Bitcoin Bear Cycle 2021-2024
If we follow market cycles exactly, then this idea is wrong and bitcoin has a technical target upside of 180K-200K for this year; however, I just don't think that is plausible this time around. The reason is that bitcoin has too much exposure; the entire world knows about it now, and almost everyone I know is a crypto trader these days. This can't be a good thing. It is precisely the kind of thing we were always warned about: you are supposed to sell when every person on the street is in the market, and generally that is what the pandemic has done. We all have our money in the market already, and the only hope everyone seems to have is that institutions are going to step in and continue pumping bitcoin in a vertical rally, but I just don't think that is a very smart purchase plan for long term holders like institutions. They are supposed to be the "smart money" after all. So what we actually have here is a situation where everyone is in the market waiting for the price to go higher, and when you run out buyers, you can guess what will happen. Eventually, we are going to pivot from buying on dips, to selling on rallies until support lines crack. This, combined with how many novice traders the pandemic has brought in, might be a recipe for the price retreating just as fast as it advanced.
One of the primary narratives since the March 2020 crash has been that low interest rates combined with all this money printing via government stimulus will cause inflation, and since then bitcoin has gone up around 1000% to a high of almost $42,000. I think 10X in 10 months was an overshoot and the market needs to cool off a bit before climbing higher. Sentiment can change overnight in this market, and I think there are a few potential narratives that may put a damper on this euphoric market sentiment, the biggest being Mt. Gox creditors finally receiving their refunds after waiting several years. What this means is that approximately 141,600 bitcoins will potentially be entering the market, creating a lot of selling pressure. There is also the usual Chinese New Year narrative, or government regulations. Hell, we are probably due for some more tether FUD too. Regardless of narrative or sentiment, I think the path of least resistance is to the downside for now.
One of the primary narratives since the March 2020 crash has been that low interest rates combined with all this money printing via government stimulus will cause inflation, and since then bitcoin has gone up around 1000% to a high of almost $42,000. I think 10X in 10 months was an overshoot and the market needs to cool off a bit before climbing higher. Sentiment can change overnight in this market, and I think there are a few potential narratives that may put a damper on this euphoric market sentiment, the biggest being Mt. Gox creditors finally receiving their refunds after waiting several years. What this means is that approximately 141,600 bitcoins will potentially be entering the market, creating a lot of selling pressure. There is also the usual Chinese New Year narrative, or government regulations. Hell, we are probably due for some more tether FUD too. Regardless of narrative or sentiment, I think the path of least resistance is to the downside for now.
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