Is This Time Different for Bitcoin?
Bitcoin Data Newsletter
Hello All!
As Bitcoin continues to trend mostly sideways, as I expected, there are many claims within the crypto space as people rush to call it’s next move. First off, the reality is as you may know that no one knows what it will do for sure. It is very unwise to make financial decisions based on short term price predictions. Buying in when long term indicators are showing that Bitcoin is oversold however, has proven to be a good idea over time. This will keep you out of the trading mindset, which statistics show 95% of traders lose money. Expanding your mind to a longer time frame will help put you in the very few amount of people that can win.
The big question is, “Is this time different for Bitcoin’s bottom?” The answer is, yes and no. Yes, this time is different. But so is every time. History doesn’t repeat itself, but it rhymes. I will address some probable concerns you might have in this article.
You may be thinking of this popular indicator, the Bitcoin Rainbow Price Chart. It has broken down below the graph for the first time in Bitcoin history.
This was bound to happen. It was constructed using logarithmic lines, which can help determine future price, but it is only a guess. It failed to call the previous tops, and I predict price will eventually trade outside of this model entirely.
It is important to realize that almost all indicators that you have seen were created after the 2017 bull run, and were not used to make profit before that time. All models are wrong, some are useful. There is also a new version of this indicator out by the original source of this model.
There are other examples of this as well:
The Bitcoin yearly candles just made a bearish engulfing candle, which usually is the start to a bearish continuation. The Bitcoin Logarithmic growth curves indicator has completely broken to the downside. Bitcoin’s price has went below it’s previous ATH for the first time, and the 200 moving average was broken below for the first time.
So yes, that does make this time different. The reason this is happening is diminishing returns. As Bitcoin grows, it cannot make the same gains that it used to in the past. This causes things like you have seen above. But it does not mean that Bitcoin is destined for a new type of bear market, one that goes lower, or lasts longer than others.
Just as it takes a break of psyche to sell your Bitcoin near market cycle peaks, it requires the same to buy at the right times as well. Let’s take a look at current market sentiment based on a twitter poll I ran.
Is asked my followers what the cycle low will be for Bitcoin. 57% of them said that we still have at least a couple thousand dollars more to drop below the latest low of around 15.5k, with 10% thinking even lower than that.
The majority sentiment proves to be quite an effective counter indicator in most circumstances, as the majority will not be the ones that make money in the crypto space on average. As I have said before, in order for their to be winners in crypto, there must also be losers. Someone must sell their Bitcoin to you at the bottom for you to buy it. If for instance you were to bought the absolute bottom, someone is selling all that Bitcoin to you at a loss, and probably a tremendous one. You would be the winner in that circumstance they would be the loser.
You must also adopt this mentality to sell at the right time. If you were to sell at the absolute top that means someone bought all your Bitcoin off you after you patiently waited for it to rise, and they will then hold that Bitcoin to likely sell it at a loss.
Let’s revisit the poll I ran in April of 2021 near the top of 64k:
This is the power of greed. Only 22% of people thought that Bitcoin would top below 100k, and even less than that likely thought it would be only 64-69k.
You may be saying, “But I thought you said don’t try to time the bottom so what does it matter?” The idea is to get close to the bottom, and this is how you do it. The “this time is different mentality” will likely lead you to being a loser in both scenarios, up and down.
I posted this on twitter and it is a good example of market psychology and “this time is different”, can be applied to both tops and bottoms:
To beat this, here’s what you need to do. Acknowledge that yes this time is different, but the patterns to other cycles at good times to buy are similar. If you wait for lower prices as many will, they may never come. Bitcoin may shoot back up, then the mentality is “This is a suckers rally. Bitcoin is going way lower you’ll see.” Bitcoin does go a bit lower than it shoots right back up to prices above 30k. You then choose to buy and have missed out on an excellent opportunity at much lower prices.
I see it all over Twitter. There are many analysts calling for lower prices very confidently, showing something like this as evidence:
The same squiggly line, rejecting from a retest of a broken support zone, and then the squiggly line traveling to an area of strong support around 11k. This is what most people are thinking will happen and they fail to realize that 1. Bitcoin can return right back above that broken trend line, and 2. All long term indicators point to Bitcoin being heavily oversold. I will get more into these in my premium newsletter.
IN CONCLUSION…
To make money in Bitcoin, you must go against the grain. Buying when everyone says wait for lower prices.
The Bitcoin cycles are diminishing, and so is the time to make very good returns. Do not waste this time.
When Bitcoin returns to ATHs, people will envy this price you were able to buy it at, because they themselves were not able to identify the good buying opportunity. I’m ok being wrong about this not being the bottom, but the data doesn’t lie, it is risky to not buy Bitcoin right now.
I will be releasing my premium newsletter today going over some short term data, and some of the unique indicators I have created lately.
As always thank you for your support!
HODL on,
CryptoCon