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Leading up to the Merge, many were extremely bullish. Ethereum had just hit $2K and it had just been announced that BlackRock was about to enter the space in a very “real” way. Long-term, this is bullish. However, in the short term, it was a clear sell indicator. The majority of the market interpreted this incorrectly, and as a result, lost money. Ethereum is currently trading at $1274 at the time of writing and the entire Crypto market cap is down 5.4% in the past 24 hours. Institutions never look to pay fair market value when acquiring positions. They simply wait for discounted prices. This is how Smart Money operates.
Another Smart Money principle
You may remember that institutions began exiting their positions a couple of months ago. Many would consider this foolish, but that’s yet another clear distinction between retail investors and Smart Money. Whether it be whales or institutions, these investors and institutions generally have a good handle on risk management, unlike the average investor. Once a continued downtrend has been identified as a high likelihood they simply sell. Yes, even at a loss, and here’s the reason why. If you hodl your coins through a painful downturn, you still have the exact same amount of coins, and you have lost money.
Smart Money takes a small loss, waits for lower levels, and then simply repurchases the position. They in turn have lost less money and are now holding significantly more coins than the hodler. This move also enables them to move into profit a lot quicker than the hodler who held out all the way down. This is essentially what Smart Money is about to do. As Bitcoin begins to range lower, institutions and whales will begin accumulating again. Investors need to begin thinking and acting differently. However, as I have often mentioned, this requires knowledge and understanding, which in turn, requires time and dedication.
An Exhausted Level
The $19K to $20K level is fast becoming thinner as a level of support. The market is looking to take a further step down. What you often see is a desperate attempt from the market to try and protect a weakening level. I would suggest that we have already witnessed this to a large extent. I would also consider that a move below $18K is not too far off. If you are playing this game by exercising the disciplines that govern it, then this is actually good news for you. This is why ongoing research and analysis are so very important. I do however believe that markets are going to see the “rulebook” being adjusted over the next few years. It’s the only way how I see markets surviving. The current rulebook in a future world will be devastating, in my opinion. This however is very much my own idea and prediction of the future. I do see changes coming in how we will be interpreting and analyzing the market. A new “language” if you will.
More Than A New Lens
Many are still interpreting Crypto through the lens of the current financial and economic construct. They are unable to see beyond what they already know and understand. In other words, they are simply adding the Crypto dynamic to an existing model. Anyway, this is more appropriate for another article. I am going a bit off-topic. Ultimately, I believe that the discounts I have been waiting for are just around the corner. This is not financial advice, but rather the product of my own personal research and analysis. Get ready! I think things are about to get a little crazy!
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