Lots of people who are involved in crypto have opinions about the direction of the market. People standing on the sidelines can tell you that it’s over and will never recover after the crash in 2018. However, for people who have been in this for a while, we can see the patterns. Bitcoin bubbled at $30, $200, $1,000, and $20,000, and some were even expecting the rise and fall.
Nobody knows the day or hour when these patterns and cycles will play out, but we can say at least that they probably will. A bubble will form and a bubble will pop. The price will jump up very quickly just before a crash. There will be a sell-off after Christmas… and the loudest people will lose interest when the real growth begins.
Bubble after bubble
A lot of people think that the 2017 crypto bubble has popped, and now the market will never recover. They’re not aware of Bitcoin’s previous bubbles, peaking at $35 in 2011, $200 in early 2013 and $1000 in late 2013. They believe it’s just like the dot-com bubble, rising once and never again.
However, this market has a different dynamic, in a different era. It’s not just exposed to Wall Street traders – almost anybody in the world with a smartphone can buy cryptocurrency, and as it gets more user friendly, more and more people will start accessing it. For good or bad, it’s likely that the market will become overhyped many more times before this technology is commonplace.
We know a bubble will come again, so we can begin preparing for it now, in order to take advantage.
Putting on the boosters
A consistent pattern to look for is when a coin grows in price over many months, perhaps going up 500% or more, then suddenly increases, going up another 50% in just a matter of days. When it does that, it’s likely that the rally is nearly over.
As I mentioned last week, many people will become emotional at this point, losing themselves in visions of swimming in money like Scrooge McDuck. That feeling is a key signal that it’s time to preserve your wealth, rather than expand it.
After Christmas sell-off
Another very consistent pattern is a sell-off after Christmas. Some say that’s Chinese preparing for Lunar NY, a dubious explanation. Whatever the cause, it’s consistent enough that you should set a reminder in your calendar for December 20th. Seriously, pull out your phone or Google calendar or your day planner and write it in there. Do it now. Don’t leave it for later. Do it now, and thank me later.
A quiet rally
Last week I talked about the sentiment on social media. As I said, it’s most noticeable when things are getting overheated, when a lot of new money is coming in and people are overhyped. After the crash, Bitcoin would start to rally and people would say “Is this the return, the second coming? Is something special happening again?”
Ed Bugos of The Dollar Vigilante pointed out that in every subsequent rally, there are less and less cheerleaders on social media. It might be because these people bought in high and they’re holding onto the hope of recovering their losses… Eventually they lose hope. In any case, when the price starts to move up without fanfare, that’s much more likely to be a lasting trend. When there’s no fanfare, that’s when the increase isn’t about flashiness or hype, it’s real growth.
Thank you
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