Being a Smart Cryptocurrency Investor: The Timing of Bitcoin’s Market Psychology Cycle
The prolonged bear market has its share of positives and negatives. We all are aware how the bear market has robbed us of any action in the crypto market, but the good thing as many have argued is that the speculators have packed their Bitcoin bags and left for potentially greener pastures. However, this has been good for crypto space as it has left the pessimists and the builders who are running the show.
For those new to the space, bitcoin (BTC) is believed to be in its 4th fractal pattern in its decade long career. The repeating nature of Bitcoin's Price action is becoming apparent to those looking at historical charts and data and believe we are experiencing our fourth big wave of approximately 90% draw down, then lasting 1-2 years at this rate of -90 percent roughly but should expect to see a 10-20x gain. How's that for a bitcoin price prediction?
It is also general consensus that we are in the second half of this 4th fractal wave pattern and would imply we are les than a year away from seeing 10x-20x in the price of Bitcoin skyrocketing (before the great 2020 halving).
So, this might be the time for you to be an intelligent investor. Here, we are not talking about the financial data but rather the real companies that are expanding their size, building the future and generating revenues.
Recently, Boss Cole wrote in his medium blog, where he shared what exactly is “The Intelligent Investor,” in a wider sense, quoting Benjamin Graham’s book of the same name,
“The whole point of investing is not purely to earn more money than average but to earn enough money to meet your own needs. The best way to measure your investing success is not by whether you are beating the market right now, but whether you have put in a financial plan and a behavioral discipline that are likely to get you to where you want to go. In the end, what matters isn’t crossing the finish line before anybody else but making sure that you do cross it.”
Sell To Optimists & Buy From Pessimists
Unlike other markets, crypto investing involves a greater degree of speculation. Moreover, the author focuses on evaluating the opinion and beliefs of the market participants for finding the intrinsic value of a cryptocurrency. This industry is still nascent and doesn’t have much past to depend on but the past market values and market psychology is what’s left to find the
“true market value.”
The price breaks down of crypto in a specific area and overall sentiments around the cryptos hold value here.
The current picture of the crypto market, according to the author reflects the early years of the stock market as the majority of investors involved are non-institutional or “average” person which means,
“a plethora of new valuation methods are being created, and the market is still dominated by emotion.”
What could be said about the crypto market is what goes up, will almost always come back down. So, once an asset has been pushed up to a level, they are likely to be headed for a retracement that provides a potential buying opportunity.
Coming onto to the top of price increases, nobody can predict that. In crypto space, there are some assets that are always on the upside and once the price goes so high that nobody wants to pay for it anymore, the sentiments shift and the crowd moves from this hot asset to another hot one. Quoting Benjamin Graham once again,
“The Intelligent Investor is a realist who sells to optimists and buys from pessimists.”
The main role in cryptocurrency that one needs to assess the cycle of emotions and how that is correlated to price. The author points out that the optimists are usually proved wrong, and when the last pessimist falls, the optimists take the control yet again.