Bitcoin - Headed a lot Lower - Back to the Mean

[WickedPigeon]

Bitcoin - Headed a lot lower, back to the Mean
Like a lot of people on this Forum, I'm in pain right now. My gains and profits are now turning into losses - capital is vanishing, melting, gone away. And it's going to get worse. I like reading the post here, it's a good community. BUT, lots of people are going to learn a hard lesson if they are trading like they say in their posts.

I've been trading markets for 35 years - as a job - and yep, I'm an old dude. I am still a trader and an accountant for a mid-size company; stocks, bonds, funds, options, futures, forwards, and a lot of currencies (thank god we aren't in Crypto-investments at work too).
Last year was seductive, I was doing well in all the markets (equity, debt, and crypto) - 'halcyon days'.  Last year, I had profits in Crypto, I was even buying into "it will be different this time."  But this year, I now have "unrealized" losses with some serious % numbers next to them. I from what I read, I'm not alone.

There are unavoidable Truths coming, if not already here. Lots of, if not most, people will lose in Crypto/Bitcoin investing. It’s just the way of the market. Holding to the end is a sure fire way to lose. Stepping up, ending a trade that’s losing money is so, so hard to do. But right now, it’s the only right answer. Save your capital, fight another day.

Good luck
The King Fisher and Wicked Pigeon



The classics never die.. they just find new markets.

From Jean-Paul Rodrigue (2017)
Bubbles can be very damaging, especially for those who arrived late with the hope of getting something for nothing. Even if they are inflationary events, the outcome of a bubble’s blow off is very deflationary as large quantities of capital vanish in the wave of bankruptcies and financial defaults they trigger. Historically, they tended to be far in-between, but the scale and amplitude of bubbles has accelerated; web/technology stocks (deflated in 2000), real estate (deflated in 2006), commodities (deflated in 2008) and crypto-currencies such as Bitcoin (deflated in 2018).

[Proton2233]

If you are so well versed in the markets you should understand that the bubble is easily blown away but it can also be easily inflated. Where you have confidence that the whales don't stop now the sale of coins? They have long returned their investments in bitcoin. Why can't they take the risk? Expectations in the market are very high. The price may go up instantly.

[hacker1001101001]

For me Bitcoin is surely not a bubble as we have already seen much drops in the prices of Bitcoin and other crypto currencies and also their are many examples of very rapid rise in the rates of some coin so we cannot say that it is a bubble as a smart investors will now buy more coins as it is a great opportunity for every one to become rich very easily.

[WickedPigeon]

For me Bitcoin is surely not a bubble as we have already seen much drops in the prices of Bitcoin and other crypto currencies and also their are many examples of very rapid rise in the rates of some coin so we cannot say that it is a bubble as a smart investors will now buy more coins as it is a great opportunity for every one to become rich very easily.

Here is the story I tell new traders.

Isaac Newton was one of the smartest people to ever live.

"Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he 'could calculate the motions of the heavenly bodies, but not the madness of the people.' Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in today's money. For the rest of his life, he forbade anyone to speak the words 'South Sea' in his presence."

So if one of, if not "THE" smartest man every to live cannot avoid a bubble, how are you going to avoid it? (really not looking for an answer to that question). I've lived through a lot of them, traded them, and hated them all. No one ever knows what a bubble is until it's pasted. Just the way it is. But you need a trading strategy to deal with market moves like a bubble popping or correcting or pausing, or what ever you call hitting $20,000 and pulling back to $7,500.

[aoluain]

Interesting points, i had to check out the South Seas Company, i found it
intriguing > https://en.m.wikipedia.org/wiki/South_Sea_Company

That company seems to have been destined to fail !

Ok while the prices of BTC and crypto in general are falling its a horror
story for people who are using them as pure investments especially those
who got into it all in November, December and early January.

For the people that are looking long term and not following market trends
todays fiat price doesnt make a difference. BTC and crypto will continue
to be used.

[WickedPigeon]

Interesting points, i had to check out the South Seas Company, i found it
intriguing > https://en.m.wikipedia.org/wiki/South_Sea_Company

That company seems to have been destined to fail !

Ok while the prices of BTC and crypto in general are falling its a horror
story for people who are using them as pure investments especially those
who got into it all in November, December and early January.

For the people that are looking long term and not following market trends
todays fiat price doesnt make a difference. BTC and crypto will continue
to be used.

You are correct when you say Crypto/Bitcoin will continue to be used, as are all the asset classes that got swept up in recent bubble history - tech stocks and real estate for example. Bitcoin isn't going away, just a shift in pricing. In time, after the dust settles, Crypto leaders will emerge again, some may be the same, some new.

Right now, It's time to put some money to side lines, and wait. My personal motto, "Waiting is the hardest part." Thank you Tom Petty,  God bless you.

