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Author Topic: How a bull market begins  (Read 1332 times)
bassclef (OP)
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January 02, 2015, 10:13:26 PM
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Gentlemen. At its most basic level, the market is a mechanism for discovering price based on supply and demand.

During a bear market, when supply is in control, the price falls day after day, week after week as bagholders cannot stand their losses any longer and sell. We call these actors weak hands. They may have bought at too high of a price or are simply manipulated into selling. They are on the wrong side of the market. As the selling reaches critical mass, the price plunges strongly downward and panic ensues. This is called a selling climax and is accompanied by very high volume and bad news.

Sound familiar? We had one recently. At some point, smart money steps in and begins buying enough to stop the selling climax from progressing further. If they didn't, the price would fall even more. These buyers are generally strong hands--smart investors, professional traders or those who sold at higher prices. They are on the right side of the market. They are not necessarily working together in conspiracy, rather they are professionals who know how the game is played. When the price rebounds up, a huge number of coins have exchanged hands and the majority of weak hands have left the market.

What follows is an accumulation phase, where supply and demand are now in relative harmony. The climactic low and first reaction high define this trading range. The market now moves sideways, having found a low point for the smart money to fill their coffers. Why are they buying? Because they expect to sell at a higher price. If it is true accumulation, volume will expand near the top of the range and contract near the bottom. There will be shakeouts, preferably on low volume, as this is an easy way to test the market for supply. Remember, the smart money all know how the game is played and will accumulate slowly and stealthily as to not raise the price. They are well aware traders are driven by fear and will capitalize on this fact. They may sell parts of their stash to test the market, but the net effect will be more buying than selling. This phase can drag on for months as the last bit of available supply is squeezed from the market. Toward the end, selling volume is almost nonexistent and the price drifts up on very little effort.

Why does the smart money have to absorb so many coins? It is simple: A bull market is what it is because there is no significant selling to stop the price rise. If the smart money is bullish for the future, they need to allow for the higher prices at which they intend to sell. This price increase happens rather quickly to catch stops, squeeze shorts and discourage selling. Eventually, as the market approaches new highs, more buyers will be drawn in who will become the weak hands for the next cycle. The news will certainly be positive and bullish. The smart money is now capitalizing on another fear: The fear of missing out!

This is how and why a bull market begins. Supply must be removed for demand to take over. Now you understand why a powerful bear market is a prerequisite. And the more coins that have exchanged hands, the more significant it will be.

Since the selling climax in October, volume has fallen off sharply. There is no supply to go lower and price is drifting up on almost no effort. Dumps that used to scare the market into selling are quickly absorbed. Signs of accumulation are all around.

The question is: Are you on the right side of the market, or the wrong side?
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January 02, 2015, 10:22:04 PM
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TL;DR Gentlemen. Please, oh please buy my bag.  For the love of Satoshi, I'm begging you!

No.  

bassclef (OP)
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January 02, 2015, 10:28:58 PM
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TL;DR Gentlemen. Please, oh please buy my bag.  For the love of Satoshi, I'm begging you!

No thanks, I already bought yours.
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January 02, 2015, 11:50:41 PM
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Nice post. Lambtroll agrees. He has probably already started buying like the rest of us.
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January 03, 2015, 12:07:59 AM
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bull ?  Grin like this ...

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January 03, 2015, 01:47:59 AM
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Hard to actually consider the current cabal of exchanges as representative of an efficient market; VC capital has gone to start-ups, not the purchase of coins for example.

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January 03, 2015, 01:42:09 PM
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Good read, OP.

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January 03, 2015, 03:04:18 PM
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Closer and closer Smiley

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January 03, 2015, 05:30:42 PM
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Closer and closer Smiley

Just another $301 to go til [irrefutably] solid support Smiley
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January 03, 2015, 05:45:55 PM
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At some point we will have found a real bottom. And from that point on there will be growth and the market will turn irrefutably. This may still take some time, but it could very well be that $275 holds true to be our current long-term support. No one really knows...

