Binance Closes Its Doors To America
My Thoughts And Plan
If you haven’t heard the news, Binance, the biggest and most popular crypto exchange, just announced that they will not be allowing American-based customers to use their exchange come September.
Some people are saying that now is an opportunity to “buy the dip,” while others are fearful and thinking the prices are about to nosedive.
While I usually take giant red candles as buying opportunities, I do not like this fundamental news and believe it’s best to get out of alts. This morning I closed out all of my altcoin positions except for XRP and ETH. The majority of my funds are now in Bitcoin.
Interesting fact — If you would have just held onto bitcoin since Jan 1, you’d be up significantly. If you held onto any altcoin since Jan 1, you would most likely be down or at breakeven unless you held onto one of the few that did well.
Like many others, I was waiting for alt season to come. With this news, however, I believe that alt season has been officially cancelled. Bitcoin has once again shown its power.
There’s a chart by Goomba @remigoomba on twitter that shows a list of coins that will still be available to US customers through US compliant exchanges once binance stops US-based trading in September.
The takeaway is that coins in white might see their trading volume decline through the summer (or forever).
For the foreseeable future, I am no longer going to be investing or trading coins in white, nor 99% of altcoins for that matter.
Why?
Think of all of the American whales that will dump the loads of tokens they got from pre-ICO that they’ve been holding on to. Think of the Binance-only coins getting delisted, falling into the abyss.
Oh, but Binance will have an American exchange, right?
Right… and so?
That exchange will most likely not have access to all of the coins, not have access to margin trading, not have access to IEOs and also require KYC which I’m sure plenty of people won’t want to do.
Personally, I believe that Binance no longer serving US-Citizens is a big enough fundamental catalyst to kill off any hope of an alt season and drive alts into capitulation. It will be at that time if that time comes, that I will go heavy into alts again.
Perhaps this 10–20% drop in alts we experienced today will be all there is to it. I don’t buy it. And I’m not willing to risk even more of my capital to find out.
Conspiracy Time
In just over a month, BAKKT will start accepting users to test its bitcoin futures trading platform.
First, we had the New York Attorney General announcing a court order against Bitfinex under investigation for fraud. And now we have the US government coming down on the other biggest exchange in crypto.
Is this all just a way to get big investors and institutions away from off-shore crypto exchanges before BAKKT comes out? I mean, BAKKT will have the “backing” of the US government and, most notably, the New York Stock Exchange. That is a HUGE deal and will calm any potential investor’s nerves about security, which is a major issue in crypto.
My strategy: Look into what coins will be available on BAKKT and invest heavily into those. If they’re on both BAKKT and Coinbase, that gives even more weight to them.
Right now, there is just too much uncertainty that I don’t like about most alts.
With saying that, there are a few that may be worthwhile to dollar cost average your way into.
This brings me to a point that I believe most people should hear. Well, a couple points really.
- If you would have put your money into a standard index fund and just let it sit there, you would have outperformed 90–95% of all traders and hedge fund managers over a 30–50 year time period.
- If you would have invested into bitcoin at the absolute top of $20,000 and simply added equal amounts of money to your bitcoin stash each week, you would be in major profit right now.
The point I am trying to make here is that unless there is a legitimate “alt season,” investing into Bitcoin via dollar cost averaging is the best strategy when it comes to how you should go about investing.
Many of you are making 30, 50, or $100,000+ a year from a regular job. Let’s say BTC goes up to $36,000 during its next bull cycle in the next 2 years. That’s a solid 4x from today’s rates. Now, I am definitely not advising anyone to buy anything, but I myself would be great if I 4x’d a $20,000, $40,000, or $100,000 investment in just 2 years. And if that’s not a high enough number for you, you can always learn to trade and aim to make 5x, 10x, or 100x if we end up having a crazy alt season again. The thing is, even though Bitcoin still technically isn’t “guaranteed” to go up, alts have an infinitely greater chance of not going up.
*Disclaimer — While I don’t believe it will happen, there is still a chance that Bitcoin can drop to as low as around $1000… so never invest more than you’re willing to lose.
Bitcoin has been labeled as not a security. Same thing for ETH. XRP and maybe a few others most likely aren’t securities either. But who knows about the thousands of others.
Here is the strategy that I like to use:
- Have an investment account that I dollar cost average into every week. You can set up automatic payments on Coinbase so you don’t have to think about it.
- Have a much smaller trading account that I trade alts with. When I make 20% on that account, I take 10% of the winnings, convert them to BTC, ETH, LTC, and XRP, then transfer them over
Even if you like ETH, XRP, LTC, or others, you can also include them in your portfolio and simply rebalance your portfolio using something like shrimpy.io to keep a certain percentage in each coin automatically.
There’s a lot of things you can do.
The thing not to do is to risk your capital.
Originally published at http://blog.cryptolete.com.
