“All the hyps and all the speculation are pulling small investors into the market before the mother of all the crashes happens.” These words are not from anyone but from a real investment legend. Hedge treasurer Michael Burry, who became known through the Hollywood movie “The Big Short,” warns his followers of the dangers of the encryption market via tweet. Soon after, however, the message was gone again and with it the entire profile.

The background to the warning was psychological analysis private investor. If they panic or suffer from impatience, the selling pressure increases for the entire industry and over time dissolves to a trillion in market value. In the meantime, we have become accustomed to a certain variation in digital currencies.

3 justifications for further price declines

Lists now Wirtschaftswoche three reasons for encryption crash and against it. These are the reasons for the further fall in prices:

  1. Cryptocurrencies have been among the main support signs
  2. States are increasingly active in the fight against digital currencies
  3. Institutional investors are scared.

In fact, Bitcoin, the great flagship leader of all virtual currencies, has recently suffered severe losses and a psychological limit of $ 30,000. Purely technically, many investors are likely to have put stop-loss signs on this, which will now trigger and thus increase selling pressure. Often one comes here Momentum’s strategy for use.

The losses were not coincidences. Another bad news from China, which closed entire mining facilities, only shook the market. This is likely to have an impact on institutional investors, who feel great uncertainty in the market after a long period of growth.

3 arguments for rising prices

But the other side also has its arguments. So the Wirtschaftswoche also mentions three processes to return to higher prices:

  1. Encryption has never been so easy
  2. Legalization and legalization are immediate
  3. Cryptocurrencies are still a good investment option for traditional assets

Meanwhile, digital currencies have indeed gained so much popularity that increased competition has significantly improved the availability of individual coins. You no longer need to be a technical expert to set up your wallet. In addition, there are all kinds of state supporters who do not support the Chinese course. Recently, news came from El Salvador, which BTC now recognizes as an official payment method. Especially in smaller countries it is often agreed. If cryptocurrencies do prove to be a hedge against inflation, it could also become a long-term one Reversing the trend Come.

Photo by Conor Samuel

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