Yes it soared to an all time high of over $73,500 dollars as of March 14th to be precise. All thanks to the ETF pressure and the follow up by Google ads amendment. The FOMO was high, with institutional investors leading the charge even the medium ones could not resist. With an outpour of funds within a short period of time we saw green candles in the bitcoin industry that also affected the altcoin industry.
What does it mean for an asset to be overpriced? From here, I would say giving it a price tag that is worth more than it should be at that particular time. Is Bitcoin not worth such an amount like $73K? Of course it is, depending on the time. note the word 'particular time' in my short definition. Prices of goods and services are likely to appreciate overtime but when overly done, there'll definitely be a problem. We saw those short lived resistance in bitcoin that caused liquidations.
Even in the offline markets, we've seen goods, products, service and commodities being overpriced. Perharps you've been a victim once, when a seller tells you about the quality of product he wants to give you and why you should buy it now or buy higher later. It's offline hype I guess.
Let's take two prominent instances; first was when bitcoin hit around $73,750 dollars on March 14th, the resistance was not there due to it being overpriced, we saw that market decline six days later which sucked a lot of investors out in the process. The ETF firms fought really hard but it was not just Enough to avoid the sudden dip . It was an inevitable loss. Secondly, we saw bitcoin dip a little below $60,000 ( around $59,760 according to some exchanges) on April 17. The result mostly came as a result of the perceived war, yet what to note is where the resistance proved strong (within the 60K price mark). It was indeed another loss for those who longed the market.
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I sense the real bitcoin price within the first three months was 60K, the rest was overpricing. FOMO and FUD played a huge role. You should know what it means to be left behind before an inevitable halving, yet the halving pressure pushed the price within the needed price. It has consequences in a market in general, when looking at the altcoin industry, we saw shocking market decline in the process. This has push some investors off the crypto ship just few months into the year.
Market instability coupled with investor loss
Why a market falls drastically is due to it being over priced. When a falling knife is let loose, the market (its investors) suffer. We saw the created bubble after the ETF approval, I always sensed danger the moment bitcoin would exceed the $69K mark. The best time for this to have happened would have been after the halving. Dividing the block reward would have showed resistance due to difficulty in mining and rarity.
We saw the overvaluation correction sending a shock wave, people bought at overpriced value, a risk that when intrinsic value is discovered, many always go home empty. Till date, a lot of investors are still skeptical about if bitcoin has actually found it resistance. To me it has and it's that $60K market I predicted in one of my recent article (this is no investment advise).
Capital misallocation has consequences
We saw it all happen at a flash, the idea by medium investors was to gain from the FOMO. You may be wondering how? capitalfrom the altcoin industry was mostly pushed to the bitcoin network for short lived gains but when it backed fired, we saw a distortion. Why do you think some altcoin dropped more than 30%, exception of response to bitcoin loss as usually, there was no longer resistance (out of capital) in the altcoin industry leading to inefficiency in the crypto economy.
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Some investors are unemployed as it stands. What I mean is, capital have vanished into thin air (gain actually to someone else) deterring long term market vision. There has been a financial crisis and economic recession in the process. When loss pushes money to few hands, it difficult to cease broader productivity.
Bitcoin did hit $59, 650 dollars on April 19 within the halving period of 19th and 20th. The price is beginning to spring the green ways. Will there be a decline to the $60K region. The uncertainty of war may play it part but I must say it would be difficult for that to happen. A steady price is what we may see. Another thing to watch out for are miners decision; what if they liquidate the market through bitcoin selling to raise funds and cover the Proof of Work expenses which has increased.
To conclude, let me add, overpricing has consequences. In the presence of FOMO always lies an inevitable loss. There has been loss in the bitcoin market within a month to the halving. 60K price mark has proven to be the true value all this while, the rest was bitcoin being placed in a seat of overvalued asset at that particular time. Indeed it has potentials to break the 100K price mark, nevertheless, FOMO will always be followed by liquidation; many will loose and as usual, few will gain. Be conscious in the financial market when pursuing prices and speculations, it can be a bait.
Disclaimer, if you've ever read my financial article, always note it is not an investment advice. I am not even done advising myself. financial market is a game of who wins and who losses. DYOR. Thanks for your usual understanding.
Posted Using InLeo Alpha