Bitcoin - 2014 - 2018 Comparison Part 2
Bitcoin hasn’t done much in the past week, and it seems to be consolidating. As it has been observed in the past, when bitcoin is stuck in a prolonged consolidation phase, altcoins tend to move and we are seeing that right now. However, I believe this to be a bull trap, to get people excited about crypto again only to trap them before resuming to the downside. Further downside is expected.
Matching 2014 and 2018 fib retracement
Let’s apply the fib retrace for the 2013 top and 2014 bottom.
Let’s do the same for the 2017 top and projected 2018 bottom.
Bitcoin in 2014 consolidated at the .236 level before a sharp move down. We seem to be experiencing the same in 2018. If this pattern plays out and continues to do so, then we have a picture perfect replay of the 2014 correction and the ~3k bottom is the target.
Bull trap
This is a classic case of a bull trap. Many believe the bottom to be in and are in a hurry to inject fiat back into the market out of FOMO. Yes, money can be made during these temporarly up trends, but it is easy to get trapped if you get too greedy. But where is the bottom? Everything in this world is governed by a set of universal mathematical formulas. For mass adoption to occur, everything needs to go through stages of growth and correction. When there is a change in trend, it most likely occurs because something is either overvalued or undervalued. FUD, FOMO, etc, are all a result of the emotional rollercoaster that all humans naturally experience. The key is to learn from past experiences or historical data and try to look at the larger picture, remain calm, and come up with a strategy to benefit from any situation.
When enough people feel that bitcoin is undervalued, and only then will the bottom be put in. And the fibonacci and the golden ratio are mathematical principles as observed in the universe to help us predict price and time with great probability.
Institutions accumulate in the OTC market
Some believe that institutional money will drive up the price of bitcoin. On the contrary, institutions accumulate in the over-the-counter market where large quantities of assets are exchanged without affecting the price too much. They accumulate just enough and quitely from behind the scene to have skin in the game and to be able to provide liquidity. What will drive up the price of bitcoin? It isn’t institutional money. Institutional money goes into building the framework, services, business around the usage of an asset like bitcoin, so when mainstream adoption occurs and the retail investors drive up the price of bitcoin and start using them, they are there to benefit the most.
Be a contrarian
Not everyone can make money all the time. If that did happen, money will be worthless. There has to be a level of scarcity for something to be valuable… like bitcoin for example. As the famous Warren Buffett said,
be fearful when others are greedy and greedy when others are fearful
As easy and simple as it may sound, this is probably the most difficult thing to learn as an investor.
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