Skyflowers.co [0031] - "Bitcoin Black Tuesday" on August 1st: A Lesson In "Investment Psychology"
Well, August 1st is fast approaching and Bitcoiners are readying themselves for "Bitcoin Y2K". Remember that one back in 2000?
What will you be doing with your Bitcoin on Black Tuesday, August 1st?
While August promises to offer some great financial opportunities for Bitcoiners, for me, the best opportunity bitcoin investors can take from this whole fork thing is the opportunity to learn about investment psychology. Augusts 1st or "Bitcoin Y2K" is a great time to learn one of the hidden - but very real - factors of investment.
The psychological or emotional aspect.
On August 1st, "what people think" will be clearly separated from the actual value of Bitcoin. You will see how human emotion ( not actual, real world value ) drives the price of investments up or down. Fear, negative speculation and outright self preservation will be the prime factors why Bitcoin will dip prior to August first. Which it will.
In fact, I predict it (a) dipping slightly around July 29, (b) then entering a freefall July 31 through to August 2, (c) steadying for a failed rally August 4-5 (d) and then dipping again to (e) regain traction around August 8th. Those are my best guessing. The "algorithm" that I use is not a financial one. It is a psychological model based on how people respond to a perceived crisis and "bad news". Each stage relates to an emotional progression.
Check out this graph from the Wall St stock market crash of 1929. You can see the same progression that I just mentioned ( false rally and several dips. ) The funny thing about this graph is that I looked it up after I made the predictions above.
!
Anyway, enough psycho babble and market speculation. Back to the point of the article.
As I said, the "emotional value" or "safety of Bitcoin" will be separated from the other two factors that make it up.
- Real or "Hard" Value - The actual value of the coin / technology. I.e. The value of Silver as a raw material.
- Confidence Value - Confidence in the thing as a store of value. I.e. Confidence in the US dollar, largely determined because other people use and value it.
- Emotional Value - Psychological or emotional perception of the current market. I.e. This value can be anything and is anchored to your primitive cortex in the brain, not to the real world.
As "emotion colors thought", August 1st will be a "blood bath". Not because of a tech failure or fall in the actual value of Bitcoin. It will be a bloodbath because we will see a mass of people acting out predictable behaviour. Behaviour that has been hard wired into their brains to ensure survival of the species. We will see a flight ( briefly ) from the currency and a large group of investors at the top cashing out because they "value current safety over the future value of Bitcoin".
In short, a brain function will drive the price down. Sharply. It is pretty much guaranteed because (a) the need for survival is prioritized in the brain over (b) clear thinking. I.e. You run from danger first, then think about it later. Your brain is designed to do this. Thankfully.
Now apply that mechanism to the block chain of investors and you will see a sharp sell off and panic. So factor for the possibility in your own strategy. Personally, I plan to clean up during the crisis. I invite you to do the same.
What you will also see is that the smoke will clear after Bitcoin Y2K and investors will panic-buy-back. The panic buy-back will be interesting to watch and we could see prices spike to new highs soon after Bitcoin Y2K, perhaps around August 10th or even as late as the 18th, before a correction comes. Levelling the price to something higher than it was before the sell off.
Anyway, beware the false highs! Look for the next dip because there will be several.
Normally, the psychological / emotional behaviour of an investment market is eclipsed by the other factors. But emotion is a real and strong influence despite being hidden from view. People tend to speculate the price of shares, etc based upon the real and confidence values. Never factoring for the emotional values.
If the graph is going higher, then confidence is high and greed is basically the driver. I.e. The desire to make more money drives the price. If the graph plateaus, let alone dips, then self preservation kicks in. The brain does what it is designed to do and gets out of harms way. The flight response is triggered in the brain and a blood bath happens in the markets. This catches a lot of investors out who fail to factor for the human brain in the equation.
August 1st will be a great lesson for investors. A text book case of emotional drivers of a market. The example of emotional behaviour will be on display, for all to plainly see.
The moral of the story?
If you're an investor, "keep one eye on the market value and keep one eye on human behaviour." Because it is human behaviour that tips markets. One way or the other. And it doesn't take a genius to see that the Bitcoin market is jittery over August 1st.
When investors forget about the actual value and only look at the emotional value ( because their brain tells them too ) of an investment, the dips are sharper than the usual ebb and flow of the market. Dips become cliffs. This is how free falls occur. Emotion has taken over and all common sense has been thrown in the air.
August 1st may reflect the Wall street panic of 1929. Not because there is good reason. But because enough of the whales at the top will be spooked into preserving their wealth by abandoning Bitcoin.
Will "B2K" happen? Check out my other articles on August 1st and "Bitcoin Black Tuesday"
"Bitcoin Cash: The Plan To Fork Bitcoin Back Out Into The Real World."
https://steemit.com/bitcoin/@skyflowers/skyflowers-co-0029-bitcoin-cash-the-plan-to-fork-bitcoin-back-out-into-the-real-world
Run! It's August 1st! "Bitcoin Black Tuesday" Is Upon Us!
https://steemit.com/bitcoin/@skyflowers/skyflowers-co-0035-run-it-s-august-1st-bitcoin-black-tuesday-is-upon-us
Bitcoin Cash: What Will Be The Long Term Effect of Giving It Out For Free?
https://steemit.com/bitcoin/@skyflowers/skyflowers-co-0037-what-will-be-the-long-term-effect-of-giving-out-free-bitcoin-cash
Thanks,
Brendan Rohan - Melbourne, Australia
Www.Skyflowers.co ( see "botany" tab for the plant research )
Www.ClinicalFlowerTherapy.com
Social @iSkyflowers
YouTube Skyflowers.Tv
If you support natural medicine and an independent research project that began in 1997, then steem me. The creds I get will help me provide a solid body of information that future generations to draw upon.
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Billionaire Investor Marks, Who Called the Dotcom Bubble; says Bitcoin is a 'Pyramid Scheme'
https://steemit.com/bitcoin/@raviraj4you/billionaire-investor-marks-who-called-the-dotcom-bubble-says-bitcoin-is-a-pyramid-scheme
How's it going @skyflowers! I started investing in the stock market about three years ago. I've noticed the psychology of buying and selling in that time, and frankly it's annoying sometimes, but also an opportunity to buy if I have funds available. I find it ridiculous that a company's stock will jump or fall a significant amount based solely on a price target that an investment firm announces. They basically state their opinion and regardless of what's happening with the company, the price jumps up or falls that day. I invest in companies with good leadership that are building their company for the future. I'm looking to hold that stock for years, not days. The stock dips on bad news for the day, but over two years it rises 80%, it's ridiculous. I've also seen my companies take a dip because another company in the same sector is having a bad day. It's laughable . Anyways, I'm hoping to take advantage of any crash in Bitcoin price. I'd like to know more about your natural medicine research project btw.