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Bitcoin has fallen more than 25% from its peak earlier this year, and is it time to escape before it further collapses?
Historically, September was the worst-traded month of the year.Worrisome economic indicators increase the likelihood of a recession, with billions of dollars of leveraged longs being liquidated.Hundreds of millions of dollars in “historic” capital outflows hit Bitcoin ETFs for several consecutive days.Analysts warn that when Bitcoin trades at $54,000, it will fall to a low of $40,000.Celebrities who hyped up the Bitcoin bull market a few months ago now say there is no catalyst for Bitcoin’s price to push up this year.
Panic is reaching higher levels, negatively affecting Bitcoin and cryptocurrency markets.Depressed, influencers have changed their title from “Get Rich” to “Get Out”.No wonder the Fear and Greed index hovers at its lowest level this year.
If you think Bitcoin is bad, then you will definitely be in pain if you hold altcoins.Such an era makes Bitcoin Maxis look like a genius, while altcoins are commonly referred to as “junk coins”.The Ethereum ETF has been declared to be a failure.Pump.fun has withdrawn millions of dollars in degen funds, and the loss of leverage absorbs most of the remaining funds.A variety of high-cap altcoins such as Dogecoin, Avalanche, Cardano, Chainlink and Polkadot have given up huge gains from earlier this year.
Why is skeptical makes sense
It is understandable to be skeptical of Bitcoin and the broader cryptocurrency market today.Wall Street was supposed to release a lot of money, and Bitcoin celebrities such as Cathie Wood and Michael Saylor also threw out their million-dollar predictions.Half has already happened, and according to history (which is always repeated unless it does not happen), Bitcoin should be trading at or near all-time highs.
Presidential candidate Kamala Harris threatened to raise taxes and manipulate prices, suggesting her team may not be economically friendly.In addition, the current government (Kamala is the vice president) has carried out a predatory attack on the U.S. cryptocurrency market, suffering huge losses from Ripple and plotting billions of dollars in fraud at Sam Bankman-Fried and other croniesAfter the case, cryptocurrency exchanges, NFT platforms and other decentralized applications were attacked.
We all feel that we are getting poorer.With personal savings rates approaching an all-time low, credit card balances hit record highs, the government seems unable to accurately report any economic data.Inflation is said to have fallen, but it’s hard to know when you buy anything or pay your bills, and it seems like everything is going up.
As retail cryptocurrency investors, we face several problems:
We feel poorer because we are indeed poorer.
We are used to getting hope from influential people and analysts, and now they spread fear because only greed or fear can get clicks and views.
Bitcoin is currently close to its last line of support and may experience another sharp decline afterwards.
Why isn’t this time to give up Bitcoin
I’ve written six paragraphs to explain why it’s wise to not buy or sell Bitcoin now.Now, I will explain why this idea is short-sighted, wrong and dangerous unless you are a short-term thinker.
I can discuss how the number of bitcoins on exchanges continues to decline, how the price of bitcoins is trading below short-term holders’ realization (historically bullish indicator), or point out Michael Saylor’s massive Microstrategy purchases orMr. 100 Continuous Accumulation of Bitcoin.I can also dive into how the crypto fear and greed index has historically become a reverse indicator and how Donald Trump’s presidential victory has brought massive capital inflows to risky assets.
In fact, I can highlight multiple other bullish data points and talk points to support why Bitcoin has huge buying potential now.
But I won’t do that.
I want to make a simpler argument.The Fed is changing direction.Below is the simplest and most accurate chart of when Bitcoin prices will accelerate.The blue bar indicates when money supply in major economies (US, China, EU and Japan) will increase.You will soon notice that when the money supply does not grow rapidly (red circles), Bitcoin will appear horizontally or downward.
Meanwhile, when the money printing machine starts, the price of Bitcoin will rise sharply.Two years after shutting down the printing press, the Fed may turn on the printing press again, and other central banks will follow suit.
When the printing of money is fully developed, you will want to hold Bitcoin.This is because of Bitcoin’s inherent deflation structure.Although unlimited quantities of USD, yen, euro and renminbi can be printed, the amount of Bitcoin remains the same.Printing money can lead to two things:
Since Bitcoin is (errorized) as a risky asset, more fiat currencies flow into Bitcoin.
More and more ordinary people are beginning to realize that the current fiat currency system is manipulated and that Bitcoin can protect them from currency devaluation.
Some different ways to observe the market
Sometimes, when my portfolio isn’t doing as I wish, I try to use metaphors to calm my mood.Here are some alternative ways to consider the current Bitcoin and cryptocurrency market conditions.
Imagine you were on vacation but you were trapped in traffic jams.You know that traffic will get better one day, but you’re not sure when.You won’t cancel your trip and turn around and go home because of traffic jams, right?
What if you bet on a sports team?The team you bet on has an 85% chance of winning.If the team you bet on is behind in the third quarter, would you bet on them losing the game or canceling your bet on them?Or will you increase your bet based on your confidence in their victory?
Good things are hard to come by.If you want to gain muscle, you have to tear off the old muscle.If you want to do your best in something, you have to face painful losses and overcome adversity.Holding Bitcoin isn’t always easy, but it will pay off in the long run.
Key Points
If you are scared, worried or stressed about the Bitcoin and cryptocurrency market, this is completely understandable.As discussed, there are many reasons why you feel this way, and our environment can affect our thinking.Giving up Bitcoin is what Wall Street and the Bitcoin giants want you to do.Because they have so much wealth, falling Bitcoin prices represent buying opportunities.
If you invest in Bitcoin for short-term profits, it may be time to exit.It is important to understand “why” hold Bitcoin.If you are not familiar with the basic reasons for holding Bitcoin, you can easily be frightened and leave the market too early.
On the other hand, if you realize that as the money supply expands, the price of Bitcoin will also rise, and we are entering a stage of growth in the money supply, it may be good to load or accumulate more of this scarce asset now.opportunity.
If you think it’s reasonable to hold Bitcoin right now, applaud.Or, if you don’t think so, share in the comments why holding Bitcoin is meaningless.Thank you for reading.
I own Bitcoin and Bitcoin ETFs.This information should not be considered investment advice.I am not more qualified to provide financial advice than to win the Hot Dog Contest.Digital assets like cryptocurrencies and NFTs involve risks, so you should always do due diligence before investing.
