Markets
Why the fall season will be an important correction indicator
Bitcoin (BTC-USD) prices fell sharply during Friday’s trading session, triggered by Mt. Gox’s initiation of customer refunds, which has sparked fears of a potential sell-off in cryptocurrency markets. Lucy Gazmararian, Founder and Managing Partner of Token Bay Capital, shares her thoughts on the outlook for cryptocurrency.
Gazmararian notes that the Mt. Gox refund event was “followed quite extensively in Bitcoin circles” and was widely “anticipated.” She suggests that “any selloff [in bitcoin] “It’s likely that the sales will happen in stages” rather than all at once. Additionally, she questions whether any major sales will materialize, saying that “people are likely to hold bitcoin for the long term.”
Gazmararian predicts a “quieter” trading period heading into the summer season, especially for bitcoin. However, she stresses that the real test lies ahead: “The big question is what bitcoin is going to do when everyone goes back to work in the fall and markets start to recover. That’s when we’ll really be able to tell whether bitcoin is going to have a deeper correction than is actually typical for most cycles.”
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This post was written by Angel Smith
Video Transcript
Bitcoin fell after Mount Gox began refunding users, stoking fears that customers would quickly sell the coin amid discussions about what investors should do.
We now have Lucy Gas Marian, Founder and Managing Partner of Token Bay Capital.
Lucy.
Nice to have you here.
Thank you for joining us here on this topic.
I mean, what should we expect from what some of the holders or holders might do as a result of Mount Gox now?
So, uh, Mount Gox has obviously been followed, uh, you know, pretty extensively in Bitcoin circles, so it’s an expected event.
And there was also a lot of debt swapping before this was all settled on behalf of the creditors.
So, uh, it’s really up for debate whether $9 billion is going to flow into these markets at one time and it’s actually very unlikely.
It is therefore likely that any sale will be spread over a certain period.
And actually, the question is whether there will be sellers because, as I say, it’s likely that many claims have already changed hands and people are already going to either hold Bitcoins for the long term or sell them, but it’s unlikely that it’s going to happen all at once.
So that should be the case and the market should be able to absorb any incoming supply.
Lucy.
The story continues
There’s a lot, I see a lot of chatter on the different forums, on the different crypto forums.
Very focused on what’s happening with this presidential election.
Let’s just say that if President Biden decides to step down, someone else steps up and takes his place.
Who is the best person for the cryptocurrency market?
What’s interesting is that there are a lot more pro-crypto voices in Congress in American politics and, you know, we have a lot more cheerleaders and a lot of that is driven by that stance with the crypto movement and the funding that they’re getting really from a coordinated attempt by all the big players in the crypto industry to really change the perception around crypto, really get people on board with the new technology and, you know, the infrastructure for a new generation of financial markets and for, you know, politicians to see it as such and actually see it as an enabler and a way for the American economy to move forward and grow.
And so I think they’re doing a huge job of doing that this year.
There’s a lot of funding coming in and there’s a lot more voices and it’s not just the funding, but it’s also the education, with all these crypto groups going to Washington and really explaining and sitting down with lawmakers to define what this technology can really offer to the Americans coming up.
And even in the first half of this year, the crypto scenario was pretty straightforward.
It was about approvals and having, what does the second half playbook look like for crypto?
So I think, OK, we had a little sale recently.
I think with every wave we have new buyers who are not used to this volatility.
So it’s not a particularly pleasant experience to buy an ETF in January, to be really excited about making 30% or 50% gains, and then to lose 30%, you know, it takes some getting used to.
So we have new buyers coming into this market.
And trading during the summer is usually quieter, right?
You have quieter trading months during the summer and Bitcoin is no exception, especially now that Bitcoin is listed on a national exchange.
So there will be some degree of correlation.
The big question is what will Bitcoin do when everyone goes back to work in the fall and markets start to grow again?
This is when we can really tell if Bitcoin is going to experience a deeper correction than is typical for most of the cycle.
And so far we are still seeing very typical movements in the price of Bitcoin.
If someone wanted to use this pullback, Lucy, as a buying opportunity, what should their first stop be?
Um, so, well, it changes every time they fall below.
So it was 56.
Now people say 48.
Um, look, I think a good investment tip, although I can’t give investment advice, is to know the dollar cost.
To average your asset class, you need to take a long-term view on Bitcoin.
We need to look at the fundamentals.
If you’re investing for six months or a year, it’s going to be a pretty tricky trading strategy because the market goes through boom and bust cycles.
So the best thing to do with Bitcoin is to value its dollar cost and hold it for the long term because we’re likely to see another down cycle towards the end of 2025 into 2026, when we’ll have another cycle when these cycles actually come out of this Bitcoin mining halving, which happens every four years.
So I think as investors, you should really have an opinion on Bitcoin.
Do you think this will become a fundamental trading tool?
Do you think it will become the equivalent of the US dollar in a global digital economy?
Do you think more emerging markets and governments will start storing Bitcoin as a reserve asset?
You know, think about what you actually think about the utility of Bitcoin because there are a lot of different narratives associated with Bitcoin and, you know, you just buy it because you think it’s going to go up.
I would suggest having a longer term investment horizon.
Lucy Gas Marian, Founder and Managing Partner of Token Bay Capital.
Thank you so much.