[jmlona]

If the graph is true then I would say that puts us somewhere between fear and capitulation, would you agree with that or would you place us some place differently? I would guess the mean price would be somewhere around 2-3k

[WickedPigeon]

If the graph is true then I would say that puts us somewhere between fear and capitulation, would you agree with that or would you place us some place differently? I would guess the mean price would be somewhere around 2-3k

Hard to say where we are, but I think you're about right. Fear seems to be getting a strong foothold. Prices could easily track to sub-5K. My guess, sell here buy 25-50% lower. Doesn't make me happy as I'm long a lot of Alts and Major coins too.

It's an unfortunate reality.  I hoping that there are a few (and soon) Dead Cat bounces in the market. While I've lighted up a little, I need to sell a bit more.

[BillCoin]

We can't know if that's the "mean price" or it's just another small price correction on the way to 100K$.
The true value of bitcoin is unknown as the asset is still very new and it's price only being determined by speculation.
I think that a large amount of years are going to pass before bitcoin can actually get to a point of stable price.
The world can't determine what's bitcoin worth and that's what makes it so volatility

[Fobrins]

Well, it could be that your 35 years of experience doesn't help here in crypto.
Many guys that I know made millions in a few years and finished with investing. They retired.
That would be a nice thing for me too and I'm on the good path at the moment to do that.
Why I need to break my head about your or anybody's long-term chart thing.
I would like to see Bitcoin still going strong because I like technology and he has a good chance to kill fiat currency.

[WickedPigeon]

Well, it could be that your 35 years of experience doesn't help here in crypto.
Many guys that I know made millions in a few years and finished with investing. They retired.
That would be a nice thing for me too and I'm on the good path at the moment to do that.
Why I need to break my head about your or anybody's long-term chart thing.
I would like to see Bitcoin still going strong because I like technology and he has a good chance to kill fiat currency.

I think my experience helps a lot, at least it helps me. I've made millions over the years in all sorts of markets. I've found Alpha and some times Truth (investment speaking). And I have a good return in Crypto too - maybe not Alpha, and certainly not Truth in trading Crypto, at least not yet. 

I want smart, good crypto traders to make money. I hate to see people get killed and walk away from any market because they don't know what they are doing. And I've seen that in spades over the years - 2007/08 was a classic for chasing money out of the markets and it took years for some traders to come back, and some never returned.

Anyway, Just trying to get traders to think, #HODL isn't the only strategy: try taking profit, keeping some side line cash, and patience, for a new market will arise out of the ashes of this correction.

Bulls make money, Bears make money, but Pigs - they get slaughtered.

[andrey111]

I think now the main news for bitcoin will be G20. Poor bitcoin has already endured everything. And the crash of the exchange, and bans of social networks, and bans of search engines, and hacker attacks on the crypto exchange. If the bitcoin re-emerges from the ashes, it will no longer be stopped ...

[kimochidesh]

The graph in OP represents the Dow theory, not a bubble graph which includes 3 phrases...1 Accumulation phase. 2. Public Participation 3. Excess 4. Correction. You can easily find such figures in historic charts of many stocks. So there is nothing to panic. This is a secondary trend in between primary trend which can give correction up to 1/3 to 2/3 of price an can last from 3 weeks to 3 months.

[Anonylz]

But the bubble has already exploded more than ten times before, so we shouldn't be worried about this situation anymore, this is normal.

If you are so well versed in the markets you should understand that the bubble is easily blown away but it can also be easily inflated. Where you have confidence that the whales don't stop now the sale of coins? They have long returned their investments in bitcoin. Why can't they take the risk? Expectations in the market are very high. The price may go up instantly.

The price will go up until it touches $10k again, and then it will go back like it has been happening for weeks-.

[romanovst]

For me Bitcoin is surely not a bubble as we have already seen much drops in the prices of Bitcoin and other crypto currencies and also their are many examples of very rapid rise in the rates of some coin so we cannot say that it is a bubble as a smart investors will now buy more coins as it is a great opportunity for every one to become rich very easily.

I agree with what your opinion here. It is almost impossible for a bubble to survive more than 8 years. All those negative news you hear about bitcoins sounds so funny and stupid. Earlier people were saying that bitcoins is being used by criminals and thus it will not rise much as governments will ban it. And recently I read an article saying that now monero is being used for criminal activities instead of bitcoins and thus bitcoin will not rise and its demand is decreased because of this. I think bitcoins will break all records this year.

[andrei56]

It is very unlikely we are going to return to the mean, we can all recognize that bitcoin was in the middle of a bubble but the bubble did not began without a reason, the reason the price went up was because of the activation of segwit that in itself should rise the price of bitcoin a few thousand dollars at least so it is very unlikely we are going to see a price a 1000 once again.

[jmlona]

If the graph is true then I would say that puts us somewhere between fear and capitulation, would you agree with that or would you place us some place differently? I would guess the mean price would be somewhere around 2-3k

Hard to say where we are, but I think you're about right. Fear seems to be getting a strong foothold. Prices could easily track to sub-5K. My guess, sell here buy 25-50% lower. Doesn't make me happy as I'm long a lot of Alts and Major coins too.

