Probably most investors have already discovered that Bitcoin (BTC), as the market leader influences the prices of the rest crypto "assets" depending on its price swings.
Moreover, everyone is aware that scarcity is a powerful feature supporting the price of BTC to reach new heights as demand rises.
Finally, with enough research, an analyst can discover that the price action of Bitcoin (BTC) contains boom and bust cycles, each lasting approximately two years.
Price charts for BTC have recorded three major bull cycles and two bear cycles so far, and some analysts suggest the third bearish cycle is currently ongoing.
The top and the bottom usually contain identical circumstances and events that eventually caused a trend reversal.
While Bitcoin (BTC) has been declared dead numerous times since the beginning, it still managed to display resilience and attracted tens of millions of investors.
However, it failed to attract users as P2P Electronic Cash and achieve global adoption as a payments network as the whitepaper proposes.
Boom And Bust Cycles And Why There Will Be No Next Price Level For BTC
When looking for reasons for Bitcoin's boom and bust cycles, we immediately identify two key points:
- Scarcity (21 million fixed supply)
- The halving (or the "halvening")
These major features are backed by an extreme marketing network in social media.
It takes a really long time to research the space, and the majority of those supposed to be interested in educating the public are BTC advocates that care for the exact opposite.
Their plan is to promote BTC as the only worthy cryptocurrency to invest in, and the price action is the first and foremost indicator.
Meanwhile, the technical aspect is barely explained since superior to BTC technology is already available.
The price of BTC failed to achieve what everyone was expecting. BTC didn't reach $100k and currently struggles to sustain itself above the 2017 ATH ($20k).
In all previous boom cycles, BTC's price exploded several times higher than the previous ATH, signifying a new price level.
Yet this time, it failed.
The profit margins are way lower than the previous boom cycles, and all predictions are invalidated.
This is the end of the parabolic price action for BTC.
And that's a good thing.
Was Trololo wrong?
No, Trololo (trolololo) was correct, but the chart required an adjustment in 2020. The correct one is the one below, which predicts the overall market of cryptocurrencies, since BTC has lost its dominance.
(source)
Trololo perfectly predicted the 2017 $10k ATH but failed with the $100k prediction for July 2021. The reason is that Trololo failed to predict:
- the rise of other cryptocurrencies in market cap (Ethereum, XRP)
- the inaction of Bitcoin Core devs to scale the chain
- the rise of (centralized) stablecoins
The Trololo chart failed to predict that innovation would thrive and didn't predict Ethereum would become widely adopted and evolve the market into an industry. Finally, the Trololo chart didn't forecast the impact of the scaling debate that concluded with Blockstream dominating developments.
Bitcoin (BTC) would have achieved the $100k target under different circumstances, and perhaps a lot higher, if Blockstream hadn't divided the community leading to thousands of early adopters abandoning it disgusted and frustrated.
The BTC strategy focused only on the store of value narrative but excluded the currency option (means of exchange), eventually limiting the chances of BTC achieving the 100k mark (a flaw that was recognized, though).
Everyone was wrong about Bitcoin, except the big block size that wanted Bitcoin to scale up and achieve domination as a robust payments network.
It was the missing link that Trololo couldn't predict as to when he/she published this chart, Bitcoin was united and moving forward as both store of value and a means of exchange.
By removing the money aspect in the process, potential was crippled by half (or more).
Can Bitcoin (BTC) reach a new ATH?
(source)
It can, but the invalidation of both Stock-to-Flow and Trololo charts point to the fact that Bitcoin (BTC) will enter a lengthy process of consolidation that will last for at least another year.
The issue today that should concern every other project is the market itself and its structure, which is biased in supporting BTC at the expense of other cryptocurrencies.
The exchanges base trading on two factors that sustain Bitcoin (BTC) as the market leader:
- Stablecoin USDT
- BTC trading pairs
Multiple mechanisms are used to divert attention from any other useful cryptocurrency into BTC, which according to maxis is "the only one you need and the rest are scams". Unless of course a maximalist gets involved with another coin, so it becomes an exception!
This obscure identification of the public needs somehow helped BTC in the past, as during the frustration of the 2018 bear market, the maxis discovered with this approach they could lure into BTC those that remained in crypto .
The savior of BTC at this point is the cryptocurrency exchange mechanism that sustains it at the expense of the rest innovation in the field.
Forget about BTC - The Market Breaths Innovation
Focus on blockchains that work and keep building on fundamentals:
- Decentralized
- Permissionless
- Borderless
- Immutable
- Censorship Resistant
- Fast, Feeless, and Reliable Networks
Concerning P2P Electronic Cash options, it takes lengthy research to define which networks take cuts on their principles, and which work exactly as publicized.
Feedback from our experiences offers clarity of events and a better understanding of behavioral patterns.
Usually, it takes a long time to adjust or recognize the falsehood of narratives that overwhelms us as newcomers in this space.
Focus on what owkr
Originally published at read.cash
Cover Photo by "xresch", on Pixabay
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Thank you.
Very interesting and informative.