My take on the market

[coolcoinz]

Since I can see the fear and pressure some of you are under at this point, I'd like to offer some advice and a bit of analysis of the market. Maybe this will put those of you who are biting their nails and watching the charts all day long at ease. Hodlers probably won't learn anything new here, but I at least hope that those who think the sky is falling will.

Let me start by saying that the things you can read in both the mania and extreme fear are one of a kind. Especially on youtube you can see and see some weird mix of panic, hate, resentment and sarcasm. No, Bitcoin is not going to $1, $100, $1000 or anything in between. The protocol is intact, the hash power is growing, this Bitcoin that people are selling now at a loss below 40k is actually a stronger, better Bitcoin than the one they were buying for 40k in January 2020.

You're probably thinking that if everything is fine then what caused it to crash and why 30k again? There's so many people who feel fooled by media and youtubers. It was supposed to be at 100k, right?
There's so many factors that influence the price that it's impossible to predict the exact value and time. There's external and internal factors, with internals being the number of users, nodes, network upgrades, hash power, difficulty, number of transactions. External factors are things like the stock market, the attitude of various governments, pandemics, wars and so on.
In 2013 it was mostly internal with the biggest exchange declaring bankruptcy, while the March 2020 market crash is a nice example of an external influence (US stock market covid crash)

Unlike the external ones, internal problems cause a prolonged loss of confidence in the asset, so they're much worse.

IMO we are currently facing a bearish correction due to external factors. High inflation all over the world with countries like USA, Turkey, Russia and Poland really struggling to fight it. Most of them try to increase interest rates, which means that companies who are in debt are forced to pay more interest and any future loan is going to cost them more. Naturally this is going to slow them down and make investors (who also have to pay higher interest on their loans) to sell some assets to be able to cover that increase. This is why the stock market is going down and dragging Bitcoin along.

Is it bad overall? Sure, but is it bad for Bitcoin? Not really, because it's still the same Bitcoin, just people don't have enough money to keep buying and since we are mining more every day, with less buyers Bitcoin is naturally going to keep falling in price.

Silver lining? Of course there is one. First of all, the stocks are not going to keep falling forever. The governments know that they can't let this go too far or companies start going bankrupt, which means less taxes and unemployed people on the streets waiting for another round of stimulus checks. They are going to start printing money and lowering rates, which will push the stocks and bitcoin up.

There's also some technicals for those of you who like these things.
The similarity among this price action and other historical events is striking.

We are going through Spring of 2021 all over again. You can see that there's much less volume this time because we've been witnessing an outflow of coins from exchanges all throughout last year.

Why shouldn't you panic?
1. Fear is at extreme levels in both the fear and greed index and on social media. The blood is definitely on the streets.
2. The RSI is at one of its lowest levels in history, around the value where it was in March of 2020. Historically such a low RSI hasn't happened more than once per year and always indicated a good buying opportunity.
3. In the previous cycles we clearly had an overheated top, that was followed by a 50% move to the downside and a dead cat bounce (a lower high followed by a lower low). This time there was no such thing and we've reach the oversold area without even correcting 50%. In the previous cycles the price had to correct 70% or more to become oversold on the RSI.
4. The fundamentals remain the same.

If that's not enough for you, calm down and think about it for a moment. A year ago people were happy to see 30k, now they panic at 35k. We tend to see the negative side of things, despite common sense. If someone gives you $100 and the next day demands $80 back, you'll be reluctant to give it away. All you'll feel is regret that he gave you something and then came back to take it away, completely ignoring the fact that he gave you $20 for free.

Most people can't stand a little bit of pressure and succumb to it. They want for it to stop already, even if it means turning this pressure into regret. When you hold an asset that's 10% down you just want it to stop and go up, but when it goes down another 10% and another, you sell just to be able to get on with your life. That's why bear markets always take longer and go deeper than they should, without any fundamental reason.

[ChrisPop]

This is a quality post, but I think it belongs to the economics or trading section of the forum.

