"What if?" scenario. What if a Short Squeeze hadn't taken place?
In April 12th Bitcoin's price shot from 6.8k to 8.1k in less than 10 minutes. I remember waking up, since it was 7 am where I live, looked at the price and was surprised to see a sudden drop from ~7k to ~6.8k. I went to the kitchen and started my coffee, took the dog outside, came back and turned the computer on. It light's up in less than 30 seconds. Cryptowat.ch is my homepage so when I hit Chrome, not ten minutes after getting out of bed, the price was at 7.9k. I thought the cache was bugged or something so I loaded up Coinmarketcap. I couldn't believe it. Luckily I had a Long order open since 6.1k and rode that bitch up. I was expecting just another Pump/Dump scheme since those had been happening quite regularly (price shotting up in a 5 minute candle, going sideways for hours and then slamming down). That and the fact we were still in a bear market made me use my gains from this move to open up a short. We were in the 6k's for days, weeks, with no relevant movement other than the fucking PnD's. Opening a short at 8.1k was awesome. And a mistake. This crazy rise wasn't a pump; it may have ~started from a pump~, but Short's stop-losses started to get triggered, creating buy orders, and a domino effect ensued. We had the opposite of a flash crash. All was fine until then, since we were still in a bear market I expected the price to eventually drop again. But then something weird started happening. People started calling "the bulls are back" like crazy. People FOMO'd in like crazy. I remained skeptical, waiting for the dump. It never came, and the price just kept rising. Make no mistake, the amazing rise from 6.8k to 10k was mostly fueled by FOMO created by the Short Squeeze, and the Short Squeeze was probably caused by one of those Pump/Dump schemes, but it finally had an irreversible effect: indirectly caused major FOMO.
So, after thinking all this through in the shower today, while I was watching the price slowly going down from 10k to 9k, I wondered: "What if that fucking Short Squeeze never took place?"
So very rudimentary, I took a graph and "blanked out" the Short Squeeze candle, and dragged the price down accordingly. This "vision" does NOT account for the FOMO generated by eventual buy orders that ensued in rallies AFTER the ShortSqueeze. The price would be around 8200.
Had that not happened, I believe the price would still be struggling to break 7k, and would've possibly plummeted down to 5k, after finally breaking the major support in the 6k area. There, at 5k, a reversal would probably take place and price would slowly crawl back to the 6k's for probably weeks, maybe months, as people kept losing interest. That would be the "Early Accumulation" phase that starts coinciding with "late distribution" on bear market cycle and starting a new bull market cycle.
Since that's not the scenario and the Short Squeeze took place, we could very well already be in "Mid-Accumulation", where we have a Markup (a fast rise in price, but even for Crypto a jump from 6.8k to 8.1k happened ~way too fast~) and the price starts making higher lows and higher highs.
But.
We just witnessed a rejection at the 10000's, a big psychological barrier (it wasn't during the bullrun because hype was so big and buyers were so many that this barrier was just trampled; this is not the case now as way less people are interested in Bitcoin). Bitcoin shyly touched it and the zombie hungry bears came back, causing the price to drop ~10% in a day. I believe the Short Squeeze's effect didn't anticipate Mid Accumulation. I believe it just triggered another bull trap. Traps happen on FOMO rallies, and I'm fairly sure that is what happened. And I honestly believe this could cause the bubble pop/crash to continue to where it should've been, possibly even lower.
Get your fiat ready to buy the lows. 6000's offered great support and a bounce is expected there. Ride it up, close your long and wait it out.
Image for What If Scenario in comments.
So, after thinking all this through in the shower today, while I was watching the price slowly going down from 10k to 9k, I wondered: "What if that fucking Short Squeeze never took place?"
So very rudimentary, I took a graph and "blanked out" the Short Squeeze candle, and dragged the price down accordingly. This "vision" does NOT account for the FOMO generated by eventual buy orders that ensued in rallies AFTER the ShortSqueeze. The price would be around 8200.
Had that not happened, I believe the price would still be struggling to break 7k, and would've possibly plummeted down to 5k, after finally breaking the major support in the 6k area. There, at 5k, a reversal would probably take place and price would slowly crawl back to the 6k's for probably weeks, maybe months, as people kept losing interest. That would be the "Early Accumulation" phase that starts coinciding with "late distribution" on bear market cycle and starting a new bull market cycle.
Since that's not the scenario and the Short Squeeze took place, we could very well already be in "Mid-Accumulation", where we have a Markup (a fast rise in price, but even for Crypto a jump from 6.8k to 8.1k happened ~way too fast~) and the price starts making higher lows and higher highs.
But.
We just witnessed a rejection at the 10000's, a big psychological barrier (it wasn't during the bullrun because hype was so big and buyers were so many that this barrier was just trampled; this is not the case now as way less people are interested in Bitcoin). Bitcoin shyly touched it and the zombie hungry bears came back, causing the price to drop ~10% in a day. I believe the Short Squeeze's effect didn't anticipate Mid Accumulation. I believe it just triggered another bull trap. Traps happen on FOMO rallies, and I'm fairly sure that is what happened. And I honestly believe this could cause the bubble pop/crash to continue to where it should've been, possibly even lower.
Get your fiat ready to buy the lows. 6000's offered great support and a bounce is expected there. Ride it up, close your long and wait it out.
Image for What If Scenario in comments.
Comment:
Bitcoin without Short Squeeze from April 12th: imgur.com/a/FmAaymu