Bobby Lee “blames” his brother Charlie — the founder of Litecoin — for causing the 2017/2018 Bitcoin price crash.
He’s joking of course. Sort of.
Charlie famously sold the last tranche of his Litecoin holdings in December 2017 for $350 each.
Bobby remembers seeing the news hit Twitter. “I was like, gosh, that probably marks the peak,” he says.
“I said to him jokingly, like ‘you just caused the end of the bull market’.”
Of course, Charlie wasn’t the real reason the bull market ended, but it was a stunning piece of market timing, given he sold the last of three tranches of LTC at almost the exact top. It was no fluke either, as Charlie had predicted in early December that a “multi-year bear market” with 90% drawdowns was imminent.
The question is whether ordinary crypto traders and hodlers can follow Charlie’s lead and sell out at the next market peak, allowing them to buy back in and accumulate more at the bottom.
It’s a difficult feat to pull off and most people are more likely to follow the footsteps of podcaster Peter McCormack, who famously got caught up in the hype of 2017 and watched his Bitcoin portfolio skyrocket to $1.2 million… and then plunge back to near zero after he was forced to sell his stash to pay the bills in the depths of crypto winter.
Some of the biggest brains in crypto have been working on this problem, from onchain analyst Willy Woo to David Puell of Puell Multiple fame and Decentrader’s Filbfilb and Philip Swift. Around 2018, they began devising metrics and indicators based on historical patterns to help determine when the peaks and troughs will be approaching.
There is a range of views as to whether timing the market is even possible. Bobby Lee swears by the halving price cycles, while Quantum Economics’ Mati Greenspan and Wolf of All Streets’ Scott Melker believe it’s best to follow sensible rules on profit taking and portfolio construction that don’t require you to predict events in advance.
The unpredictability of markets was in evident while writing this story, which I started writing in April and then had to put it on hold for four months after news out of China and Elon Musk’s Twitter account nuked the markets and made the bull run seem like a distant memory.
Spoiler alert: All of the commentators interviewed agree that you should try and take profits on the way up. I was lucky enough to heed their advice literally hours before the big crash in May.
Every crypto bull run I’ve seen has been followed by a bear cycle. The market needs time to consolidate. That’s just my experience from 7 years of watching this space.
How low and how long it will be is TBD. People need to be aware of this possibility and invest responsibly. https://t.co/ozcR11N68o
— Charlie Lee [LTC⚡] (@SatoshiLite) December 11, 2017
History lessons: Four more years
Bitcoin hasn’t been around long enough to draw any firm conclusions from the historical record, but there’s a widespread belief it moves in predictable cycles related to The Halving.
That’s when the block reward Bitcoin miners receive is cut in half almost every fourth year, which reduces the issuance of new Bitcoin. The theory is that less Bitcoin equals higher prices, and during each halving so far, the price has bottomed out in the lead up and hit new all-time highs afterward.
Lee has been a proponent of the idea for almost a decade and presented the concept during a December 2013 talk at Stanford University.
“I’m a simple man,” says Lee, author of the new book ‘The Promise of Bitcoin’. “I can’t predict the future but based on my gut intuition and based on my 10 years of experience on this, I think these price cycles mimic the block reward halving. It’s a true economic lever that happens to Bitcoin, where the production rate goes down by half.”
“In each case, the price movement upwards happens on a delayed basis compared to the block reward halving.”
If the theory is correct — and…