Bitcoin: The Big Short Is Already Here And It Could Get Far Worse

Summary

While some retail investors are taking out mortgages to buy Bitcoin many institutional market participants are stacking up massive bets against the digital asset.

Traditionally this trading dynamic doesn't work out so well for the little guys.

Bitcoin's crashing market share, and its continued functionality issues are adding to the uncertainty regarding short-term price action.

Governments' continued crackdown on Bitcoin and its ecosystem are causing anxiety in the digital asset world and pose a risk of inducing a price collapse.

Although I am constructive on Bitcoin long-term, mounting fundamental factors, coupled with a troubling technical setup are likely to put pressure on prices in the short term.

Source: theatlantic.com

Bitcoin (COIN) has had an incredible rollercoaster ride over the past year. Prices have fluctuated wildly from about $800 to nearly $20,000 per coin. However, over the last month Bitcoin has been trapped in a trading range, as the digital asset has been consolidating since hitting an all-time high in mid-December. Bitcoin attempted a breakout in recent days but was denied at a crucial resistance level, $17,000, not exactly a positive development from a technical standpoint. Moreover, several troubling fundamental elements appear to be materializing concerning Bitcoin. Thus, deteriorating technical factors, coupled with weakening underlying fundamental elements, are likely to put increasing pressure on Bitcoin’s price over the short term.

My Personal View on Bitcoin

I am a strong believer in Bitcoin and its Blockchain long term. The decentralized aspect of Bitcoin, its popularity, and its potential multiuse function as a digital commodity, a form of global currency, as well as a digital store of value are extremely appealing from a long-term investment point of view. However, widespread adoption of Bitcoin as a credible alternative form of currency with the potential to challenge the current fiat monetary system remains far in the future. 

Therefore, Bitcoin’s rise to a multitrillion dollar market cap is not going to be a smooth ride up on an elevator. There will be peaks and troughs, ups and downs, huge rallies as well as big shorts. So, while I am a believer in Bitcoin long term and see the price going much higher in the years ahead, I cannot ignore the immediate evidence that suggests Bitcoin could fall further over the short term.

Source: https://seekingalpha.com