August 2018 was one of the worst months for the cryptocurrency market even though Bitcoin hasn’t updated its year-to-date low yet. During bearish trends like this, it is always a great time to invest. Bitcoin, together with the altcoins, including Ripple, Ethereum, Cardano, Stellar and others, had some difficult days starting with August 8. Interestingly, the altcoins started to decline because of negative news related to Bitcoin, which shows the close interconnection between the cryptocoins.
The BTC price pointed down as the US Securities and Exchange Commission (SEC) shows strong opposition against Bitcoin-related exchange-traded funds (ETFs), a type of investment product that gives exposure to Bitcoin and can be traded on stock exchanges. First, the regulator rejected a second proposal for a Bitcoin ETF backed by Winklevoss brothers. Then it moved the decision date to approve another Bitcoin ETF to September 30, which was viewed as negative news. Recently, the SEC rejected nine Bitcoin ETFs proposed by ProShares, Direxion, and GraniteShares. The regulator doesn’t want to make any concessions, putting pressure on the entire crypto industry. The ETF rejections almost triggered a general panics, with Ripple losing 90% of its value since the record high in January 2018 and Ethereum touching its lowest level since September 2017. Again, the SEC has nothing to do with the altcoins, but it shows how connected the cryptocurrencies are.
Bitcoin trading volume is much lower than in December and January when the oldest cryptocurrency touched the record high. It means that there is much room for institutional investors, who might revive the market and contribute to Bitcoin’s next explosion. However, as soon as the SEC doesn’t want to give the green light to Bitcoin ETFs, there are few channels for institutional investors to enter the crypto market. At least they can trade Bitcoin futures on Chicago based CME and CBOE.
As of today, Bitcoin is moving in a sideways trend, showing no signs that it is ready to start a strong bullish trend soon. For retail investors, it means it’s a good time to buy, as they should try to enter the market during the lowest levels possible, and this month came with the right opportunity. However, the point is to buy and hold the currency for longer periods. As for the short-term traders, there is never a right time to buy at all. Despite its high volatility, Bitcoin is not the right instrument to generate profits within a day or a week. Some online exchanges might propose you contracts for differences (CFDs) on Bitcoin, which means you will trade on the price of Bitcoin without directly buying and holding it. These exchanges tend to encourage short-term trading like intraday, but it’s not the right approach.
In the end, whenever there is a strong bearish trend, it should indicate that it is a good time to buy because you get Bitcoin at discount prices. That’s what experienced investors would do.
The bull market will start for sure, but we should wait until the market matures and the SEC and other regulators become more open to it.