I just sold half of my Bitcoin holdings right now, despite it being down 41% this week and 49% this month (although still up 40% this year).
I am writing this post to explain my reasoning behind my sell position.
It’s apparent from last week that Bitcoin will continue to move in the same direction that the overall markets are moving, and I think the markets will continue to take a beating through next week as the economic implications of the virus become more and more “real”.
Trump has declared a state of emergency and seems to be caught with his pants down when it comes to the corona virus. The vaccines and tests aren’t where they should be, we should have had tests ready on Wednesday and started conducting tests on Thursday last week. As a result, the number of known cases is low and people are continuing to go to work and go out to bars and restaurants.
Assuming the number of people who contract the virus doubles every 3 to 4 days, and with a major gathering holiday like St. Patrick’s Day going on in major cities like Chicago, New York, and Boston, what started as something small and manageable has probably grown significantly over the weekend.
I am wondering when we will start seeing real change from people. I don’t think it will be until Monday or Tuesday next week once the government starts testing people and we see how big the problem actually is.
Some napkin math:
If we go off the assumption that the virus probably doubling every 3 - 4 days:
2,952 confirmed cases as of 3/15/2020
6,000 cases by Wednesday (4 days, 3/19/2020) which puts us where Germany and Spain are today, which they have closed down stores and bars and are basically on lockdown.
12,000 cases by next weekend (7 days, 3/22/2020) which puts us where Iran is today
24,000 cases by the following Wednesday (March 25th)
If the incubation period for the virus is around 5 days, I think we will start seeing people show symptoms in larger numbers starting this week and continue on into next weekend, especially if companies are continuing to not implement work from home policies and people continue to congregate at bars and restaurants.
So that number of 2,952 could really be closer to 5,000 which would be:
10,000 cases by Wednesday (4 days, 3/19/2020) which puts us near where Iran is
20,000 cases by next weekend (7 days, 3/22/2020) which puts us where Italy is today
40,000 cases by the following Wednesday (March 25th) which puts us between where Italy and China are today
I think even the 40,000 by March 25th could be conservative. Exponential growth is an incredible thing. Just for fun, let’s assume there are 10,000 people in the US with it right now:
20,000 cases by Wednesday (4 days, 3/19/2020) which puts us near where Italy is
40,000 cases by next weekend (7 days, 3/22/2020)
80,000 cases by the following Wednesday (March 25th) which puts us where China is today
So that’s the math on corona, but what does that do for markets?
Well this puts us out to March 25th, almost two weeks from now. Entire industries are going to be shut down until at least then, but more likely for an entire month, maybe even two. That is going to cause a massive shock to the economy and massive intervention by the Federal Reserve.
While I think long term this bodes well for Bitcoin, things are going to get worse before they get better. I only wish I would have seen this earlier.