Main reasons:
1. Tether looks like a classic Ponzi/scam:
https://www.bloomberg.com/news/arti...her-and-its-links-to-biggest-bitcoin-exchange
If it is a scam, and exposed/proven as such, the likely response is the shuttering and/or bankruptcy of many exchanges, and a price crash of monumental proportions (as in 50-80% in one day or even 1 hour), followed by months/years of lawsuits, manhunts and so on. It could be even worse than Mt Gox as the market is far bigger, and it would affect exchanges worldwide.
2. The listing of Bitcoin futures on CBOE/CME shortly, provides a classic 'buy the rumour, sell the news' catalyst, so even if Tether is legit, or not exposed for months/years longer, we are still at/very near to a decent point to book profits.
3. Obviously, cryptos/Bitcoin have had a gargantuan runup, are hitting the most extreme overbought readings using classic indicators, and basic rebalancing theory shows that it's wise to reduce your exposure to an asset after a huge run to very overbought levels. Value metrics like the NTV ratio, and overbought measures like price to 200MA are in the danger zone now, as they were in early major tops.
4. Sentiment is at near-euphoric levels. Non-financial media have Bitcoin's run on their front pages now. Bloomberg has a crypto article every single day.
Factors 2, 3 and 4 would together advise some profit-taking, but the possible Tether scam makes it a 'nuclear' risk environment - you could be trapped in positions, see your exchange get closed overnight, see flash crashes to 1 cent, have multi-hour delays in order executions and so on. The moment the possible scam 'breaks' in the news and is confirmed, normal trading will probably be impossible, as it was in the 1987 crash.
HODL bulls can still maintain long exposure, but at prudent levels. If your normal risk tolerance is for a 20% loss, cut your holdings to 20% - that way you don't get ruined in the worst case, but you will still get rich(er) if it hits $100k or $1 million in future.
Reducing exposure has a worst-case downside of still making good money, and a best case of avoiding a horrific crash/bear market. That makes it the smart odds play for anyone with serious exposure to these markets.
1. Tether looks like a classic Ponzi/scam:
https://www.bloomberg.com/news/arti...her-and-its-links-to-biggest-bitcoin-exchange
If it is a scam, and exposed/proven as such, the likely response is the shuttering and/or bankruptcy of many exchanges, and a price crash of monumental proportions (as in 50-80% in one day or even 1 hour), followed by months/years of lawsuits, manhunts and so on. It could be even worse than Mt Gox as the market is far bigger, and it would affect exchanges worldwide.
2. The listing of Bitcoin futures on CBOE/CME shortly, provides a classic 'buy the rumour, sell the news' catalyst, so even if Tether is legit, or not exposed for months/years longer, we are still at/very near to a decent point to book profits.
3. Obviously, cryptos/Bitcoin have had a gargantuan runup, are hitting the most extreme overbought readings using classic indicators, and basic rebalancing theory shows that it's wise to reduce your exposure to an asset after a huge run to very overbought levels. Value metrics like the NTV ratio, and overbought measures like price to 200MA are in the danger zone now, as they were in early major tops.
4. Sentiment is at near-euphoric levels. Non-financial media have Bitcoin's run on their front pages now. Bloomberg has a crypto article every single day.
Factors 2, 3 and 4 would together advise some profit-taking, but the possible Tether scam makes it a 'nuclear' risk environment - you could be trapped in positions, see your exchange get closed overnight, see flash crashes to 1 cent, have multi-hour delays in order executions and so on. The moment the possible scam 'breaks' in the news and is confirmed, normal trading will probably be impossible, as it was in the 1987 crash.
HODL bulls can still maintain long exposure, but at prudent levels. If your normal risk tolerance is for a 20% loss, cut your holdings to 20% - that way you don't get ruined in the worst case, but you will still get rich(er) if it hits $100k or $1 million in future.
Reducing exposure has a worst-case downside of still making good money, and a best case of avoiding a horrific crash/bear market. That makes it the smart odds play for anyone with serious exposure to these markets.
