Is this just the latest false hope in a string of disappointments?

Chinese New Year.

Bitcoin prices had hit a new low following the all-time highs in December, and many attributed it, at the time, to Chinese New Year. Many crypto-traders in China had taken their profits and were enjoying holidays. Being such a large part of the Bitcoin community, it made sense that prices would be depressed during this time. Returning from vacation, these traders would boost Bitcoin's price right back to its previously stratospheric levels.

It didn't happen.

Wall Street bonus checks.

I'll admit, I got sucked in to the excitement that built around this event. Looking at the numbers at the time in February, Wall Street traders were due for a large batch of bonus checks, most often spent on luxuries like new cars. The talk at the time was that these new investors might cause an influx of spending in Bitcoin, creating a huge recovery and a pile of new money entering the cryptocurrency market. The end of the Bitcoin rout was in sight, it seemed.

Nope. Barely a green blip on the charts.

Tax Day, April 17.

The latest hope in this series of events is tax day, April 17, when Americans will have withdrawn their crypto gains from past investments (keep in mind, if you invested before November last year, you would still be ahead) to pay the tax bill. Spending can once again resume after these pesky taxes are paid.

The more time I've spent learning about market movements in Bitcoin and cryptocurrency in general, the more I realise I do not know. While I would love for tax day 2018 to be the beginning of a massive rally in crypto markets, I just don't see it being a dramatic turning point. If anything, prices might even become more subdued for a little while as more people cash out to cover their tax bills.

The reason this is so tricky to predict: low liquidity and concentration of wealth in relatively few hands. This just isn't a very large market - and much of its wealth is extremely concentrated, so large buys or sells can move the candles so drastically that prices can go any which way with little justification. More often, it is a sort of self-fulfilling pattern, if anything, with a little bandwagon-jumping that causes movement during events. So while it is likely that there may be a spike in volume and buying on tax day from people who believe it to be the beginning of a long-term rally, it will likely be short-lived.

More importantly, the long term is a little more predictable. In the long term, Bitcoin and cryptocurrencies are on the rise. Growth will continue, and will continue to fluctuate irrationally, but over the span of months and years, this is going in the right direction. Just don't base your bets on any one short term event.

*This is not professional trading advice - it's just my opinion!

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image source:

https://easieraccounting.com/taxes-due-april-17-ready/