To comment a bit on it: The raise of interest rates will surely affect the level of spending of people and businesses, but we can't know for sure the magnitude of the impact. After all the productivity growth caused by technology advancement is something we haven't seen before in our history. Just think about the economic value artificial intelligence could unlock, not even talking about space exploration. The sell-off is probably caused by a mixture between the expectation of a serious drop in economic activity once interest rates hike and fear of the on-going health crisis. It is a pity that Bitcoin is not yet considered a hedge against uncertainty. Probably investors need to see a longer track record in the markets.

[coolcoinz]

Thanks for the input. I chose this section because I didn't want the thread to be too technical or too political. It's also not about trading but rather not getting rid of your coins after a 45% drop in price without considering the bullish case.

You are right, but I feel like the market is becoming more mature. There's less speculators and more strong hands. People compare market cycles thinking it will play out the same way every time (20x up and then 85% down in a year of bear) but It's not going to be like that. This would be too easy to predict and too linear.



 

[GreatArkansas]

Here's an addition to "Why shouldn't you panic?" of OP.

People especially newbies must also be aware that this bloody market action recently is not only happening in the cryptocurrency market, if you take a look at the stock market, they are also suffering. I am more likely worried if this bloody market is only on cryptocurrency, this is like global effect, for all the market not only in Bitcoin.

The Dollar Cost Averaging (DCA) method this time is extremely effective, with the drop from $40,000. Oversold market, then if even we will drop again, I am positive that we will not visit $20,000 or below again.

[franky1]

when the price goes up it always comes down

there are so many waves you will always find a combination that matches more then once

\
  \    /\_
    \/     \/\

especially if there is like 8 other peaks between the 4peak pattern. making it a 1/3 chance

but this silly pattern 'trend analysis' is meaning less. its more so fulfilling prophecy rather then predicting anything
if enough bots are programmed to trade in a pattern if the price dips more then 10%.. guess what. the bots are the ones then causing the pattern

however if you look at a more outside view of just imagining a price line. you can start to see more things.

just looking at the price line. you could the market 'bottom' (lowest price of last month, 3 month, 12 month) and then whatever the price is today you can see if its near those bottoms or up high. meaning you can see if something is cheap or premium (value or overvalued)

you can also make a better value window. by looking at things not found in the market price.
things like the mining cost from cheapest on the planet to most expensive.  and you will find when putting the charts together the price no matter what it is fits inside the value window. its no surprise.

here is my recent example
yep its much better then drawing arrows on price charts. as its actually using statists not found in price but explain alot about the economics at play.

ill throw my guess in.
'value window'(mining cost, not market price) bottom sits at:
one month low of $33229.81
three month low of $30237.55
six month low of $20333.11
twelve month low of $16751.05
these lows mentioned above are not based on "price" lows seen.. but based on absolute bottom mining cost which has nothing to do with the market price. but has to do with the cheapest anyone can mine on the planet on the day of the hashrate that day

its based simply by calculating the mining cost and tracking that with the hashrate(no market price variable included).
premium mining cost (hardware with ROI+ $0.37/kwh electric)
cheapest mining cost (hardware with ROI+ $0.04/kwh electric)

and separately THEN adding in the market price into the final chart as a comparison


note the mining cost b & p is pure [asic hardware ROI+electric cost] vs hashrate. using bitmain s19pr (110th at $12k with 2year ROI and $0.04elec or $0.37elec). it has no market price variable,

yet for all the years i have used this. the price(separate stat in grey) has happily sat between the cheap-premium mining cost window.

yes the mining hashrate can retreat back to 3month, 6 month or 1 year bottom. allowing for the price to retreat down too.

[Obito]

Oh boy, with the fear index on the high gear. I guess it's time for us to start making sure that we have fiat lying around so we can make sure that we are going to buy a lot of cryptocurrencies, I know that I'm not the only one who thinks this is a good opportunity to buy crypto right now so I know that my opinion is somehow grounded in logic. Hope that everyone gets to buy crypto right now when the prices are dumping.

