I did this analysis on SPY last October. If you put together context and history on this chart, It's hard to ignore a potential painful scenario. Here are my thoughts.
1) If the markets are truly fundamentally cyclical, we could imagine the past being just versions of the same phenomenon : "When we're highly over-extended, old profitable bags are being sold to young greedy believers of paradigm shifts'"
2) In order for that not to happen, you would technically need factors big enough to outweigh the gravity pull that Newton's law is usually exerting on the market.
So the question is :
1) Are these factors powerful enough to break Newton's law? (Gigantic sideline money + Massive influx of new Investors + New economic culture + Other factors I don't know of)
2) If we observe a de-coupling of crypto and traditional markets, should we interpret that as evidence of the point above being true?
I am really on the fence between those two thoughts :
1) We're obviously going down, it's pretty crystal clear. Thinking other-wise is being a euphoric noob.
2) We're entering the most chaotic and unpredictable market moves in history and our expectations should be the first thing we doubt.
It is a saying that the market has its way of not getting us what we want. The reason why I am being neutral at this point is because I truly see the 3 same scenarios since October 2021 and yet at this point, it seems still too early to confirm any of them. At least through my eyes.
Scenarios being :
1) EXPONENTIAL ERA : We enter the so called exponential era that translates into a multi-generational money orgy sort of bubble
2) REGULAR ERA : We go for a real dump (20%-30%-40%), new investors get tricked by either buying the dip too early because they think their edge is infinite or selling the bottom betting on the end of the world, and we continu going up at a regular pace. The laws of the markets prevail. Maybe crypto decouples at that point?
3) MOTHER OF ALL CRASH: We truly are the generation that eats all the compounded shit of human history's past. (Quite skeptical of that one but maybe that's a bad sign?)
DISCLAIMER : THIS IS NO FINANCIAL ADVICE
1) If the markets are truly fundamentally cyclical, we could imagine the past being just versions of the same phenomenon : "When we're highly over-extended, old profitable bags are being sold to young greedy believers of paradigm shifts'"
2) In order for that not to happen, you would technically need factors big enough to outweigh the gravity pull that Newton's law is usually exerting on the market.
So the question is :
1) Are these factors powerful enough to break Newton's law? (Gigantic sideline money + Massive influx of new Investors + New economic culture + Other factors I don't know of)
2) If we observe a de-coupling of crypto and traditional markets, should we interpret that as evidence of the point above being true?
I am really on the fence between those two thoughts :
1) We're obviously going down, it's pretty crystal clear. Thinking other-wise is being a euphoric noob.
2) We're entering the most chaotic and unpredictable market moves in history and our expectations should be the first thing we doubt.
It is a saying that the market has its way of not getting us what we want. The reason why I am being neutral at this point is because I truly see the 3 same scenarios since October 2021 and yet at this point, it seems still too early to confirm any of them. At least through my eyes.
Scenarios being :
1) EXPONENTIAL ERA : We enter the so called exponential era that translates into a multi-generational money orgy sort of bubble
2) REGULAR ERA : We go for a real dump (20%-30%-40%), new investors get tricked by either buying the dip too early because they think their edge is infinite or selling the bottom betting on the end of the world, and we continu going up at a regular pace. The laws of the markets prevail. Maybe crypto decouples at that point?
3) MOTHER OF ALL CRASH: We truly are the generation that eats all the compounded shit of human history's past. (Quite skeptical of that one but maybe that's a bad sign?)
DISCLAIMER : THIS IS NO FINANCIAL ADVICE
