Doubling down on losing trade could turn out to be a costly mistake, says Peter Brandt
While a lot of Bitcoiners think that the ongoing sell-off presents more opportunities for stacking cheaper sats, veteran chartist Peter Brandt warned traders against catching a falling knife in a recent tweet.
The legendary commodities trader, who began his career in 1976, says it’s not safe to add more to a losing trade.
To support his argument, he points to the fact that a lot of people were tempted to buy silver cheaper in 1980 after the price of the metal reached a peak of $50.35 per ounce and started declining precipitously. Sadly for dip-buyers, the price continued crashing all the way to $3.65 per ounce. On March 27, 1980, silver infamously collapsed from $21.62 to $10.80 per ounce.
Bitcoin is currently down 40% from its all-time high, but the major cryptocurrency has seen much more severe declines in previous bear markets. In 2018, Bitcoin depreciated by over 70% during a nightmarish bear market.
Of course, Brandt cautions that he does not believe that market conditions are the same. After all, there was a clear cause for the silver crash: Nelson Bunker and William Herbert Hunt, the heirs of American oil mogul H.L. Hunt, were forced to offload their vast holdings due to new COMEX limits after aggressively buying the metal in the 1980s.
With Bitcoin, future price movements are extremely unpredictable, but the general market consensus is that the cryptocurrency is likely to be affected by rising interest rates in the United States.
As reported by U.Today, former BitMEX CEO Arthur Hayes predicts that the crypto market will be crushed by the hawkish Federal Reserve unless inflation concerns start being a priority ahead of the November elections in the U.S. The Fed is expected to end its bond-buying program this March, putting an end to the “money printing” narrative.
