As predicted towards the end of last year, Cryptos have trended lower—much lower—throughout the first few months of 2018.
From a contrarian investor’s perspective, this came as no surprise, as the masses rushed into the streets and those who scarcely could say the word “Cryptocurrency” dove in with both feet.
This is always a red-hot warning sign. Especially when compounded with the fact that the majority of those joining the party in the late hours were saying that “it can never go down”, “Lambo’s for all!”, and other statements that are frequently made near a bubble top.
Yet, as also predicted, Cryptos are now beginning to move higher —and in a significant way. This is largely due to the easing of pressure as the tax season within the United States comes to a close. Those who sold for accounting purposes are now taking renewed positions.
Bitcoin, leading the charge, is heading towards its best week in four months, up over a whopping 25% this week alone!
Still, the fear of the taxman cannot be overstated. Countless investors have skirted the law and avoided paying their taxes, a fact I pointed out in a previous article. The IRS has taken a keen interest, showcased by their recent crackdown on Coinbase users.
Perhaps the recent lows have formed a new support level, and we are destined to move higher from this point forward, as seen from the recent enthusiasm returning to the Crypto space. Or perhaps not. It is far too early to tell.
Regardless of what happens in the short term, I believe Cryptos will be stuck in a sideways trading pattern, at least for the next year to two years, eventually returning to and testing their old highs.
What is, however, starting to solidify is the second part of the prediction I made during the latter days of 2017. This is that funds diverted away from the precious metals space will begin to find their way back throughout 2018, as those who made large profits from Cryptos look for the next best opportunity.