Spotting when the Market is Ripe to Turn

in btc •  last year  (edited)

The concept here is simple, cryptocurrencies work off of a supply and demand mechanism, NOT valuation.

Stocks have a company underlying them, meaning the only time it is worth investing in a stock, is when the price of the stock has gone below the market value of the company. A stock may go up even if it is overpriced, but paying above the value of something which is supposed to be pegged to its actual value, is not a good investing decision.

In the La La Land of Cryptocurrency, everything is worth zero to begin with, so concepts like valuation are, for now, useless. Meaning, there is no value in which Bitcoin/Crypto is cheap, and there is no value at which it is expensive.

Rather, to find the turn in the market, we need to spot the point at which accumulation has reduced market supply sufficiently so that the long-term accumulation has outpaced the short-term selling pressures.

Really then this is a visual exercise from seeing when other cryptos in the past have turned.


Example 1 - Stabilized base with Inflection Point:

In this chart, notice the wide swing which occurred in the middle of the dip. Before this point, it was a slowly stalling bear market. Yet as the bear market subsided, there came a point at which a larger price swing occurred (presumably with higher volume). After this occurred, the attitude of the price chart changes. Even though it is still a weak market for the coin, it has upward momentum. It tries to rally twice more against a resistance zone at 1.15, not breaking it, but as it keeps trying with the attitude of heading upward, it eventually breaks that barrier and heads to new all time highs afterward.

Example 2: BTC Long-term Recovery

In this chart we see BTC's last recovery. It basically tanks, a good day to buy, and then after it tanks there was enough accumulation in that crash to enable the price momentum to break the previous resistance. It tests the black resistance line by drawing back to it as support. At which point it is sort of like a green "Go" for the market which ensued afterward. At the red circle, this is the point at which the market attitude changed for the price action that follows.

This was maybe hard to spot on the day it turned (day trader might spot it), but certainly by the time we have reached the green circle, we should be able to spot that the market has fundamentally changed.


Present Situation for BTC and the Crypto Market

While now may be a great time to buy, there is nothing in the chart which suggests the long-term attitude of the BTC market has taken a turn. Certainly the turn is hard to spot at the very bottom. Yet, within a week or two of the bottom, or even a month after the bottom, it should produce a visible change in attitudes about the market which is visible in price behavior as well. Lows find support at higher levels and there begins the upward slope in price. Previous barriers in price are broken and become support zones going forward.


Remember, BTC is not worth billions. It is worth nothing. Yet it should trade to 1 trillion very easily because it is a currency. Just the fact that it is a used currency for international trades and internet situations means it can sustain a large value so long as the systems remain operational to keep it functioning.

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Soooo we wait. We dont do shit haha.
Great to read you again,
Im not buyong crypto right now because i want to buy a camera to shoot youtube videos haha
Sooo for me, i dont mind waiting on the sidelines

Thanks. I still look forward to your posts more than anyone else in the crypto space.

We're going to need some real capitulation with volume before we can start accumulating, red candles have started to get slightly bigger which tells me we could see some more dumping real soon. Wait and see.

Nicely explained about each and everything in details the only problem with crypto is that the fear of going to zero we know its not possible but everything looks possible in this world

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Well with BTC, the market could be dramatically shaken by a major network event... shaken but likely not destroyed. If there was a network event, they would pick a block number, everyone would agree upon the block number, and that would be the genesis block for the recovery chain. Unlikely, but not impossible. Yet because human enterprises back the currency, they can make decisions for themselves to protect the economics of BTC, meaning they'd immediately relaunch the network somehow. So BTC would still exist even if it crashed. Just such an event could impact price. This is the main risk with BTC specifically, but such a risk would echo through the whole market.

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the only thing that makes it completely free is that it can't be controlled by anyone in the near future too which is a great thing in this world which is purely centralised

thank you for this...

Very good analysis of the situation.