Markets
Daily Ramble
It’s been a day here. The increasing level of fear in the crypto markets has been infectious — especially with the deluge of messages I’ve been receiving. It’s not that it’s unwarranted. But even knowing the fearful subtext to the messages, they still have an impact on me. What that translates to is moving slower, taking more walks outside, and disconnecting from the computer as much as possible to keep my own counsel.
Not that any of it is easy. The addictive drive to stare at every flicker and move of the price action is, well, addicting. It’s almost as if the fear feeds on itself, desiring more fear porn. But why exactly is there such an emotional rollercoaster when the price goes up and down? Well, since money is a proxy for time, we’re literally juggling our future time as we wrestle with how best to manage our positions in the market.
That may not make a lot of sense, so let me try and break that down a bit. Our net worth represents our stored value. Although that stored value may be quite far from the labor that generated it, at its core, you traded your energy and time to produce something someone else desired. In exchange, they provided currency. By investing in the marketplace, that earned capital is being put to work in the hopes it will generate a positive return. When, and if it does, our spirits rise because we know that we’ve been able to avoid some level of future work, expanding our time options. If the value invested declines, our spirits fall knowing that our future time is being cut into. (Note: I’ve intentionally kept it simple by leaving inflation out of the conversation.)
When it’s all said and done, the only asset we all have a shortage of is time. Money provides us the option for free time spent in the way we’d like. Of course, we don’t need money to have free time, but we need money to have free time spent doing the activities we love. So, when it’s said and done, it’s impossible to avoid emotions and markets. On big days, the best any of us can do is be aware of the emotions, allowing us to avoid acting on their behalf. And having the clarity to separate emotions from the decision-making process is a great life skill, in or out of the markets.
Favorite Things on the Interwebs Today
Bitcoin Price Prediction
Yesterday: $39.6k - $46k
Today: $36.2k - $44k
Tomorrow: $36.2k - $44k
The thin ice holding up the Bitcoin price gave way yesterday, leading to another leg down to $38.5k. The speed of the decline and the rapidly degrading market sentiment suggests we are nearing the seller’s capitulation. It doesn’t mean that the bull market will continue straight up, but it does mean that a bottom can form, giving the possibility of a new bullish trend. Given the support price we’re at here, that’s the most likely scenario. The big buyers like to purchase when fear is at its maximum. Indeed, increasing outflows of Bitcoin from the exchanges suggest the point of max fear is being reached. If it’s not here, the maximum conceivable point we could reach is $33k before my bias shifts to bearish. Until then, hodl on if you’ve got Bitcoin and consider cost averaging here if you’re not. Riding the Bitcoin bull is not a walk in the park.
Bitcoin Q & A
Q: Is the bull market for Bitcoin over?
A: Not likely.
The 41% pullback we’ve experienced in the price of Bitcoin is a typical bull market pullback. Historically, there have been multiple 30%+ pullbacks during bull markets. In 2017, there were six. That means this pullback falls in line with history. Additionally, we did not experience a blow-off top to reach $65k, which is a substantial change for Bitcoin if we enter a bear market. Adding it all up, it’s possible the bull market is over, but not likely.
Thanks for reading,
Kent
Do you have questions or a “Favorite Thing on the Interwebs”? Comment below or reply to the newsletter to reach me.
If you’re not on the email list, subscribe now — just this newsletter, no advertising.
Me? I offer personal and corporate Bitcoin Implementation Strategies: custody, investing strategy, security, tax management, and inheritance. Contact me for a free initial consultation.