So another halving has happened, the block reward of bitcoin has decreased, tensions have risen, prices have, well, not done a whole lot just yet. But there's a common sentiment among many communities that I've noticed: everyone's quite bullish.
Ultimately, this has me feeling a bit fearful. With such a strong sentiment of bullishness during a bear market, where monthly resistance levels are constantly being tested (and thus far rejected) while society itself is being tested with the nature of the pandemic, economic downfall as a result of decreased productivity and unemployment levels rising through the roof as governments scatter around like insects trying to keep things green while printing insane amounts of money, I can't help but feel we're prepping for some big movements. Though, more south.
First off, for years people have stated that the cryptocurrency market thrives on manipulation; that's not true in the slightest. It's the most free market there is that you can trade. A 50% move in either direction at the snap of a finger is not manipulation. It is completely natural movements as a result of a market in which its traders share diverse quantities of funds. A whale that pumps or dumps the price in a huge wick is not manipulating the market with their stake, they are simply contributing to the market as does a small retail trader.
We are witnessing manipulation of the highest order in fiat, however. As governments are printing currencies, injecting them into the markets, and completely avoiding the natural direction and movements the market has decided. It is argued that bitcoin has had some of the most insane volatility of any market, and that's true, because it's natural. What we are witnessing right now could certainly be, in a crypto fanatic's eyes, the best possible scenario for the future of cryptocurrency, we're actually witnessing reason for crippled growth.
Stimulus checks and fiat manipulation bleeds into the cryptocurrency market, obviously, given it's a market driven by fiat transactions through longs and shorts, spots, and even funding. The deprecation of one asset doesn't necessary warrant the increase in price of something paired against it, if the asset it is paired with relies heavily on the growth of that deprecating asset. Dollar or Euro strength bleeds ripples of additional liquidity into cryptocurrency markets, and a stimulus check is just a weak band-aid that requires being paid for sooner or later.
With the present issues in fiat, crypto is essentially a child being strangled by its fiat umbilical cord as it attempts to exit the bear market womb. And recent price volatility can be taken with a grain of salt as monthly resistance levels are tested; what better way to test market strength than to reach for a major resistance level? Whether it succeeds to break the wall or not, that strangling fiat umbilical cord remains a problem for future upward momentum. The safest option is to accept reality and drive down the price.
While I have no idea where we'd expect to end up in the event that this monthly resistance gains its strength as we continue to retest it, I do feel these movements would be necessary in the event that a bull market awaits around the corner. Whales will want to test resistance, drive down the price to some very low and affordable levels, wiping out that insanely bullish sentiment that currently exists during a very bearish time and resetting the market at a comfortable price that will then serve as a nice base for longs. Because ultimately, are the masses prepared to join us in a new wave of risk and loss as we break upward over $10,000 and aim towards new highs? Not yet. There's just not enough capital freed up in any markets, crypto or legacy. And with so many in crypto having a long sentiment, will there be enough selling pressure to achieve new local highs above such strong resistance? Probably not.
A very interesting take on all this but yeah, I'm one of those people feeling pretty bullish and, let's be honest, a big part of the upward momentum of cryptocurrency like Bitcoin is based on people feeling bullish. If there'd be more naysayers than believers, we would probably only go down in the long term.
I'd say we're priming up for a big sell-off. Something to really punish the bullish people right now but also provide a new, safe and low entry point for people to become bullish in. Anyone buying around here is buying just under rejected monthly resistance levels.
I'm bullish long-term, but right now? The world just doesn't seem like it's prepared to start breaking huge resistance levels and then kick into a new bull market above 20k.
There's a big quote from Warren Buffett that gets tossed around a lot:
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
Let's see. We all think we know, but nobody really does.
Time will tell.
I still think that, as a long term investor, bying BTC for 10k is still a great investment but if you've got a short term mindset ( not helpful in crypto ), you might fall in many bull traps. Been there, done that ;>)
See you around, buddy!
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