The Idea Is Not New
Ever since Microstrategy and hedge fund managers moved into the Bitcoin space in early 2020, the rumors and “conspiracy theories” began to circulate that the days of an independent and relatively free market were over. Price action did however manage to continue in a relatively predictable manner when considering Bitcoin’s general behavior. However, mid-2021 was full of surprises. After dropping from the new all-time high of approximately $65K, the narrative began to form that Bitcoin was likely to experience a cycle similar to that of 2013. Bitcoin went on to do more than just dip! Bitcoin proceeded to drop approximately 56% before finding a bottom. Let me remind you that the entire drop from peak to floor in the previous bear market of 2018/19 was 85%!
Considering the recent local high, potential investors found the discount too good to pass up. A fresh round of accumulation began and the Bitcoin price once again began to push higher. BTC went on to form a new all-time high just below $70K, prior to collapsing yet again. We have seen the price edge lower on a consistent basis and are now currently observing a price of $39K, as I am writing. In a recent post published on the 18th of January, I outlined my view that if BTC were to definitively break below $38K, I would expect that the targets of the current bear patterns in play would most likely be reached.
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.
One needs to be aware of the infamous “Bitcoin scam wick”, which will overextend significantly on a drop, only to bounce back into safer territory. For this reason, I would at least wait for a daily close below these levels.
My Recent Observations
In the same article, I describe what I am interpreting as a well-designed accumulation zone between $38K and $45K, which has become so boring through predictability. I also stated that a sudden spurt in volume could shatter this zone in an aggressive move either way.
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.
What also needs to be considered is that the extension of this zone is also a probable scenario. The goal is to create the opportunity to buy even lower, in essence extending the zone without breaking it. There have been a couple of brief dips down to the current levels and you have to admit that buying at $38K is a great buy. Even in the short term, a 10% gain can be secured in days.
Organic Or Strategic?
Is this a surprise move of volume or another very well-constructed move? Answering this question has the potential to reveal how far the manipulation goes. If greed has encouraged large players to extend their zone, then at least there is a form of comfort. The reason is, accumulating at low levels doesn’t help much if the whole price structure collapses. However, the volume on exchanges is very low but that doesn’t mean too much, as OTC is often the preferred method.
Manipulating the spot price with volume in order to buy with volume on an OTC, where the price is not affected is a logically “smart move”. There are so many ways that markets are perverted on a daily basis, it is probably better that market participants are for the most part ignorant of this truth. It may very well deter many if they were to know the extent to which this actually occurs on an even daily basis.
Patience & Restraint
Jumping on any bandwagon at this point because of a potential scenario or narrative that may very well be playing out is not something I am doing. For the moment, I am watching and gathering points of data and intel. Everyone is at a different point in their Crypto journey, which means that risk tolerance is at varying levels for particular individuals. Every investor needs to assess their own unique risk tolerance. As my disclaimer states, I am not your financial advisor. I merely share my thoughts, experiences, and insights into the market.
Extreme Fear Persists
Since we have now printed a new all-time high for Bitcoin at just below $70K, the market is already in significant pain. The Crypto Fear and Greed index continues to reflect “Extreme Fear”, which has been the case for the past three weeks.
Certain alts are suffering tremendously, while others are holding out a lot better. This is what we actually need to be seeing more of if we truly want to see this market become truly established.
Is The Manipulation Real?
There is always the chance that this is all fairly organic. It is a possibility but to be honest, I personally doubt it. There are a few rather concerning points that do however point to some level of manipulation. The continued accumulation of whale wallets at these levels is also an indication that they don’t see prices completely collapsing. What we need to deduce, if possible, is how far and how long this will go on.
Having someone tell you what to do is never a good idea. Investors need to be active in this market so that they can make independent decisions. Crypto was in essence meant to remove custodial services, which would also imply broker services, where a well-dressed individual simply tells you what to do. Crypto puts the power back into your hands, along with the responsibility.
Wishing you well as you continue on your Crypto journey, remembering that all journeys include both sunshine and rain. There are benefits to each, as well as opportunities. Don’t get burdened by price action, so as to become unresponsive to the opportunities that surround you. See you soon!