Market Psychology
Markets have a way of distracting and exhausting market participants. Anyone who has been involved with any financial market can attest to this. Every market has an inherent and unique psychological dynamic unfolding at any given time. Despite what you may want to believe, all markets are manipulated, and constant attempts are made to do so.
The Crypto market has just experienced a rather lengthy bear market, and in many ways, some may consider it to still be in motion. However, despite the recent manipulation and weaponizing of authority, compliments of Mr. Gensler, there is a clear deviation from the downward trend. What needs to be understood is that this is what I refer to as the “safe accumulation zone”. To help provide a little more clarity, let’s visit the bear market of 2018.
The final capitulation event dragged BTC down to just above $3K. This turned out to be the point at which the market pivoted and subsequently experienced an adjustment in trajectory. From this point on the market provided a great opportunity for accumulation. This range provided the best opportunity to initiate a multi-month period of accumulation. Look at that extended sideways chop, great for accumulation.
Even though the market crashed back into the $3K zone, it was short-lived. This is typically what takes place once a bottoming formation has been established. It’s simply just an added bonus, in terms of an incredible buying opportunity. Zooming out, we can see how the volatility increased somewhat. This can be seen in the screenshot below.
This is where you wanted to be accumulating, due to the “safety” of a bottoming formation being printed. Ideally, between the green and yellow arrows. Finding an accumulation zone is not about buying a bottom. It’s about finding the safest point at which to commence an extended period of accumulation. This was indeed that place.
Coincidentally, where we are in this current market looks very similar. We are correcting after a bottoming formation from a local top of approximately $30K. In a similar way, the BTC price action of the previous bear market corrected from approximately $14K after also forming a bottoming formation. If it wasn’t for the covid dump, the price action would have been rather sideways.
It’s Always An Option & Opportunity
This is why, even though it’s accumulation time, one can never rule out a sudden deep correction. However, as mentioned, in such a scenario the formation of a previous bottoming formation has a significant impact in providing confidence for buyers. These sorts of opportunities tend to be seen as once-in-a-lifetime opportunities, and so, are extremely short-lived.
During this phase last time around we had the One Token scam, I think it was. This created tremendous volatility. This time around we have the SEC and other regulatory issues. There is always some type of battle or chaos during this period. The important thing is to determine your viewpoint and then stick to it.
Final Thoughts
There is significant evidence and signs pointing to a period of accumulation. The market could move sideways for a while, or even experience similar volatility as before. Either way, this is the period of accumulation that tends to last months and provides a great window of opportunity. The way I see it, further downside at this point is simply an opportunity in disguise.
Everyone needs to do their own research and establish their own thesis. These are simply my views, and where I determine the market to be in terms of progression towards a fresh bull market. Practice caution, stay safe, and see you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.
Great analysis. I see the current cycle resembling rather the 2015-2017 one rather than the 2019-2021 one, but I might be dead wrong(not the first time).