in fact the total coinmarketcap rose 5 times from USD160bn to USD800bn. The lowest yesterday was around USD410bn. Notwithstanding, even at this valuation if we have considered the previous 3 months price rise that is still ~2.5x over a quarter. In view of such astronomical hike, a sharp correction is expected.

Trading recommendations

1. Bitcoin and digital currencies prices would continue to rise for the next few months albeit at a slower pace. The reason being post the huge correction over last few days. Investors have grown to be more wary and cautious and would likely take some profit.

2. Now is the time to hold and add some positions to altcoins especially platform coins (possibly: platform currencies Ethereum, Stellar and NEO). Many investors are likely to buy these coins with aim to participate in ICOs, in view that bitcoin marketcap is nearly USD200bn and there is limited room for 3-4 times increase. Platform coins are expected to rise faster than bitcoin during the next few months of slow recovery but investors need to beware of pump and dump schemes especially for lower cap altcoins.

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