Bitcoin: Is this a Sucker's Rally or Denial? 🤔 Yes, I'm still here! Read all about where I went and why I'm back 🙋‍♀️

in #bitcoin2 years ago (edited)

It has been four months since my last post but don't worry, I'm still here and I never left. I never stopped writing, I was just (professionally) writing elsewhere. And, of course, the last few months have been a drain on all of us, myself included. Still, we continue on a positive path with Bitcoin and crypto. These past few months have been accummulation for many people, including myself, and the question is now where to go from here.

Did we enter the new Bull Market, or is this the Sucker's Rally that I have been expecting for months now? Or, worse yet, do we still have more capitulation on the horizon?

So where have I been?

I never left, never powered down, and still highly optimistic about the space! More than ever before, in fact.

Sometime last year, I decided to actually pursue a career in crypto because of it. My blog on Steemit turned out to be a great addition to my portfolio and it landed me a freelance job at a (non-English) crypto-news website. I've been writing articles there for a while now which I highly enjoy. Unfortunately it has cut down drastically on my free time and as such my blog on Steemit has suffered some serious neglect!

I plan to change that, though, starting today.

On the current Bitcoin and crypto-markets

We're at the most dangerous place and time possible: The intersection between Denial and Hope. It's the most dangerous time because inherently it is impossible to foresee whether it is a case of Denial or a Sucker's Rally. Everybody still in the space knows that a bottom will be found - at some point or another. It is now a matter of finding out where.

There's essentially three ways this can go:

  1. The bottom was in at $3100 and we will soon break through $6000 and above to start a new bull-run
  1. The bottom was in at $3100 and we will never drop below it but remain trading sideways below $6000. In this case we will likely retest $3100, or slightly above it to set a higher-low, in a few weeks/months to confirm the bottom. After that the new Bull-run can commence.
  1. The bottom at $3100 was a false bottom, capitulation didn't actually happen yet. We'll not break $6000 and instead will eventually go back down to $3100 where it will not find support. This will trigger the true capitulation move that will bring us to a much lower level which is where the true bottom will be found.

These three paths mean that it is highly risky to be buying Bitcoin right now if you don't have steady hands. In two scenarios there is further downside potential and in only one scenario will it play out well and profitably. The distance between the current price and a price of $6500-ish is also small enough that adequate risk-management would encourage to instead wait to see if Bitcoin can break above $6000-$6500 first before buying. This removes most of the risk, even if it means sacrificing some gains.

Considering most investors are rather risk averse, I believe the above may steer Bitcoin away from the possibility of breaking through $6000 anytime soon. There's just more risk and strategically it plays better out to wait. This will decrease momentum and without it I do not believe Bitcoin can break through a crucial resistance level such as $6000.

More likely do I consider scenario 2 and 3, which means that we're not out of the woods quite yet. It means months more of waiting and accummulating slowly, which is either good or bad depending on how much in a rush you are.


Of course, the inherent psychology of the Denial stage may very well mean that I am suffering from this Denial right now. The market has a tendency to inflict the most amount of pain to the most amount of people. In the Denial stage that means that when all of us are waiting for Bitcoin togo lower, it might just do quite the opposite and shake out many people waiting for a price that may never come.

In the end it is a psychological battle between FUD and FOMO. On one hand you could get more BTC if you waited. On the other hand, that might end you up with less BTC if it turns out to never happen and you are forced to buy in at a higher price. At what point does it become more of a risk, and less of an opportunity to wait on a further price drop?

We're going to have to wait and see. The real time to buy BTC was in the past 3-4 months, and congrats if you did. We may get a better chance to buy at an even better price, but without certainty of that happening it is rather essential to have built up a position prior. Still I have no quarrel buying at $5K either. If we drop lower than that is too bad, but on our way back up we will eventually pass this level again - and I expect I will be buying then at the same price just the same. If you think Bitcoin will eventually be much higher and you plan to hold for years to come, there is no problem at all with ensuring that you don't miss the boat.

Future outlook & chart

As for my current outlook on the future paths that may unfold, I present to you my Tradingview chart. It is the Bitcoin price on a log chart. The scribbles I m made are not scientific nor entirely accurate, but it outlines the general path that I expect Bitcoin to take. By my estimation new ATH's should be established in roughly mid 2022. Though as I said this is a very rough estimate which may very well end up being as much as a year off. My ATH puts us as a neat $100K. But just as $10K was once seen as an unbreakable ceiling, I wouldn't be surprised if we similarly shot up to $200K or even $300K next time. Or perhaps as low as 'only' $80K.

If you know a thing or two about Bitcoin and it's price charts, I believe the chart is pretty self-explanatory. It is the same pattern projected onto the future. I believe that psychology works the same in a group of 10.000 people as it does in a group of 100.000 or 100 million. What this pattern represents is the exponential growth and adoption of Bitcoin, showing the same general underlying psychology that occurs each bubble.

