Bitcoin and Markets From A Sentiment Perspective
Updated
It's been a while. I'm enjoying my time not quite paying attention to markets as much. I have finally finished my graduate program, and have been devoting my time to the creative things I enjoy: reading and writing sci-fi, playing music, and making visual art. As I've mentioned, I've considered shifting over to Youtube for my videos, but that has the potential to take time away from other things I enjoy - things I haven't had the time to do for quite a while. I'll of course post an update on here, should I decide to go that route.
Now, the analysis. Although my long term stance on crypto has shifted, that does not mean that the market can't bounce, and it does not mean that it'll go straight to zero (although as LUNA showed us, it actually could). Sentiment is overwhelmingly bearish. In fact, I've never seen sentiment this horrible across the crypto space, and rightfully so. Speculative buyers have lost tons of money, and more people than ever are convinced it's a Ponzi scheme, which, let's be real, it mostly is. Sometimes it's hard to tell whether I'm in r/cryptocurrency or r/buttcoin. Should this market continue to exist, this is how the retail investors get punished over time. Every single altcoin project has failed to sustain new highs against Bitcoin, except BNB. And BNB is being called into question as a potential unregistered security. Even ETH is looking worrisome on the ratio, and could be confirming a MACRO lower high.
Nevertheless, there are some signs of a floor at current levels. The market usually does what no one expects. Although Bitcoin made a brief lower low to
25K, it has maintained support above 2021 Summer lows quite well, with significant volume. I was thinking that it could fall straight to 20k once the 3 day 200 MA broke, but buyers have been fairly resilient. Traditional markets also show signs of a short term bottom. It's very possible U.S. markets simply rally until the midterm elections, forming a huge double-top before the "true" recession begins. It's against the current government's interest to let markets unravel so easily. But of course the market can always do its own thing and keep heading lower. Microstrategy stock still looks like a bubble in the midst of popping. To position oneself in this environment, a risk assessment is more important than ever.
There are still enormous bubbles - rents in NYC have roughly doubled in the last few months and people are somehow comfortable paying 5k for a 1 bedroom apartment, when this could get you a 4 bedroom on 5th avenue merely 10 years ago. I think it's only a matter of time. A huge asset bubble like this takes a long time to unwind.
So, what does this mean for Bitcoin? Well, to begin with, the OG crypto will need to break through a lot of heavy resistances. One of the largest is the $37-38k range, which I consider a zone of control. If markets are to rally for several months, Bitcoin could even push higher than that, but let's start small. I also do not think Bitcoin will continue to provide heavily outsized returns versus the stock market, as I wrote about in my most recent post. The chart also looks quite bearish, new lows could easily be on the horizon, but I do not own nearly enough crypto to be concerned about that. I still think there is significant risk for prices to return to 2018-2019 lows. They already have for many projects. What's promising here is that Bitcoin dominance is finally trending up, which I've mentioned is usually a better buy signal. Money flowing INTO altcoins (decreasing BTC dominance) is usually indicative of speculative mania.
What this implies is that this might be an interesting time to own at least a small amount of Bitcoin and other cryptocurrencies. Often when everyone is bearish, and when negative media articles keep being circulated, it can be a good time to buy, at least in the short term. I decided to purchase very small amounts of a couple projects, pretty much only playing a potential bounce. I am no longer including crypto as a large portion of my portfolio. I'll be carefully re-investing some of my gains over the next few years as I begin to work full-time again. Generally, I invest in things that align with my values. There are a few cryptocurrencies that fit this ideal, but I acknowledge that they may also just fade into obscurity.
This is meant for speculation and entertainment only, not as financial advice!
-Victor Cobra
Now, the analysis. Although my long term stance on crypto has shifted, that does not mean that the market can't bounce, and it does not mean that it'll go straight to zero (although as LUNA showed us, it actually could). Sentiment is overwhelmingly bearish. In fact, I've never seen sentiment this horrible across the crypto space, and rightfully so. Speculative buyers have lost tons of money, and more people than ever are convinced it's a Ponzi scheme, which, let's be real, it mostly is. Sometimes it's hard to tell whether I'm in r/cryptocurrency or r/buttcoin. Should this market continue to exist, this is how the retail investors get punished over time. Every single altcoin project has failed to sustain new highs against Bitcoin, except BNB. And BNB is being called into question as a potential unregistered security. Even ETH is looking worrisome on the ratio, and could be confirming a MACRO lower high.
Nevertheless, there are some signs of a floor at current levels. The market usually does what no one expects. Although Bitcoin made a brief lower low to
25K, it has maintained support above 2021 Summer lows quite well, with significant volume. I was thinking that it could fall straight to 20k once the 3 day 200 MA broke, but buyers have been fairly resilient. Traditional markets also show signs of a short term bottom. It's very possible U.S. markets simply rally until the midterm elections, forming a huge double-top before the "true" recession begins. It's against the current government's interest to let markets unravel so easily. But of course the market can always do its own thing and keep heading lower. Microstrategy stock still looks like a bubble in the midst of popping. To position oneself in this environment, a risk assessment is more important than ever. There are still enormous bubbles - rents in NYC have roughly doubled in the last few months and people are somehow comfortable paying 5k for a 1 bedroom apartment, when this could get you a 4 bedroom on 5th avenue merely 10 years ago. I think it's only a matter of time. A huge asset bubble like this takes a long time to unwind.
So, what does this mean for Bitcoin? Well, to begin with, the OG crypto will need to break through a lot of heavy resistances. One of the largest is the $37-38k range, which I consider a zone of control. If markets are to rally for several months, Bitcoin could even push higher than that, but let's start small. I also do not think Bitcoin will continue to provide heavily outsized returns versus the stock market, as I wrote about in my most recent post. The chart also looks quite bearish, new lows could easily be on the horizon, but I do not own nearly enough crypto to be concerned about that. I still think there is significant risk for prices to return to 2018-2019 lows. They already have for many projects. What's promising here is that Bitcoin dominance is finally trending up, which I've mentioned is usually a better buy signal. Money flowing INTO altcoins (decreasing BTC dominance) is usually indicative of speculative mania.
What this implies is that this might be an interesting time to own at least a small amount of Bitcoin and other cryptocurrencies. Often when everyone is bearish, and when negative media articles keep being circulated, it can be a good time to buy, at least in the short term. I decided to purchase very small amounts of a couple projects, pretty much only playing a potential bounce. I am no longer including crypto as a large portion of my portfolio. I'll be carefully re-investing some of my gains over the next few years as I begin to work full-time again. Generally, I invest in things that align with my values. There are a few cryptocurrencies that fit this ideal, but I acknowledge that they may also just fade into obscurity.
This is meant for speculation and entertainment only, not as financial advice!
-Victor Cobra
Note
Clarifying reasons for a pre-midterm elections rally:1) Justification for higher interest rates to tame inflation
2) Ensuring re-election of democrats
3) Big double-top distribution before the real economic crunch. The housing market has yet to unwind.
Note
Already looking pretty weak - very possible this just breaks down. Honestly really hard to say at this point. The time to truly de-risk was earlier this year/late 2021. Today, it's much more difficult. For those interested in crypto exposure, this is the time when the less aggressive investor will start to buy a little bit here and there. However, I think there's a pretty substantial chance the market continues to fizzle out. My reasoning is shown on recent posts.Note
Here are some major support levels, should the current consolidation break to the downside without touching any of the higher levels. Note
Welp, looks like too many people were hoping for a small relief rally to get out at a better price. What a brutal market.
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