Many newcomers and old-timers of the market constantly reiterate that technical analysis is not applicable to digital currencies. They often argue their arguments that all power is concentrated in the hands of whales, who manipulate the market and enrich themselves at the expense of naive hamsters. They are also confident that the release of high-profile news destroys "entertaining geometry" on the analyst's charts.
Among such irreconcilable skeptics, not only bitcoin maximalists and supporters of long-term portfolio investment, but also the so-called nokoineri – missed the opportunity to buy BTC at a low price, or merged everything, fearing a rapid collapse.
During the Baltic Honeybadger 2018 conference in Riga, well-known trader and analyst Ton Weiss shared his opinion on technical analysis with BlockchainJournal, giving valuable advice to beginner cryptoinvestors. He also talked about the prospects of the stablebinks, the impact of the Lightning Network on the price of Bitcoin and when the bear market will end.
BlockchainJournal: Newbies in the world of cryptocurrency often say that technical analysis on the cryptocurrency market does not work. Is it so? If so, does it not work at all or only on cryptocurrencies?
Ton Weiss: I think technical analysis works in all currencies. There is the concept of liquidity, which suggests that a lot of people are trading on the market. These people are united by a psychological factor. This means that at least 50% of the time they can do such things. Technical analysis can tell a lot about the situation and mood in the market, it helps to trade.
BlockchainJournal: What is the best place to start cryptocurrency for beginners in the world: from trading , long-term investment, or is it better to combine both directions?
Ton Weiss: If you're just starting out, then it's better to stick to the Buy & Hold strategy. In this case, you need to slowly learn the basics of trading. After that, you should definitely practice with fake money on a demo account. This is necessary to understand whether you are able to earn or not. Only after that you can slowly use real money. If all goes well, then trading can be a serious job.
BlockchainJournal: Is it possible to achieve success by trading using leverage?
Ton Weiss: You have to be very careful with margin trading. If you take only the first steps in trading, I advise, it is better not to use the shoulder. The main thing in trading is not how much you earned, but that you managed to avoid losses. Using borrowed funds you can lose a lot and very, very quickly, so it’s better to start without a margin and with small amounts.
The cryptocurrency market also has its own specifics – if you want to trade large amounts, it is very dangerous to keep a lot of bitcoins on the exchanges. They can be stolen due to hacking the stock exchange. Or the government can come, it all close and in fact also steal. Thus, in this market, the risks listed above are more dangerous than margin trading.
BlockchainJournal: Many people know you as a bitcoin-maximalist. Are there other cryptocurrencies on the market that also deserve attention?
Tone Weiss: No, I think that the rest of the cryptocurrencies can only be traded in order to get more bitcoins. In the long term, in 5-10 years, I see no alternative to BTC.
BlockchainJournal: Does a market need steblecoins such as Tether?
Ton Weiss: I don’t think they are very necessary. They are very convenient, but their use is fraught with great risk. For example, no one knows if the USDT is fully secured with US dollars. Even if it is 100% backed by fiat reserves, the government can still come and collect them. It is better to find a stock exchange that works with banks and supports fiat currencies. This is better than trading Tether, which can “cover up” on any given day.
BlockchainJournal: The distribution of 160,000 BTC (over $ 1 billion) among Mt. users will begin next February. Gox. Does this put pressure on the price of bitcoin?
Ton Weiss: I don't think so. The collapse of Mt. Gox was so long ago that all victims for this time have already bought themselves new Bitcoins. At the time of the stock exchange crash, the BTC rate was about $ 400. Today, Bitcoin is trading at around $ 6,500. I am sure that all these people have savings in the American dollar by far exceeding the amount that they lost while sitting in Bitcoin. That is, each of them will receive from Mt. Gox average of 1-2 BTC. In addition, each lost 20-30 BTC on this exchange in due time. I do not think that the distribution will seriously affect the price of Bitcoin.
BlockchainJournal: Will Lightning Network (LN) be the main driver for long-term Bitcoin growth?
Tone Weiss: I'm not sure that LN will greatly affect the price of Bitcoin in a bear market. In such a market, good news doesn’t particularly affect prices. If they somehow influence, the effect lasts for a week or two. But the bad news is affected, and very seriously.
The bear market is likely to end next year. However, this may happen at the end of this year. LN this year is unlikely to work at full strength. Most likely, its mass adoption will begin in the middle and end of next year. It may happen that the widespread adoption of the Lightning Network will coincide with the completion of the bear market. Everyone will associate the trend reversal with the successful implementation of LN, however, in fact, it will be a coincidence.
BlockchainJournal: And the last question: when the market capitalization reaches $ 1 trillion, what will be the Bitcoin dominance index?
Ton Weiss: I think that with an objective assessment, the Bitcoin dominance index should reach 95-99%. Of course, we should not take into account some currencies whose offer amounts to billions of coins. For example, one coin was sold for $ 1 and now its capitalization is $ 1 billion.
At the conference there was an excellent presentation on the alternative to the “market capitalization” indicator . This indicator should not take into account coins that are still stationary or lost. If we take such an indicator as a basis, then it will turn out that all cryptocurrencies will suddenly fall in capitalization overnight. In this case, the Bitcoin dominance index, I am sure, will be much higher than the current one .
Interviewed by Alexander Kondratyuk
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