[yazher]

Oh boy, with the fear index on the high gear. I guess it's time for us to start making sure that we have fiat lying around so we can make sure that we are going to buy a lot of cryptocurrencies, I know that I'm not the only one who thinks this is a good opportunity to buy crypto right now so I know that my opinion is somehow grounded in logic. Hope that everyone gets to buy crypto right now when the prices are dumping.

It's totally a downtrend except for the stable coins. Man, this is too good to enter the market but I'm still waiting for the right time to invest because it might go down further in the next few days. I'm just putting the money first in the exchange to get ready for the massive comeback. I'm sure everyone is doing the same as always and they also waiting for the right time to enter the market.
This is a sure profit since we are investing in the top 10 cryptocurrencies but it is safe to say that bitcoin is the best choice right now.

[Obito]

~snip

It's totally a downtrend except for the stable coins. Man, this is too good to enter the market but I'm still waiting for the right time to invest because it might go down further in the next few days. I'm just putting the money first in the exchange to get ready for the massive comeback. I'm sure everyone is doing the same as always and they also waiting for the right time to enter the market.
This is a sure profit since we are investing in the top 10 cryptocurrencies but it is safe to say that bitcoin is the best choice right now.

I get your point but I'm just saying that it's not the time for us to be scared because the prices are going down, and instead see it as an opportunity for us to get a potential profit in the near future when all of this red days are over. I mean you can wait for more days to come and see where it takes you but we don't know if the prices will start climbing again but hey, to each of their own.

[Fundamentals Of]

For those who find such explanations a little more complicated than what they could easily digest, it simply means avoid letting your emotions take over your decision making. The market is doing good and healthy. Bitcoin remains the same valuable Bitcoin.

Fear and panic are high right now especially to the newbies who bought at a much higher price. If you give in to your emotions you will end up selling at a loss. Remember that selling is the only thing that makes you lose. The value of your Bitcoin right now is just paper value. The moment you sell, that’s the time your value is made permanent. You cannot anymore recover from it.

[passwordnow]

Good read, I'm one of the holders and this is also my stand point this time.

A year ago people were happy to see 30k, now they panic at 35k.

Honestly, I'm one of those who has sold earlier and that's why I think that I'm still cool with whatever is happening in the market. It's like a cycle or it actually is. We're close again to another Chinese new year and usually when it comes, the market is really bleeding. Who knows? The whales from China or wherever they are co-celebrating and cashing out money from the market for their another "prosperous" upcoming new year.

[franky1]

there is no 'fear index'

its just a chart that shows greed in one direction and 'fear' in the other

/\

but here is the thing
for every seller there is a buyer.
so on the same updown. the buyers are the opposite
/\

one persons reduction \ is another persons discount
one persons premium / is another persons profit

and when it comes to sellers. not everyone bought above $35k so not all sellers are upset/afraid

i wouldnt call it a fear index. id call it an impatience index for those selling when prices are low.

what you do learn though is all the people that bought in previous years at $6-$20k that are selling for $35k. they are all happy.
and the new owners are at $35k and fresh, and willing to hoard for a longer period meaning the sentiment becomes stronger as a support above $20k to become a support above $30k
the more that bought below $20k and sell above $30k resets the $20k support to become $30k thus help prevent the price dipping below $30k because too many have bought and refuse to sell at a loss. and too many value it at $30k+ plus to want to buy more while its cheap.

the price drop is not FEAR, its impatience for those that seen the $69k ATH but cant wait around for support bottoms to catch up to the speculation numbers above it

[virasog]

If that's not enough for you, calm down and think about it for a moment. A year ago people were happy to see 30k, now they panic at 35k. We tend to see the negative side of things, despite common sense. If someone gives you $100 and the next day demands $80 back, you'll be reluctant to give it away. All you'll feel is regret that he gave you something and then came back to take it away, completely ignoring the fact that he gave you $20 for free.