That's not to say these patterns are foolproof. Far from it. Unforeseen circumstances can change everything. A ban on Bitcoin might ruin it all, for example. And of course, at some point 'this time it's different' might actually be true.

I hope you're all still here for the ride that is crypto. If you are, congratulations! You are now TRUE veteran of the crypto space and if you're still holding then you're one of the real HODLers out there. I salute you!

Posted from my blog with SteemPress :

You're missing a possibility. Actually one that I think it is. It's going to go up and test whatever number it decides to stop at, then go back down to a higher low. Such moments are moments of true panic for people that don't trade...but traders expect them. In hindsight, they're barely even acknowledged, but when they happen people think it might be going down to who knows where.

Of course, the inherent psychology of the Denial stage may very well mean that I am suffering from this Denial right now.

You absolutely are suffering from denial, because you don't seem to realize that it's still a great deal to buy bitcoin now. You get it at $5k, and you sell it at $6k, if you bought 1 bitcoin, that's $1k. Who wouldn't do that deal? That's way more than anyone expects to get buying a stock. Of course, crypto is a lot higher risk.

Just because it might not stay above $6k does not mean it's not worth buying. You just have to realize that it might not stay above $6k if it hits there.

Thanks for the reply!

Option 2 is kind of like what you are describing: setting a higher low. Except in your case it would go up to whatever number it decides to stop, whereas I see $6000-6500 as a breakthrough point where the pattern is made invalid and we switch to option 1

It's based on my experience with how these things tend to go. Previous resistance becomes support, so dropping below 6K soon after we broke it to set a higher low seems less likely to me

I agree that BTC is worth buying at 5K, 6K, etc. I consider it worth buying all the way up to $20K. Just like how it was worth buying up to $1200 previous time

Yeah, I know about resistance levels.

When it previously went up to 20k, it bounced off 5800 abouts, went down past 5300, then went back up to the resistance line around 6100, bounced back, then rode up to $7400. It could do something like that, sideways a bit, before going back down. Or it could bounce back from that resistance a lot farther. It could go down to around $4300. We aren't clearly in a spike yet. It could spike and fall for a while...or go sideways...or just make it's way right back up. Spikes and falls look like sideways action only in retrospect usually. When you're watching them, they look like a heart attack.

Markets are very dynamic places. Very informative blog post on bitcoin and the world of cryptocurrency.

Thanks for the response! I agree, highly dynamic... but that's also why they are so fascinating!

Happy to see you are alive! We missed you a lot 😥

Posted using Partiko iOS

Thanks!!! Glad y'all are still around too!!

Good analysis - glad your back on writing, I think you've some of the most engaging content around!

Glad to be back!

Welcome back. I agree and lean towards scenario 2.

Thanks! I'm tempted to think we're not ready to break 6K either, indeed

welcome back to my feed :)

Thank you! :)

I think the most likely scenario is that we will test $6200 (or thereabouts) a few times before breaking through. I expect to drop down to about $5k levels after unsuccessful tests. Something like this:

I still think we'll turn bullish in Q3 of 2019.

I like your little paragraph congratulating the true hodlers, I echo your sentiments! Strong hands is the name of the game! Weak hands are for those who lack vision or courage!

Yes Q3 sounds good to me also
Or in any case, I think by Q3 we will be able to determine if we are in a bull-run. By then it will turn out that it has started a while ago (maybe at $3100). Denial is such a tricky stage.

And yah, congrats on hodling through it thus far! I had my doubts considering your previous optimism, but you are a true hodler now in my eyes :)
just don't assume we're out of the woods yet. I speak often about my PTSD from last bear market and I think by now you are understanding more what I was talking about back then. But to be honest, and you'll see this sentiment repeated by other veterans, it still doesn't feel like there is enough blood on the streets. It was worse last time, way way worse.

But.... Denial means that the majority of people are going to be wrong. People like to say 'this time it's different' but instead I am entertaining the thought that 'last time it was different' due to Mt.Gox.

I mean... as long as everybody is (now) listening to Tone Vays, we can't possibly follow that route and go into Denial. He's gonna be wrong at some point just like all the TA experts during the $20K peak were. It's the nature of the beast.

I'm sure we'll still see a few weak hands shaken out as the market rises and dips during the "sideways" phase. People find it so hard to look long-term!

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Great to see a new post from your side! I think practically everybody went a bit quiet in the last few months. Same counts for me.

Keep it up!

Glad to hear you're still around!
Yeah, crypto deep-winter is brutal.... but, 2015 was worse so I am still skittish and unsure about the current state of the market...! Trying my hardest not to lse sight of the market this time.

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