Skip to main content

Never Confuse Brains with a Bull Market: Bitcoin's Capitulation Phase

Over the previous week, bitcoin has declined a full 30 percent, marking a 78-percent decline from its peak back on December 17, 2017. 

This hasn't kept the bitcoin bulls and hodlers from trying to sound smart.

Faux crypto advisors still abound on YouTube, conducting spurious technical analyses and setting target buy-in prices for a speculative risk asset that is primarily owned and manipulated by a narrow segment of the population, that is visibly non-correlated against market developments, and that plainly lacks sufficient trading history and stability to support such public claims which serve exclusively as a platform for fame-hungry YouTubers to get in on the prediction front so they can look smart if the crypto asset, or cryptocurrency, trades accordingly. 

Meanwhile, these talking heads have absolutely no idea about the asset's utility value, yet they stake claims about target levels which essentially operate from the yet-untested assumption of utility. 

Moreover, the crypto bulls ironically contradict themselves in proposing lower guidance and buy-in targets within the present trading range. 

Here’s why: 

If bullish on the asset, there is no reason to wait for that nominal decline or to abstain from dollar-cost averaging into the trade, especially when measured against the expectation of future appreciation. 

As such, those who encourage traders to abstain from buying at this level are tacitly admitting that they don’t really believe in the viability of the asset; they are merely speculating on its dollar-priced gyrations, movements that have proved to be unpredictable and non-correlated to market developments. 

However, if the case for viability theoretically remains intact, then we are effectively talking about peanuts compared to the massive dollar-priced appreciation believed to be looming over the horizon, near the surface of the moon. 

Unfortunately for crypto bulls, however, there are plainly no identifiers or signals of a bottom in sight, and the short-run momentum most closely resembles capitulation, not a "bottom" or a lucrative opportunity to buy the dip. 

Ultimately, the same cases were made on and around the peak on December 17, 2017, when bitcoin eclipsed $20,000 for 30 minutes before embarking upon an impressive 78-percent decline to date. 



Bitcoin bulls and hodlers alike contended that the asset was headed to $100,000 and beyond, that everyone ought to buy the dip which ensued, that it was just a pullback before the next upward move. 

Unfortunately, a segment of believers lost their savings on that single trade, whereas others amassed capital gains taxes they couldn't afford. 

As such, many of those former believers and recent observers have become disillusioned by their losses, the precipitous decline and the spectacular volatility, and this psychology will limit the appetite of the average investor who doesn't have enough buying power to justify rolling the dice again on this bet: one that produces no dividend, that fails to store any value, that fails miserably as an efficient medium of exchange, and whose value remains completely dependent upon convincing a greater fool to buy it at increasingly higher prices.

Comments

Popular posts from this blog

Goldmoney: Real Money Purposed for the Future

The institution of money entered the minds of sophisticated traders several millennia ago, when instead of bartering with limited numbers of people within the cumbersome double coincidence of wants, large-scale economies developed from the reach and transparency of commodity money which was scarce, durable, fungible, transportable, divisible, recognizable, and usable in and of itself. 

While we may appear to have transcended those primitive times and those so-called barbarous relics, the truth is that we have merely mutilated the concept of money by clandestinely replacing it with its more manipulable and abstract representative, the proverbial coat check without the coat. 

This is but the device of a large-scale social experiment run in real time, and we are its unwitting and unconsenting subjects who’ve largely never heard of the Federal Reserve’s dual mandate, much less its missions of “maximum employment” and 2-percent annual inflation.

Yet there is hope after all.

Finally, after deca…

The Kaepernick Craze: Exposing the Nation's Fools One Conversation at a Time

The Kaeparnick craze and other viral movements haven't merely pressured people into becoming simpler caricatures of their prior selves, but they have manifestly exposed people for how foolish and uninformed they've been all along. 



In his final year in the NFL, Kaepernick ranked 17th in passer rating and 34th the year before that. 

He played through an entire season in only two of his six years in the league, and his best full-season performance ranks far outside of the NFL's top-250 single-season passing performances in the league's history. 

For reference, the oft-criticized Tony Romo posted a career passer rating of 97.1, as compared to Kaepernick's 88.9. 

Romo's passer rating dipped below 90 for only one season of the eleven seasons he played, whereas Kaepernick failed to eclipse the 90 mark on three of his six seasons, a full 50 percent of his time in the NFL. 

In fact, Kaepernick accomplished this feat only once if we are to discard those other two seasons in …

Bitcoin: Are You Feeling Lucky?

The popular cryptocurrency, bitcoin, has tumbled greater than 50 percent since its all-time high set just a month ago near $20,000. 

Since then, it has traded as low as $9,000 before rebounding modestly back over the $10,000 mark. 
The short story of bitcoin (XBT) is powerfully illustrated by its graduation from its initial use case as an easy, inexpensive medium of exchange to an erratic and highly speculative risk asset which scarcely resembles anything more. 
And despite the chance that it regains steam, it is steeped equivalently in bubble territory at $9k as it is at $20k or even $100 or $100k. 
Plainly, it is a bubble at nearly any price. 
The only difference is the anchoring effect which seduces the investor into interpreting the drop as a buying opportunity. 
So while the fundamentals and the use case haven't dramatically changed since the decline, the greedy investor assumes that the price has dropped because of reasons unrelated to its future viability. 
This is wishful thinkin…