This is human phycology. Last year people were happy to see 35K because they have not seen the 60K at that moment. Another reason was that 2021 was a bull cycle year as per the four year cycle and therefore people expected more upside and were greedy at 30-40K. Now when people see bitcoin dumping from 69000 to 35000$. they feel panic because as per the history they think we are about to enter a multi year long bear market.

Most people can't stand a little bit of pressure and succumb to it. They want for it to stop already, even if it means turning this pressure into regret. When you hold an asset that's 10% down you just want it to stop and go up, but when it goes down another 10% and another, you sell just to be able to get on with your life. That's why bear markets always take longer and go deeper than they should, without any fundamental reason.

If people can't bear the 10%-70% portfolio down, then they should not be in the crypto market. Crypto market is volatile and here we will have to face such crazy dumps. The main thing is that we know that bitcoin is fundamentally strong so it will recover. All its need is time and we have to wait for this time.

[pieppiep]

Good read, I'm one of the holders and this is also my stand point this time.

A year ago people were happy to see 30k, now they panic at 35k.

Honestly, I'm one of those who has sold earlier and that's why I think that I'm still cool with whatever is happening in the market. It's like a cycle or it actually is. We're close again to another Chinese new year and usually when it comes, the market is really bleeding. Who knows? The whales from China or wherever they are co-celebrating and cashing out money from the market for their another "prosperous" upcoming new year.

Hopefully, those people already sell their bitcoin when the price is at $69k

I think they do not have to panic seeing this situation. They can wait until the price back to $34k and start buying. Or they will not purchase anything if they are still afraid to enter the market.

Yes, we are close to Chinese New Year so we can expect that the market can be more bleed from this. Or those whales already prepare their money to buy at a low price and celebrate it by posting on their social media

But one thing that we should know is that the whales are already making a big profit from the peak and now, they are waiting for the best moment to accumulate more bitcoin from some of their profit.

[coolcoinz]

but this silly pattern 'trend analysis' is meaning less. its more so fulfilling prophecy rather then predicting anything

We're grasping at straws here, that's true, but patterns are a known way of predicting market moves. The more people see the pattern the more likely your prophecy will fulfill.
Most market indicators have their flaws. Pi cycle top indicated that 60k in April was the top, but there was another top close to 70k months later, so the indicator was ~10% short.

there is no 'fear index'

its just a chart that shows greed in one direction and 'fear' in the other

Call it what you want, but you have to agree that it's been pretty good at showing buy zones in the past. Usually when it goes to yearly lows, the sellers are becoming exhausted. As an investor you should look for extreme panic, a time when people aren't thinking straight anymore and those who held through initial selloffs get tired of waking up to red candles.

Human psychology is always the same and I know it because I've been through it in 2018 when I actually made money and was at a profit, but the long bear market made me quit the forum and stop watching charts. I had enough of constant negativity and even considered selling, but taking a break and focusing on something else helped me to get through this.

Honestly, I'm one of those who has sold earlier and that's why I think that I'm still cool with whatever is happening in the market. It's like a cycle or it actually is. We're close again to another Chinese new year and usually when it comes, the market is really bleeding. Who knows? The whales from China or wherever they are co-celebrating and cashing out money from the market for their another "prosperous" upcoming new year.

Chinese new years had more impact when China was still in the trading game. Now it's more of a "I don't know what's going on, but people are selling so maybe it's time to sell" game.

[passwordnow]

Good read, I'm one of the holders and this is also my stand point this time.

A year ago people were happy to see 30k, now they panic at 35k.

Honestly, I'm one of those who has sold earlier and that's why I think that I'm still cool with whatever is happening in the market. It's like a cycle or it actually is. We're close again to another Chinese new year and usually when it comes, the market is really bleeding. Who knows? The whales from China or wherever they are co-celebrating and cashing out money from the market for their another "prosperous" upcoming new year.

Hopefully, those people already sell their bitcoin when the price is at $69k

I think they do not have to panic seeing this situation. They can wait until the price back to $34k and start buying. Or they will not purchase anything if they are still afraid to enter the market.

