More Than A Cycle
The current bear market is something extremely uncomfortable for many a new Crypto investor. Many have heard about previous crashes but hearing about something and living through it are two very different experiences. Even those who have been through this before struggle at times, so you can imagine how shaken up the newcomers are. However, there is comfort in the consistency of Bitcoin’s cyclical behavior. This is not the first crash and it won’t be the last. The largest companies in the world are also affected by the current economic climate. What many fail to realize though is that this would have happened regardless. There wasn’t much in terms of a macro issue that encouraged a crash in 2018. It was merely Bitcoin indulging in its cyclical indulgence. Bitcoin has an inherent need to outperform the skeptics, as well as disappoint the “moon boys”.
The only way to avoid being on the wrong side of the market is to be neither. The most logical and successful approach to date is to monitor and assess Bitcoin’s habitual price performance. What does the price of Bitcoin do consistently and without change over time? One thing that you will soon identify is the four-year cycle, which is triggered and sustained by the halving dynamic. Avoid being skeptical, as well as a moon boy and instead, look to the charts. Something is relevant until it’s not. Many were calling the four-year cycle irrelevant prior to it being proven irrelevant. This is once again the human condition, exaltation over fact.
Charts & Data
Data is one of the purest forms of information. Bad actors can find ways to be deceptive though. For instance, a group of whales could agree to deposit loads of Bitcoin onto exchanges with no intention of selling. Those monitoring this would naturally expect a sell-off. A false indicator is triggered and whales simply buy more and remove their BTC. I identified an instance similar to this in 2021 and it played out as expected. There were a few other indicators that were providing confluence for the alternative outcome, which helped me to identify it as a false signal. This is why confluence is vital. Trading without confluence is not trading, it’s gambling. You need a thesis for any investment or trade strategy.
Breaking A Habit
One of the most difficult things in life is to abandon a bad habit. Developing a new habit is a lot easier than breaking an old one. Bitcoin ignored all the adoption, institutional investment, and legalization as currency just to indulge in a 13-year-old habit. Until this habit is broken, don’t presume that it is. It’s that simple. I believe that it will always be around but will most likely become a lot less prevalent. It will become a lot more difficult to highlight but it will still be contributing to the price action.
Why Do I Say This?
Quite simply, you cannot cut the supply of such a predominant asset by 50% and experience no change. It is the reverse of stating that the FED can increase the supply of dollars without triggering inflation. It’s ludicrous, right? The same applies to Bitcoin. Many on-chain analysts get ahead of themselves in my opinion. They exclude basic principles because they view what they are “picking up” in isolated time frames as new data that is superior to the current information. There is wisdom in not being too smart!
Finally, we have a global macro situation that is going to be a massive challenge for Bitcoin to overcome. Even within this turmoil Bitcoin is behaving as it always has, despite what the media says. It’s going to be interesting to see what plays out in the following two years.