This is not much of a T.A. post although I posted the latest view from my dash. What it is, however, is a stark warning based on the events from the last couple of months.
First and foremost, anyone should be clear that it is the macroeconomic picture (low interest, nowhere to spend money, inflation fears) and the implied extreme risk-on state it implies, in combination with adoption of blockchain technology and the inherent regulatory risk picture that determines the market - not T.A. (except for scalping trades) as it is only a very limited proxy to market sentiment.
We are now in a state where inflation and the fear of future inflation is increasing by the minute, where the only party in the entire world that do not recognize this is the federal government of the U.S. At the same time, we have seen absolutely insane asset price inflation due to the risk-on state up until now, where inherently valueless assets are worth an extremely large amount of money (ex. DOGE) in the market. We see the Chinese, Russian and most European governments start tapering their bond purchases and/or raising interest rates. In addition, the margin debt level in the market is at ATH by a country mile, such that sensitivity to interest rate hikes in all financial markets (and housing markets) is VERY high. This should concern investors in general, and especially those invested in very risky assets.
Although BTC is widely considered an inflation hedge, we do not know whether it is only appreciating in price in periods of high inflation fears or in times of actually high inflation - as we have not yet experienced high inflation during the lifespan of the Bitcoin protocol. Although I am a believer in BTC as an inflation hedge and that the world need safe havens, I am not as certain that this is the right time to invest - as it might be that all the potential has already been filled due to the fear of inflation we have seen in the past year.
However, there is an even stronger concern for the price of BTC now - And no, it is not Elon Musk. The concern rather lie in the fact that one person or party - whoever it might be - can influence the market in such a what that mr. Musk has done since the turn of the year. That is - the market for BTC is largely driven by sentiment, and that sentiment in turn is largely driven by its position as a potential inflation hedge and the flagship for an alternative to the current (rather appalling) financial system. If one individual can create the kind of price fluctuations we have seen lately, then there is clear indication that the picture of BTC as an inflation hedge is much less important to investors than the words and actions of this individual. Not only does this paint the picture of a centralized asset class due to the fact that one party can control market sentiment absolutely (very similarly to what large banks and brokers aim to do, and that Bitcoin believers hate), it also gives credit to the thoughts that BTC might not be a safe haven after all.
In short - we are not only in a very scary macroeconomic state due to the ATH-by-a-country-mile debt levels in combination with a bond market on life support, we also see strong indications that a large portion of the price of BTC (and thus even more so even riskier assets) is due to manic speculation rather than genuine belief in the asset as an inflation hedge. Hence, I would say that the probability distribution of the BTC price has severely changed for the worse in the time to come both due to the probability of a general risk asset crash and the weaker position as an inflation hedge.
I sincerely hope I am wrong in the long run as we need good alternatives to the current financial system, but I also believe that the world needs to see a wipe out of debt and zombie assets before the serious projects and their markets in our world can grow sustainably.
Disclaimer: This is not financial advice.
ALWAYS DO YOUR OWN RESEARCH - NEVER TAKE THE WORD OF OTHERS AS A GIVEN!
80% of "analysis" here keep on predicting imminent massive breakout in the coming days. They even did it when BTC was above 60k and was showing signs of weakening.
Even if you believe cryptos will play an important role next to the monetary system in the future, or as a stored value, it doesn't mean its price should soar endlessly.
TheDots
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@ButterDickinson thank you - and the last paragraph of your comment is very precise!
DrStein
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Great post. Especially this:"a large portion of the price of BTC is due to manic speculation rather than genuine belief in the asset as an inflation hedge.". The problem is even bigger with alts...just look at doge and other shitcoins that flood the market lately. The cryptoverse has turned into a big joke and only the herd of bulltards are still taking it seriously. And that's bad because there many good projects that only few pay attention to them.
Thank you for your analysis.
TheDots
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@DrStein, thank you! And I absolutely share your view on the cryptoverse. It also brings much more fire power to regulators.
LordOfBitcoins
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Well detailed and profound message. Following you !
Reading your posts and the comments that follow indicate to me that most of you still dont get what is going on.
Did you ever consider for a nano second that maybe Elon was trying to warn us about something. ?
You have to be demented if you believe that the crypto market is dancing to his tune.
Something on a much larger scale is going on. Which nobody knows about. Which is causing this massive correction.
Lets wait for the truth to come out.
Its not the whales.
I can give you a hint. Its due to something the US or China Govt has planned. Some friends say its the USA planning something but my money is on China.
TheDots
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@RohintonDaraChinoy, well that is some conspiracy theory by "some friends" of yours.
I wonder what is most likely - that this correction is completely natural and healthy due to insane valuations and mania, or that its due to some stories heard from someone behind closed doors from the US and/or chinese gov that something is going on, and that this has again caused this correction?
Note that the value of bitcoin always has an incorporated risk of unwanted regulation until that Day comes. Everyone knows there will be regulations, and it was just a question of time until the chinese banned crypto trading, so these are news that should not affect price one bit unless BTC is overvalued in the first place.
80% of "analysis" here keep on predicting imminent massive breakout in the coming days. They even did it when BTC was above 60k and was showing signs of weakening.
Even if you believe cryptos will play an important role next to the monetary system in the future, or as a stored value, it doesn't mean its price should soar endlessly.