Not Quite As Expected
Ok, it’s safe to say that 2021 didn’t close as many of us expected. It was a textbook example of an anti-climax, which as expected, left many disinterested. During the course of 2021, I had quite a number of people approach me in search of help in regards to Crypto. I am sure you guessed it, they are now very quiet. Let’s be honest, in order for you to be committed to this market you need to have a very strong conviction and that can only come from a foundation of knowledge and understanding. How else can you be confident in your conviction? There is a big difference between expectation and conviction. Expectancy is often based on what the general consensus is, which is exactly why in the heat of a bull market, everyone and his uncle are jumping on board. However, expectancy is based merely on emotional sentiment.
The Power Of Conviction
On the other hand, a conviction is based on something more substantial. Year after year of accumulating knowledge and watching adoption and the incorporation of Crypto into key parts of the global economy will inevitably create conviction. This is the most significant differentiation between the committed Cryptopreneur and a noob. Even if those who lack conviction stick it out, they will eventually be rewarded. The only regret they will experience from the position of hindsight is that they didn’t remain active while they waited.
However, has the strength of conviction within the Crypto community become so strong that it rejects reality? Strength has the potential to become a weakness when it is overextended. Is this the case for Crypto right now? I guess that when you look at the “story of Bitcoin” and how it is unfolding, the long-term view can only really be bullish. With that in mind, how much importance should then be placed on the current market activity?
Current Price Action
When it comes to markets, price is often manipulated in the short term. The reason is, the longer term has a way of returning the price to a more accurate fair market value. Looking at the double top, as well as the head and shoulders pattern currently evident in the BTC chart, it looks quite bleak. However, BTC has been hanging around the neckline for quite some time now. Typically, on arrival to the neckline, the price will usually give way. Even if it is a fakeout and later bounces back.
It is strange that the price has been very stable at a point that usually forces the price to react. In essence, the lack of a response in this particular case is actually an underlying bullish bias. The pattern is bearish, the breaking point has arrived and yet the price does not break down. I posted some weeks ago, possibly months ago, that I expected whales to manipulate the low to mid $40K level for as long as they could.
Eery Support At $40K
When you take into consideration what I have just said in regards to the price not breaking down at the neckline, it appears rather eery. Have you stopped to consider that those suppressing the price are also supporting the price? Think about it, picking up an asset at a bargain price doesn’t help much if the asset goes on to collapse.
Factor in all the bullish breakthroughs and adoption in recent months and you will arrive at the conclusion that the market is currently not accurately valued. Yes, the price could still break down and cause a further dump if enough traders isolate the technical analysis. However, Crypto is unlike other markets because it has another metric equally as powerful as TA and that is on-chain analysis.
Where Does This Leave The Community?
Well, yes there are many that are perhaps just refusing any narrative that contradicts them making bank, that much is obvious. However, the truly informed and knowledgeable are perhaps not shifting bearish due to a lack of confluence. This is even more important than TA, as TA is merely a single metric. Confluence gathers multiple indicators and data that reveal a similar potential outcome. The current volume is also not very impressive and price moves that last require volume. As a whole, it would appear that to shift bearish right now would be premature. It would also mean that a trading position or opinion has been formed without much confluence.
With that in mind, you may begin to think that it is actually the bears that are in denial and not the bulls. The most logical outcome here is an extended period of boring price action, most likely in the range of $38K to $45K. Significant volume could always still come in and ultimately destroy what appears to be a carefully constructed accumulation zone. This could take place in favor of the bears, as well as the bulls, it all depends on what that volume is doing.
This Is Nothing New
This has been happening for decades in traditional markets, there is no free market. One may just experience a market that is somewhat more able to operate on a more natural flow of supply and demand. These are however the markets that nobody is particularly interested in. Once an asset has the stage, you need to expect this type of activity.
For the most part, I do not think that the Crypto community is in a self-deceptive form of denial. However, it must be noted that if BTC were to break down below $38K, it would be logical to assume that the chances are quite good that the above-mentioned patterns would indeed proceed towards their specified targets. This would be a great opportunity to accumulate and OGs know exactly what to do, despite the mental battle. Buying my own blood in the crash of March 2020 was one of the most powerful moves I have made in Crypto. It is however an extremely difficult move for most people to make.
Thanks for the visit and here’s hoping that the road ahead is not too painful! See you soon!