What is happening in the crypto markets?

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Avatar for Amoryarte
2 years ago

When the crypto markets are mostly down, and where in the best of cases what everyone wants is for everything to stabilize in some way to know what to do; the question is precisely that: what to do?

But before knowing what to do, you have to know what is really happening; since that is the base of all analysis in any sense regarding trading, investments and the economy in general.

The prevailing reality in the crypto world

If you dedicate yourself to trading, you must have already developed an enormous capacity to observe and analyze the markets; And therefore, you should already know that all this that the crypto market is going through is nothing more than a cycle, one that is not new at all, but rather repeats itself from time to time in the markets.

The crypto market (and any asset market in general) fluctuates based on supply and demand; And that means something very simple: If the supply exceeds the demand, the price falls; and if the demand exceeds the supply, the price goes up.

So, although this statement is quite obvious to most people who understand about economics and investment, it must be repeated on occasions when the cryptocurrency market lies as it is right now; so that those who do not know anything about economics do not continue to think that the market is definitely falling and that everything has gone to a bottomless abyss. And especially, so that they do not echo fake news that do nothing but spread FUD and uneasiness.

Can we be sure that everything will get better at some point?

Absolutely; without a doubt; but perhaps you will say, "How can we be so sure that the crypto market will rally at some point and prices will stabilize?"

To answer that we just have to stick to common sense. Generally speaking (in the case of cryptocurrencies that are in the top 100 of world capitalization), we can be sure of this for a simple reason ...

No investment fund, no bank, no institution, company, or government invests in something that is lost, or in something that has no future; That is a reality; and we have seen enough how companies, banks, investment funds, institutions, governments, and millionaire characters have set their sights, their faith and their money in cryptocurrencies at a general level since its foundation until now; and more and more they do (even in the current times when prices are falling).

Then...

Do you think that banks that have accepted Bitcoin as a means of payment and / or investment will let Bitcoin totally become nothing? Do you think that companies of major global renown that invested in Bitcoin, Ethereum and other crypto amounts equivalent to millions of dollars will only stand by to watch their money disappear?

Let's take a recent example: The whole crypto world knows well that the price of Bitcoin began to fall from the precise moment in which Elon Musk began to make statements saying that his car company Tesla, would no longer accept Bitcoin as a means of payment because it is highly polluting ...

As a result, the price of Bitcoin began a downward spiral that continues even now; And along with Bitcoin, all or most of the altcoins are also falling since then ... But if you look closely, you will notice something important: Elon Musk said what he said about Bitcoin; But at no point has he stated that he wants to sell all the millions of dollars that he bought in Bitcoin prior to his decision to reject the main cryptocurrency for being allegedly polluting at the mining level.

You don't even need to be a genius to get notice certain things, anyone can reason why someone would do something like that. Anyway...

What is happening at a technical level?

Everything (or almost everything) what I mentioned in the post so far refers to the fundamental part; but .. What happens if we focus more on the technical part? What's going on with Bitcoin and altcoins on a technical level?

Actually, we don't even need to talk about altcoins; because all (or almost all of them) are influenced by what Bitcoin does or does not do (or what happens to it). Since the crypto market is BTC centric (so to speak); let's focus on Bitcoin.

Bitcoin is currently going through a range, an accumulation cycle that is being performed by the whales (or mighty ones of the market); This range is between $ 28,000 and $ 32,000 according to a simple analysis.

What does this mean?

That while the vast majority of those who do not really know what they are doing in the crypto market (the weak hands), think that Bitcoin is going to $ 0, and they are selling everything, the whales are taking advantage stealthily, without much noise, to accumulate as much BTC as possible at the lowest price they can buy.

And since the market is already down because it is (as I already mentioned) in the accumulation zone, it means that the whales are not even interested in pressuring the market to lower the price of Bitcoin further; They do not need to do that, the whales are simply buying all the Bitcoin that comes in front of them.

And can anyone think that the Whales are so stupid such to buy or accumulate something that they are not sure is going to go up in price?

Whales are anything but stupid; Those who believe that Bitcoin will fall do not understand the Wyckoff Method, nor what that method or theory tells us about whales and accumulation zones ...

When the price of some asset enters a long period of accumulation, the price remains low, but as soon as those who are the driving force of the market (the whales) finish accumulating at a good price; the reaccumulation cycle begins, where the price assets begin to rise quickly. In this cycle of reaccumulation, the "fools" of the market begin to enter (those who are guided by appearances), because being the price in an upward cycle, they begin to enter because of emotion; ecstatic all of them, thinking that Bitcoin (in this case) will hit $ 100,000 or $ 1 million in one go ...

And they don't realize that they are already buying at too high a price, and that the distribution cycle is just around the corner; in which the whales will sell all their Bitcoin (when the euphoria for the fomo is at its best), at the highest price they can.

At that point, the momentum will make the price of the main cryptocurrency (and most altcoins) appear to be going to the moon; But in reality, the true reality of the matter is that as soon as the whales finish selling their Bitcoin at the top of the distribution channel; then a cycle of redistribution will begin that will take everything in a downtrend to an accumulation zone again; and the cycle will start again ...

Then ...

To buy or not to buy? ... There is the dilemma ...

All this I have just explained may sound too technical, but it is the pure reality; so it is normal to wonder then if it is convenient to buy or not ...

The answer depends on you and only on you; because nobody can decide what to do or not to do with your money; and only you know your level of liquidity and your level of expenses and income ...

But if we talk at a strictly technical level, then the answer is yes, it is best to buy BTC in this current accumulation zone; preferably, the closer the price is to the $ 28,000 zone, the better the purchase.

But someone who does not have enough liquidity to do without what he will invest, should not even consider it; because it is not known exactly how long this accumulation cycle that Bitcoin is currently in will last; since the whales are trying to convert all their liquidity into BTC, but at a snail's pace, therefore this can go on for an indefinite time; time that may seem like an eternity to most mortals.

The best thing in my opinion (at least it is what I do), is to analyze the market, look for patterns of continuation and reversal of trends and trade accordingly. This is how I earn liquidity from the market; And every so often, I take part of that liquidity and buy Bitcoin and other cryptos for holding purposes.

I really believe that this is the best option for those of us who are not crypto whales yet; but that someday we most likely will be!

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Avatar for Amoryarte
2 years ago

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