Even If the Bottom Is In for the Bitcoin Market, Don’t Expect a Big Surge to a New ATH for a While.
The market has yet to be purged of those who don't understand the why of Bitcoin.
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The title of my article must have made you happy. I'm talking about a bottom that would be there for the Bitcoin market. This is something that many are hoping for as the last few months have tested the nerves of investors. However, as I told you recently, there are conflicting signals that the bottom has already been reached for this Bitcoin price crash:
My title was a bit presumptuous, and I apologize for that.
However, it is sometimes a necessity to get the readers' attention. I hope you will forgive me for that. That being said, the bottom could well be in. This is a possible scenario, but nothing is guaranteed as always with the price of Bitcoin.
Since the bottom could be in, many people are asking themselves: why doesn't the price of Bitcoin go back to $40K? Or better yet, why doesn't optimism return to the market with a reboot for a new ATH by the end of 2022.
Well, even if the bottom is in, you have to understand that things don't happen that easily.
Before Bitcoin's price can start moving towards a new ATH, the stars will have to align again. Investors' fear of the Fed's monetary policy will have to subside. Investors are spending their time waiting for the Fed's interest rate decisions after its FOMC meeting.
At the slightest hike, or the slightest mention by one of the FOMC members of a hike higher than expected, the markets panic. The S&P 500 plunges, and all assets considered risk-on suffer. This includes Bitcoin, which is still (wrongly) seen as a risk-on asset by investors in the traditional financial world.
Yet, as Bill Miller recently said, Bitcoin is your insurance policy against a financial catastrophe that will eventually occur because this flawed system is a time bomb.
But before a majority of people realize this, it will take time. A lot of time.
In the meantime, the market will continue to evolve in these troubled waters of a painful market with investors who will seek above all to reduce their losses. Many traders are between -50% and -90%. If Bitcoin hits $40K in the next few weeks, you can bet that many will sell to cut their losses.
They won't be looking to have that their long-term interest is to remain HODLers. The mindset that dominates the market is not that right now. It's all about the narrative here. And with the war in Ukraine set to continue, many will seek to disengage rather than stay on a long-term approach that will prove to be a winner.
These people just want to get out of the market. They are not in a mindset to accumulate more and see this as a unique opportunity with BTC. So the market is going to have to be purged of these investors who still don't understand the why of Bitcoin. This will take time. Patience is always required with Bitcoin. You know that very well.
In the midst of this, you also have traders who just want to make a quick profit and will look to play with you as long as possible in this price zone.
Final Thoughts
When monetary policies become less hazy, when the outcome of the war becomes clearer to investors, then the mindset will change. From a mindset of seeking to minimize losses, investors will switch to an offensive mindset of seeking to make profits. The price of Bitcoin will rise again, as risk-on assets become popular again.
How long before we reach this phase?
I can't tell you, because I can't predict the future. But I can guarantee that those who accumulate BTC during this period and are patient will come out on top. As always with Bitcoin. So the opportunity is now when everyone else seems to be in doubt.
But you already knew that, because you've gotten used to tuning out the noise around you and focusing on the real signal: the Bitcoin revolution.
Some reading
4 Barriers to Bitcoin Mass Adoption (and Their Solutions). We can trust the Bitcoin community to address these issues in the future.
Facebook in the Cryptocurrency World: Story of a Fiasco. The danger of Libra/Diem was far too great in the eyes of American regulators.
History Often Rhymes — Lessons for the US Dollar From the Collapse of the Roman Denarius. For some, America is in the midst of a modern Diocletian moment.
The End Justifies the Means — America Wants to Get Closer to Saudi Arabia Again. Joe Biden and Mohammed bin Salman will become best friends again.
Bitcoin Will Help Prevent Wars, but It Will Not Be a Miracle Peace Weapon. The characteristics of the Bitcoin system will better limit the bad sides of humans.