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

Post a Comment

Popular posts from this blog

The Deal with Tariffs

Over the course of President Trump’s two terms, there has been much talk around the matter of tariffs — taxes on imported goods. However, much of the talk seems to miss the point. After all, for those of us who seek the truth, it’s not really a question of whether tariffs are ‘good’ but whether they are preferable to other kinds of taxes — assuming, of course, that taxes are the rule, as certain as the eventuality of death. First, let’s establish the theory: beyond the generic purpose of revenue generation for the state, the institution of tariffs ordinarily serves to  reduce (or discourage) imports by making them artificially more expensive, while encouraging domestic production by making domestic products more appealing on a relative price basis. In the realm of foreign affairs, tariffs are instituted or threatened in the course of international trade negotiations in order to signal dissatisfaction with existing trade barriers and to push for more favorable trade terms; or in ord...
Post a Comment
Read more

Fischer: Tortured in the Pasadena Jailhouse (featuring the Morals of Chess by Benjamin Franklin)

Buy your copy today of  Fischer: Tortured in the Pasadena Jailhouse (featuring the Morals of Chess by Benjamin Franklin) , available at  Amazon  and Barnes & Noble . The name Bobby Fischer reigns supreme in the world of chess, yet there was a time when it hogged headlines, struck fear into the eyes of the competition, and was on the lips of folks all across the globe. More than the face of the centuries-old game, there was a time when Bobby Fischer was synonymous with the cause and spirit of America, that his moves on the chessboard sought more than checkmate but to pit the strength of “raw-boned American individualism” against “the Soviet megalithic system” which had come to dominate the game of chess at the same time it dominated Cold War politics. Fischer’s triumph over the USSR's Boris Spassky in the ’72 World Chess Championship would ultimately be celebrated as a symbolic and diplomatic victory for the U.S., but, as time would tell, it would not mean the American...
Post a Comment
Read more

The Cost of Government is What It Spends, Not What It Taxes

The cost of government is the quantity it spends, not the quantity it taxes; that cost representing the financial burden imposed upon those who pay the taxes and all who transact within that economy or through its common currency. Likewise, governments can either take the people’s money through taxation or they can take the people’s purchasing power through money-printing (or the like).  Therefore, the argument against tax cuts requires further context to appreciate why tax cuts have failed and will continue to fail to deliver economic growth, especially where those tax cuts promote or serve excess indulgence and cheap speculation. In short, it’s not that tax cuts are inherently destructive, or that reducing the tax liability of the wealthiest in society “doesn’t work”; rather, the fact is that the public debt is so high that the country simply cannot afford those tax cuts without defaulting on its debts or — which is the same — covering them through inflation (i.e. money-printing,...
Post a Comment
Read more