Vampire Phase Of The Bull Market

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(Edited)

In the space of a month, we've seen bitcoin nose dive from $52k to today's 35k range, with two 7% down days in a row as more longs get liquidated. A lot of traders are new to bitcoin and the bull cycle tends to attract novice retail that thinks they can make their fortunes either using leverage or leverage adjacent by buying shitcoins.

But none of these people hold these positions with any conviction, they hold it because they want to flip it for fiat in the near future. The bull market is normally described as a period when prices are on the rise for a consistent period. It lulls you into a false sense of confidence thinking this is the way things are or how it always will be, and you place bets based on a recency bias.

The drop from the ATH

Bitcoin peaked out at close to $70 000 so you can imagine there are a bunch of people with no conviction who bought at prices all the way between 35k to 70k and experiencing as much as a 50% drawdown on their initial purchase. It's a tough lesson to learn and when this is the first rodeo you tend to want to cut your losses.

Bitcoin's rally from $3000 to $70 000 has been one heck of a ride and with it came overconfidence and a lot of leverage trading. Trades that have now started to go against these longs that were making easy money during the price spikes.

They felt like geniuses and any marginal dip could be covered because it would rally again in a few days. A deviation of this thesis has crushed a bunch of longs and liquidations continue on, with plenty of leverage still left to be flushed out of the system.

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The bleeding continues

I spoke about some of the possible reasons why bitcoin took a nosedive yesterday as we approach 30k resistance, a figure that is still 50% higher than the previous all-time highs. Many are calling this a bear market which I don't yet agree with since we haven't dropped below previous all-time highs.

A 50% drawdown is not new to bitcoin during a bull cycle and the bear market really only arrives historically once we draw down to around 80% of the all-time high. A figure I don't see likely to happen but who knows right? Bitcoin humbles us all.

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Financial market fumble

Bitcoin continues to get bigger and as it gets bigger in liquidity and market cap it starts to get affected by larger macro forces. In previous years it wasn't so tethered to traditional markets but now that it's a national currency, now that it's used to settle high-end real estate, now that it's on the balance sheets of companies, waves in other markets will affect bitcoin as it's the same investors with different allocations in different assets.

The markets have been rather bullish as they respond to the government's easing policies. Despite it being hit by COVID, equities and risk assets soared to new highs during these uncertain times. A strange phenomenon, logic would dictate in uncertainty cash, gold and bonds would be the go-to assets, yet they've all performed poorly compared to equities and bitcoin.

Markets are clearly overly financialised and have very little tie to the real economy. The largest central bank the Federal Reserve and other financial authorities who follow their lead have created the 'superbubble' using COVID as a reason to lower interest rates, influencing mortgage and lending rates. It's created a market rife with speculators and judiciously overstated views of our real wealth.

If the mere promise of higher rates, is the catalyst for this downturn due to soring price inflation, then what would actual tightening do to these markets? Higher interest rates can put pressure on assets rising prices, but will also increase the rates for mortgages, credit cards, and consumer borrowing. Reducing the amount of access to new fiat and overall spending.

Stackers be stacking

It's going to be interesting to see how people rebalance, and clearly, most market participants are thinking it's time to get out of bitcoin and look for relative safety as they measure success in fiat. As for bitcoiners, we are fleeing to safety at a discount.

Bitcoin is fire insurance, and just because the value of your fire insurance goes down, doesn't mean you sell it. Especially when the fire is raging outside your home.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

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27 comments
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I'm sure a lot of people didn't see this coming. Even people who 'bought the dip' a few days ago are way dipper than expected.

I think the market will take a while before recovering

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Lol I was one of those people and I bought todays dip too and any dips that come in the future, fiat is designed to debase so why would I even care to change my position regardless of price

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Your position about fiat makes any decisions about crypto quite understandable. If I have enough fiat I will likely be buying more cryptos too.

Inflation is making fiat value lose everyday.

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I don’t buy any Cryptos I only buy bitcoin

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Wow. You're a Bitcoin maximalist. That's cool.

I put my eggs in several baskets for eventualities.

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I might be mentally ill but is it wrong that the only fire I'm interested in is the fire sale going on right now with sats? Git in mah belly!

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Lol I've transfered more over to my account, give me more KYC sats I don't care they are dirt cheap, it could go lower but bitcoin is criminally oversold and we making out like bandits

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It’s kind of awesome to see the new so called “traders” get rekt, and stand there not knowing what happened to them. Especially if you warned them for 50 % or more drops, but they wouldn’t believe you… I am going to watch a few more days, and then I will bite! Great analysis

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I think there is still room to fall theres a lot of leverage in the system and I mean if doge is still higher than 10 cents you know stuff is overvalued lol, let them burn! Great time to average down your cost basis for the future

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These past few months have been crazy price-wise - everything is just casually going down in tandem; be it crypto or the stock market. It is so tempting to buy in everytime the price goes down.

