Ok, if you've been in this sub long enough, and have monitored the charts, you'll know that there has historically been a year-end slump with Bitcoin. The reasons are different from year to year but most center around a few key points:
- Taxes
- Holiday expenses
- Next year legislative fears
And I'll go over some of these points in detail. As well as an analysis of last year's end-of-year slump that never unslumped.
Taxes: It's pretty simple. People generally have to pay taxes on bitcoin transactions and it's not uncommon for people who are on the edge about bitcoin to just unload before the end of the year so they are not having to do tax forms twice for this. In 2018, pretty much everyone who was holding bitcoin has watched their investment go from bad to worse. So it makes sense that people will be sick of it, disappointed, and just want to cash-out and move on before having to deal with it for the 2019 tax year.
Holiday Expenses: Money can be tight for the holidays. People dip into their funds in order to pay for gifts/travel, etc... The Black Friday and Christmas deals give a big boost to spending and some of that money is sourced from exchanging bitcoin for fiat to cover those costs.
Legislative Fears: 2018 was a bit of a whopper when it came to new bitcoin legislation. 2019 will likely have some changes to law as well, and the IRS will be putting a closer scrutiny on it. So based on how people feel about those laws, which have been traditionally more restrictive, they may decide to end their run with bitcoin before being subject to 2019 laws.
So that is part of why we are seeing some major downturn at the moment. If the past is anything to guide us, it will probably continue to get worse until the end of the year. We may see a minor uptick in early December, people cashing in on the post-Black Friday recovery point, but they too will likely make fast cash and run before 2019, with the biggest slump traditionally around the 10th-15th of December.
So...what was with last year, the end-of-year slump that never ended? First off, I know you hate the word, so I won't say it, but it popped. It hit 20k on hype and everyone knows that's what happened and not everyone wants to admit it. It was a perfect storm of extreme hype before end-of-year sell-off and never recovered to its former glory because it never should have been at 20k in the first place.
So, big question, will it recover? The answer is an overwhelming and unpopular truth: No. There is no logical reason to think it's getting back to 20k. For starters, the hype burned a lot of potential investors and there are simply put, less people interested. For those that stayed-on, they've had to suffer ridicule for hanging onto their dreams and ideals. So it's only popular among other hodlers while the rest of the world says "will bitcoin die already?" The second big issue is that while there have been minor advances in ASIC technology, those advancements have not been on par with the rising difficult rate. While bitcoin has been sucking wind for the past year, the difficulty has done nothing but go up, which means miners are getting less and less of a return on their investments. We are also, in fact, seeing a glut of video cards and ASICs in the secondary market, indicating people are throwing in the towel. We saw this after the first bitcoin pop. And the final reason is that legislation, as mentioned, has been always towards the negative so there is no indication that the market will be more favorable to governments in 2019. And if all of what I have said above is true, by what logic should it recover in 2019? It would take a major retailer, such as Amazon or Walmart, to start taking bitcoin. And even then, the impact simply will not be as great as expected since using a credit card will ALWAYS be easier than using bitcoin for Amazon or Walmart. So I don't see that happening 2019. Especially since Bitcoin has been in a decline, which means if Amazon or Walmart starts hodling, which would be necessary for operations, it's a losing investment.
So I'm not going to sit here and tell you what to do with your bitcoin, but you should all know what the history has been like, review the charts for yourselves, and look at reason and logic above mob mentality and hodling on for your dear life because this is the "two boats and a helicopter" story and if you don't take the warnings when they are given, you don't get to complain when you drown.
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