Trader Top 9: Is the Bitcoin Bull Market Over?

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Between Elon's tweets from last week, news that China would "ban" crypto, BlockFi's bonus mistake, and perhaps too much leverage in play, bitcoin finally had enough and went into a tailspin.  Is the bull market over or does it have more room left to run?  

9. Although bitcoin and the rest of the crypto market have had a rough go of it lately, nothing compared to the pain of waking up on Wednesday morning and checking our portfolio.  Nathaniel's meme perfectly encapsulates the feelings of crypto traders all over the world.

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8. But let's take a step back and try to understand what led to Wednesday's pain.  Well, in addition to the market already reeling from Elon's tweets last week, China decided that it wanted to get in on the FUD party.  Reuters published an article that China would ban all institutions from dealing with crypto.  However, the fact is that this is an old story that China was simply reiterating.  

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7. In late March, I published an article for CoinDesk highlighting some of the risks associated with keeping assets at BlockFi.  However, I never could have imagined that the platform would inadvertently send out millions of dollars' worth of bitcoin in error.  Do they even have a risk management team?  

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6. In addition to Elon, China, and BlockFi, there was perhaps a larger issue at play which explains the large correction.  Nicholas thinks that too many traders were overleveraged.  This problem was exacerbated by Wednesday's volatility, which led to many exchange platforms having technical difficulties.  Traders were unable to access their portfolios and risk manage.  Wednesday's volatility is a good reminder that traders can't rely on a single exchange and should focus on utilizing front ends that don't face the same constraints as a Coinbase or Kraken.  Cove Markets faced no difficulties and all of our customers were able to trade and risk manage as they wished.

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5. DeFi is often mentioned as the answer to all problems faced by centralized cryptocurrency exchanges.  However, DeFi has its own unique set of problems, such as when the network faces congestion, which can often lead to outrageous gas fees as Meltem points out.  A small trader simply can't afford to pay $900+ to execute a trade.

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4. While Ethereum tries to work out the solution for rising gas fees, another project called Polygon (MATIC) may have the answer.  The current blockchain ecosystem is simply not able to scale and cannot keep pace with the demand.  MATIC aims to solve that scalability issue by using a decentralized Plasma operator mechanism with Proof-of-Stake based side chains.  The result will be significantly reduced fees for the end user.  As a side note, MATIC will soon be available for trading on our platform.  Stay tuned for further announcements.

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3. Although it may have felt like this week was full of nonstop FUD and bad news, there were actually some positive developments.  Wells Fargo changed its mind on bitcoin and decided to allow its wealthy clients to invest.  Wells Fargo now joins a growing list of financial institutions that have decided that bitcoin is too popular to ignore.

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2. Cathie Wood, the CEO and CIO of Ark Invest, came out in defense of bitcoin during a recent BW event.  Not only did she reiterate her 500k bitcoin price target, but she also explained the motivation behind Tesla's decision to stop accepting bitcoin for payment.

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1. Let's start by answering the question that most of you are dying to know.  Is the bull market over?  Probably not, at least according to Phoenix.  In one of the best threads our team has ever read on Twitter, Phoenix dives into all the various metrics and explains why this is likely NOT the end of the bull market.

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🔥 Cove Markets now has a Telegram group and a Reddit community page.  Please stop by and let us know what you thought about this week's Trader Top 9! 🔥

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