Yes, we are close to Chinese New Year so we can expect that the market can be more bleed from this. Or those whales already prepare their money to buy at a low price and celebrate it by posting on their social media

But one thing that we should know is that the whales are already making a big profit from the peak and now, they are waiting for the best moment to accumulate more bitcoin from some of their profit.

Well if it is for those people that have sold the peak, they really don't have to panic when the price of bitcoin goes $30k or lower. They've made significant profit and selling x2 when the price of bitcoin heads down to that price. It's known that the whales have always been making a lot of profit every cycle of the market and as a small investor and trader, we should think about how we're going to deal with the current situation and this may take long and be patient.

[amishmanish]

So the fall has really just mirrored the stock falls due to rumors of Fed rate hikes. This may not just be the only reason as the actual fall is too great to explain this (40-50%). The geopolitical situation has definitely amplified this. Till the uncertainty recedes, we will continue to see falls. Yet, no matter what happens, the facts don't change that Bitcoin is still being considered by nation states and institutions. There have been worst falls earlier and this is also the best time to what some call "buidling".

So instead of panicking, the newbies who are stressed for their losses should really just hold onto their crypto, if they can and try to explore the space more for opportunities.

This isn't the time to care about price if you are in crypto for the long term. This is the time when you find your crypto niche and be ready for the revival.

[coolcoinz]

So the fall has really just mirrored the stock falls due to rumors of Fed rate hikes. This may not just be the only reason as the actual fall is too great to explain this (40-50%). The geopolitical situation has definitely amplified this. Till the uncertainty recedes, we will continue to see falls. Yet, no matter what happens, the facts don't change that Bitcoin is still being considered by nation states and institutions. There have been worst falls earlier and this is also the best time to what some call "buidling".

So instead of panicking, the newbies who are stressed for their losses should really just hold onto their crypto, if they can and try to explore the space more for opportunities.

This isn't the time to care about price if you are in crypto for the long term. This is the time when you find your crypto niche and be ready for the revival.

With Bitcoin it's usually a number of news, not just one, but the important part is that the drop is externally driven. Pandemic followed by a stimulus package and money printing threw many countries into an inflation spiral and scared people away from investments.

When the average guy hears all this doom and gloom in the news and finds out some of his friends lost their jobs, he goes to the bank and withdraws money. Inflation incites investing and spending, high interest rates and pandemic lockdowns work pretty much like news about a coming war and make people think of hoarding money.
Unfortunately, bitcoin is still seen as a volatile asset and instead of digital gold. We can joke that for it to be digital gold it would have to be losing 2% a year, like gold, but people will be people, most of them will never own a new car or be free of debt.

[franky1]

the quick rise from $20k to $69k was externally driven... the correction to $34k is as said the correction

the price is volatile but the bottomline value(not price) rises at a slower and supported rate. and no where was $69k price deemed as a stable price that should have remained

2021 value was $20k support value, 2022 value support is $30k

anything above these are speculative premium that can go up and down

[herurist]

Well if it is for those people that have sold the peak, they really don't have to panic when the price of bitcoin goes $30k or lower. They've made significant profit and selling x2 when the price of bitcoin heads down to that price. It's known that the whales have always been making a lot of profit every cycle of the market and as a small investor and trader, we should think about how we're going to deal with the current situation and this may take long and be patient.

The problem is that many people are still late in making decisions, for example when the price of bitcoin goes up even to New ATH, they still want to keep going up again and even some time ago $100 was still a hot topic.
and when bitcoin plummeted as it is now, they were reluctant and too late to use it to buy them instead selling their assets.
this happens very often and not even just for one or two people but a lot of people

[franky1]

buy the dip not the hype

dont listen to people that talk about fear, they have a one-sided view.
hype 'fear of missing out'
dip 'hoarders fear'

rational minds though
hype=buyers wait for correction
dip=buyers reward

hype=sellers reward
dip=sellers hoard time