It's an unfortunate reality.  I hoping that there are a few (and soon) Dead Cat bounces in the market. While I've lighted up a little, I need to sell a bit more.

Well you got the bounce that you requested. BTC looks destined to at least break 9k again. It's going to be a tough ask for it to break 12k and that's really what to me would signal that the market is still bullish and the rest of the year will go well.

It's worrying when considering what stage we are at if your graph or other similar theories are true. Because they all speak of the bottom being when there is absolutely no confidence in the market whereas right now there are still so many people bullish about a recovery. When bitcoin initially went from 7.5 to 8k last night in telegram chats there were hundreds of people going wild and calling the bottom and that the next bull run to a new ATH had begun. Not saying it hasn't but it didn't seem to fit most theories of market sentiment and investor psychology.

[WickedPigeon]

If the graph is true then I would say that puts us somewhere between fear and capitulation, would you agree with that or would you place us some place differently? I would guess the mean price would be somewhere around 2-3k

Hard to say where we are, but I think you're about right. Fear seems to be getting a strong foothold. Prices could easily track to sub-5K. My guess, sell here buy 25-50% lower. Doesn't make me happy as I'm long a lot of Alts and Major coins too.

It's an unfortunate reality.  I hoping that there are a few (and soon) Dead Cat bounces in the market. While I've lighted up a little, I need to sell a bit more.

Well you got the bounce that you requested. BTC looks destined to at least break 9k again. It's going to be a tough ask for it to break 12k and that's really what to me would signal that the market is still bullish and the rest of the year will go well.

It's worrying when considering what stage we are at if your graph or other similar theories are true. Because they all speak of the bottom being when there is absolutely no confidence in the market whereas right now there are still so many people bullish about a recovery. When bitcoin initially went from 7.5 to 8k last night in telegram chats there were hundreds of people going wild and calling the bottom and that the next bull run to a new ATH had begun. Not saying it hasn't but it didn't seem to fit most theories of market sentiment and investor psychology.

Give the uniqueness of this market, I agree that you can't know what real market sentiment is, nor where we are in the cycle. This is an odd market, heavy with new money/traders, low number of institutional players, big oversees participation, and a very mixed Government(s) oversight. Wildly unpredictable, immature and volatile. Plus we have gone from $1000 to $20,000 to $7500 in the past six months. I've heard some ex-Fx traders call the BTC market "Set on easy" - Not me, I don't find it set-on-easy at all.

The market activity has been bothering me for a while now. A couple of weeks ago, I switched up my mining operation from "Spec" mining to a hybrid "Cash/Spec" mining. That way I get some money off the table and still holding some coins. I don't have a strong short-term opinion on pricing. I do agree that long term, there are fundamental changes going to happen. But between now and then, the BTC/Alt markets will shake up and spit out a number of traders and investors, the way markets always do.

Any investing isn't all science and isn't all art. AND I don't think anyone, at least right now, can trade the BTC/Alt markets like they do other markets - stock, options, futures, etc. I've followed different theories over the years and adjusted the strategy for my size and my gut feelings, all very profitable, making good money. With BTC/Alt, I haven't figured out what the optimal trading theory is yet (it isn't #HODL for sure), and I am totally on gut feelings when it comes to BTC. And I wish I could figure out some Quant like analysis to this market. There is a solution out there, and the first one to figure it out will be a big winner. Just ask Ed Throp or Ken Griffin about inefficient stock warrant pricing a decade back.

Trade on,

The big question is how to price, hedge and execute a bullet proof strategy on BTC.

[Canis Majoris]

I've been trading markets for 35 years - as a job - and yep, I'm an old dude. I am still a trader and an accountant for a mid-size company; stocks, bonds, funds, options, futures, forwards, and a lot of currencies (thank god we aren't in Crypto-investments at work too).
Last year was seductive, I was doing well in all the markets (equity, debt, and crypto) - 'halcyon days'.  Last year, I had profits in Crypto, I was even buying into "it will be different this time."  But this year, I now have "unrealized" losses with some serious % numbers next to them. I from what I read, I'm not alone.

If you've been trading markets for 35 years, and this is a helluva job, how could it happen that you bought into this ****? Typically, people learn their lesson the hard way in their fresh years, and then it either remains with them for the rest of their trading lives or they go to hunt elsewhere. Don't consider this as an offense of any kind because I'm really-really curious. After 35 years you should be kinda invincible to these things. I mean the ones like "it will be different this time".

[Zadicar]

If you are so well versed in the markets you should understand that the bubble is easily blown away but it can also be easily inflated. Where you have confidence that the whales don't stop now the sale of coins? They have long returned their investments in bitcoin. Why can't they take the risk? Expectations in the market are very high. The price may go up instantly.

The price might shoot up instantly but the thing here is that no one knows on when that thing would happen.I know the words being spoken by OP which I do believe that most people who did invest on crypto since last year specially on December are really suffering from huge drawdown or negative with their coin holdings which it would really give you pain but doesn't mean this declining market would be over.Its still breathing chances of growing up would be there.