Ouch!
That’s what cryptocurrency investors were saying on Tuesday, when Bitcoin plunged from $52,000 to $43,000 in a matter of hours and took the whole crypto market lower with it.
One of my crypto analysts immediately messaged our Slack channel and simply said: “Flash crash!”
My immediate next message? “Buying opportunity!”
In the grand scheme of things, the Tuesday “flash crash” in cryptocurrencies is a silly, sentiment-driven sell-off that will pass very quickly. When it does, cryptocurrencies are going to rebound to fresh all-time highs on the back of relentlessly strong adoption trends.
So, don’t overthink things here. Buy the dip. Wait out the storm. Score huge gains over the next 12 months.
It’s that simple.
Here’s the story…
El Salvador announced months ago that it was going to make Bitcoin legal tender. The law in El Salvador was set to go into effect at 5 p.m. Eastern on Tuesday. That is something that had been known for weeks, the date of which assuredly was saved in crypto enthusiasts’ calendars for a long, long time.
Ahead of that official law signing, a large Brazilian Reddit community with more than 3 million users hatched a plan to get all its users to buy $30 in Bitcoin. That spread to other Reddit forums, and by Monday evening, Reddit forums across the globe were coordinating a mass retail move to buy Bitcoin before the El Salvador law signing.
Of course, crypto whales got a hold of that news, and figured they should sell ahead of the event – on the idea that they could dump their holdings for a huge profit on retail investors, and then buy back those holdings at much lower prices after those inexperienced retail traders freaked out and started panic selling.
Their plan worked out perfectly.
Big holders of Bitcoin started selling on Tuesday. That tripped off some sell alerts from the algos, which induced more selling, and tripped off some more sell alerts on different algos, which induced even more selling. Retail investors started freaking out, and they started panic selling.
Net net, within minutes, Bitcoin crashed nearly $10,000 per token, and took the whole cryptocurrency market with it.
Then, those whales promptly bought the dip after the flash crash, and the market stabilized.
In other words, the Tuesday flash crash was just the “big boys” playing games with the retail trader and making a quick buck where they could. They did that, and now it’s over.
Now, it’s time to turn our attention back to the fundamentals.
Those fundamentals are very strong, led by extraordinarily healthy consumer and enterprise adoption trends.
Golden State Warriors superstar Steph Curry – arguably one of the five most influential players in the NBA today – just signed a deal to be a “global ambassador” for FTX Trading Limited.
Michigan quarterback Cade McNamara just inked an endorsement deal with More Management, a crypto company specializing in membership services, curated live experience, and digital collectibles.
UC Berkeley just added an online course on decentralized finance (DeFi) to its Fall 2021 semester offering. University of Wyoming is also offering DeFi courses to students this semester. Across Europe, a handful of universities are doing the same thing.
Twitter is launching Bitcoin tipping and trying to give everyone with a Twitter account seamless access to a digital wallet.
Vast Bank just became the first federally chartered U.S. bank to let customers buy and sell Bitcoin from checking accounts.
Google announced that Presearch – a decentralized search engine – will be a default search engine option on all new and factory-reset Android devices the U.K. and Europe.
This is the stuff that matters. Not crypto whales trying to front-run a Reddit buying spree. At the end of the day, consumer and enterprise adoption of blockchain platforms will determine the long-term trend of cryptocurrency prices.
So long as adoption keeps rising, we will remain bullish.
And right now, adoption isn’t just rising – it’s soaring. That makes us more bullish than ever on the long-term potential of the crypto market because what you have today is improving fundamentals converging on discounted prices.
That’s a recipe for an altcoin breakout in the coming months, so long as adoption trends remain healthy (which we strongly believe will be the case).
The investment implication? It’s time to go shopping for some altcoins.
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That’s right. Tomorrow, we’re going to unveil a brand-new “Buy” recommendation in our Crypto Investor Network model portfolio which we believe represents the best “buy the dip” candidate in the crypto market today – and it’s a coin which we feel has 10X or greater upside potential…
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