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January 03, 2015, 05:53:56 PM
 #11

Gentlemen. At its most basic level, the market is a mechanism for discovering price based on supply and demand.

During a bear market, when supply is in control, the price falls day after day, week after week as bagholders cannot stand their losses any longer and sell. We call these actors weak hands. They may have bought at too high of a price or are simply manipulated into selling. They are on the wrong side of the market. As the selling reaches critical mass, the price plunges strongly downward and panic ensues. This is called a selling climax and is accompanied by very high volume and bad news.

Sound familiar? We had one recently. At some point, smart money steps in and begins buying enough to stop the selling climax from progressing further. If they didn't, the price would fall even more. These buyers are generally strong hands--smart investors, professional traders or those who sold at higher prices. They are on the right side of the market. They are not necessarily working together in conspiracy, rather they are professionals who know how the game is played. When the price rebounds up, a huge number of coins have exchanged hands and the majority of weak hands have left the market.

What follows is an accumulation phase, where supply and demand are now in relative harmony. The climactic low and first reaction high define this trading range. The market now moves sideways, having found a low point for the smart money to fill their coffers. Why are they buying? Because they expect to sell at a higher price. If it is true accumulation, volume will expand near the top of the range and contract near the bottom. There will be shakeouts, preferably on low volume, as this is an easy way to test the market for supply. Remember, the smart money all know how the game is played and will accumulate slowly and stealthily as to not raise the price. They are well aware traders are driven by fear and will capitalize on this fact. They may sell parts of their stash to test the market, but the net effect will be more buying than selling. This phase can drag on for months as the last bit of available supply is squeezed from the market. Toward the end, selling volume is almost nonexistent and the price drifts up on very little effort.

Why does the smart money have to absorb so many coins? It is simple: A bull market is what it is because there is no significant selling to stop the price rise. If the smart money is bullish for the future, they need to allow for the higher prices at which they intend to sell. This price increase happens rather quickly to catch stops, squeeze shorts and discourage selling. Eventually, as the market approaches new highs, more buyers will be drawn in who will become the weak hands for the next cycle. The news will certainly be positive and bullish. The smart money is now capitalizing on another fear: The fear of missing out!

This is how and why a bull market begins. Supply must be removed for demand to take over. Now you understand why a powerful bear market is a prerequisite. And the more coins that have exchanged hands, the more significant it will be.

Since the selling climax in October, volume has fallen off sharply. There is no supply to go lower and price is drifting up on almost no effort. Dumps that used to scare the market into selling are quickly absorbed. Signs of accumulation are all around.

The question is: Are you on the right side of the market, or the wrong side?

Great summary.
Also, shorter-term traders are currently being "trained" to always sell on rallies, and expect new lows. When that pattern finally breaks, "The fear of missing out!" can be so intense.   Smiley
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January 03, 2015, 06:08:25 PM
 #12

take a longer view for bitcoin , the bull market will not begins until more people
accept it

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January 03, 2015, 06:11:36 PM
 #13

take a longer view for bitcoin , the bull market will not begins until more people
accept it

Not necessarily! And that's to beauty crazy thing about speculation. It doesn't need new people to join the boat. Of course things are easier if there's new money coming in, but a speculative bubble can feed itself much like a feedback-loop.

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January 03, 2015, 06:16:19 PM
 #14

take a longer view for bitcoin , the bull market will not begins until more people
accept it

Two ETF are coming. Should be enough people

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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January 03, 2015, 06:26:13 PM
 #15

take a longer view for bitcoin , the bull market will not begins until more people
accept it

Two ETF are coming. Should be enough people

Which is the second one? I only know about the one of the winklevoss twins.
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January 03, 2015, 06:52:04 PM
 #16

take a longer view for bitcoin , the bull market will not begins until more people
accept it

Two ETF are coming. Should be enough people

Which is the second one? I only know about the one of the winklevoss twins.

OTCQX from BIT (Barry Silbert)

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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