!1UP

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It's going to show who has the conviction, the score board is obvious if you don't have more sats than you did the year before you're going to be kicking yourself in the near future but people learn these lessons the hard way

Thanks for the tip

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Even for seasoned cryptonians it is shocking how fast positions can unravel and so much value can be vaporized.

Just think of the NFT traders when they realize the music just stopped and they just lost the musical chair game.

No buyers and no liquidity at all for a lot of the pixelated images. 🥶🥶🥶🥶🥶

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Only 200 bill taken off the total markets cap, these are kids games, I'm ready for real pain, as long as doge is abover 10 cents and cardano is above 1 dollar then theres still pain to go. as for NFT's i've been waiting for them to get rekt so long the tweets on NFTs were rotting my brain

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We are on the same page my brother. More pain to go for sure. I don't see any way around it. I have been licking my chops at the premise of $0.08 or lower DOGE to start to rebuild a stronger position. And yeah, Cardano being above $1 when a lot of big money got in sub $0.10.

Also the Fear and Greed index will probably have to hang out in the dumpster for a few weeks to exhaust people.

In some respects this sell off could be unique because of the ability for people to leverage out as much as they can through DeFi and centralized mechanisms

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I think we will both get our way, I think bitcoin can still go down to 30k where I think it would be its floor but I can see numbskulls selling below that, so I'm on the lookout for these bargains.

People are flocking to stablecoins as if the dollar is going to appreciate anytime soon, it's hilarious, people are way too emotional and can't see the technical. The fed are jawboning now but if stocks take too much of a beating watch how this thing reverses, so pick up what you can while you can

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I agree. Personally I can see things going lower than 30K because there are a lot of people in crypto that were leveraged out and it is getting pretty expensive to live because of all the supply chain issues. People get scared and don't know where crypto is going.

For me the stablecoins are for temporary stability. At this point I wouldn't want to be in them for 6 months unless I was able to earn 20-30% and have the capital ready to deploy to projects.

Like you said, there is a lack of liquidity on various projects and the NFTs...... suddenly they panic and fire sell way lower so they can try to pay bills or whatever.

Personally I am getting another car because what is happening in the United States is that the new cars are waiting for their chips and there have even been large amounts of cars waiting that then the rats chewed the wires up so they have further issues. The car lots are empty and the used cars are breaking down and getting into accidents.the chip shortage could go on through 2023.

Mainly looking to not really lose too much on the situation.

With real estate I will need to wait until the market collapses in various markets before I allocate more to that.

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Household budgets are getting crushed around the world, many people are hiding out in stable coins because of the yeild and access to liquidity rather than sitting in dollars or their local fiat shitcoin. Look at Turkey how people are flocking to stable coins and bitcoin

I read stories about how people in the US are selling used cars for more than they paid for it due to shortages but that's crazy, how long can that last? Is it a general feeling or specific types of cars like pick up trucks?

I also read a lot of US peeps are now looking for real estate overseas since they're obligation is in a shitcoin like a peso they can easily pay it off and secure the land to leverage later

People are looking for anything that can store value, where this leads I don't know

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The car situation comes from a few different angles.
There was a lot of flooding during the summer and it keeps seeming like a lot of cars are getting destroyed from various events. For instance the Corvette plant in Kentucky got hit by a tornado and a couple hundred cars had to be destroyed.

So production has been totally messed up with the chip shortage and usually you can get older cars for $1,000-$2,500. That doesn't really exist anymore. To get into something that runs and is dependable it is going to be more like $3,000 on the low end.

Trucks have been popular but for instance the Chevy Silverado has supply chain issues so they were building them and taking them to a parking lot but then the rats chewed the wires.

Also people have been targeting the luxury and exotic market. If you get clean examples of a car that had low import numbers and already went down its main depreciation curve.

Sports cards have been popular as well.

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This looks very Bearbullish, oh wait I mean Bullbearish o.c. xE

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A downward trend after an all time high to me means the correct value of bitcoin. Trading at such a high value seems like a bubble to most of the people and I am more comfortable bitcoin trading at time price.

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Yes people get overexcited and bid up the price way higher than it should but it gets corrected as new supply comes online every day. Most people don't get how that works and are only chasing the price up or down in the short temr

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