Can you still get rich on Crypto?

 

Can you still get rich on Crypto?

"Crypto or Bitcoin is worse than the tulip bubble". A single sentence from the CEO of JP Morgan, Jamie Dimon, and in a few minutes the value of a bitcoin - from almost $ 5,000 - began to drop and then collapse after the official announcement by the Chinese exchanges to close its doors. Result: $ 2,980 per bitcoin.

It felt like an ordinary day in mid-September before phone calls and texts boomed. All asking for an opinion on the collapse, not only the USA media but also friends who, panicked, no longer knew what to do.

We had to look at the graph and think carefully, but the only certain answer was that surely bitcoin would not die. Someone big was buying at breakneck speed, regardless of the low liquidity of the market. Traders were following and so, quickly, bitcoin was already regaining 8%. After a few hours, it was worth about $ 1000 more.

It is certainly not easy to trade. It is estimated that over 95% of traders are at a loss, even if they do not recognize it. It is certainly a difficult task. A day like that of 14 September 2017 remains imprinted not only in the historical series but also in the minds of traders and Algo traders. Probably a 20% collapse and a recovery of over 20% in a few hours - without relevant news - had never been seen before. But the market reflects the psychology of the operators, alternating phases of exaltation and phases of depression.

Algo trading is different. It is the Artificial Intelligence that operates, devoid of emotions. But it has a limit: it cannot yet build itself. In any case, both an Algo trader and a normal trader on September 14, 2017, on the bitcoin market would have lost, because during the collapse of the price - and it also happened in many other important rises - the main bitcoin exchanges were not functioning.

The Rock Trading was under DDOS attack, who had sold practically could not buy anymore.

On Kraken, you could place a buy order - even with Bees - but then it was not executed.

Bitfinex had log-in problems and stop losses did not work.

Only Bitstamp was saved, although it did not allow for leverage.

When the price falls, one immediately thinks of manipulations by a few big players and exchanges. But if that were the case, why do some systems seem to be able to make money despite everything? How do they foresee the manipulations? Artificial Intelligence assisted by very complex structures is able to "understand" the psychology of traders.

Probably other manipulations left traces in the time series and the AI studied and memorized them with a magnifying glass. Result. The manipulations themselves have become part of the market psychology.

What does this all mean? Some events are unpredictable, but not for everyone. It seems that JP Morgan had operated through the Swedish ETN both before the crash and during and then repurchased large sums of bitcoin during the rise.

Did the Algos know?

Certainly not. But some algorithms may not have caught us. It is not just the law of large numbers but a thorough and meticulous study of the world of numbers and physics, because the news always comes later.

What happened on September 14th, 2017 marked a dividing line between amateur and professional traders. Not because the latter have gained but because they have lost less.

As we have seen, exchanges can be banned or controlled by governments or banks. They are not insured and can go bankrupt. Customers can lose everything because they have no guarantees. No authority ensures their operation and they could take an opposite position on the market without suffering any legal action.

Is becoming rich with crypto possible? No. Maybe not anymore. But there are ICOs. They say. Perhaps, however, they are real bubbles. Small maybe. But they will make themselves felt especially on small investors. And if Vitalik Buterin, the founder of Ethereum, says so too, let's say that the fact can be said to be established ... Most of the ICOs, in fact, are born thanks to Ethereum.

Why shouldn't bitcoin reach $ 100,000?

It has all the credentials: it is limited like gold - even more efficient - and we talk about it all the time. Several hedge funds are entering the market and we will probably see some good ones with a regulated ETF. The money supply is fixed. If the demand increases, that's it.

Yes. If there was a decentralized exchange - many are working on it - it could even exceed $ 100,000.

However, think of Spain in 1532. He had conquered the lands belonging to the Incas, storing about 45,000 tons of silver, which were later transformed into coins. He believed he could overwhelm the entire Western world by consuming these resources to conquer other countries.

Spain extracted so much silver that its value plummeted and found itself even poorer than before: the Spaniards, in fact, did not understand that the value of a coin is not absolute: the value of a coin corresponds to what someone else is. willing to offer in return.

Let's be clear, bitcoin is by no means fragile. Indeed, it is practically antifragile. it is the most appreciated financial tool by millennials. But the ecosystem as a whole - in this case, exchanges - reflects a major weakness of humans: greed.

Here, exchanges are the only weakness of bitcoin and its aspiration. With the exchange risk, will there be more and more people who will trust? And why should they?