Friendly Reminder: Going Straight Up Is NOT Bullish Long Term, And Pullbacks Are Way More Important Than You Think.

Explaining this is especially important for the new investors on this sub, those who are worried about the recent price action. So, let’s look at some numbers first.

We will be talking about the price of BTC this year. We are focussing on BTC because it largely decides the market sentiment. Technically speaking, Bitcoin can be considered as a fairly accurate market index for crypto, just like we have S&P 500 for stock markets.

From 1st January to 14 April the price increased from $ 29,331 to $62,959 a 114.65% growth in 3.5 months.

From 20th May to 11th Nov the price increased from $ 40,526 to $64,774 a 59.8% growth in 5.7 months.

Regression comparing the Q1 growth with May-Nov growth

As we can see, Bitcoin rallies like crazy during Q1, and the growth clearly looks unsustainable. And then what happens? We eventually see a 50% crash in May and the whole market tanks.

Now let us compare that to the rally from May to November. The angle this regression makes is 43°, which is substantially less steep than 59°. This is undeniably more organic than last time. So yes, this time it is different, not only that this time it is better.

The occasional pullbacks like the ones we are experiencing today are incredibly important, it helps in keeping the markets stable and sustainable for a long term rally. When we say it "shakes off" the paper hands, it also means that the capital the short-termed traders lose flows into the market, making the said asset stronger. While the +60% growth in 6 months may seem slower than +115% in 3.5 months, but remember that it's stronger. Bitcoin is far more likely to reach $100k now, than ever before. Not only that, slow and steady growth means that the market is finally maturing and hence, less volatility which means more institutional and retail adoption.

Note: In the regression plotted in the above graph, the Pearson's R is well above 0.7 in both cases: 0.91 & 0.87, which generally means that the growth can be accurately modelled by simple regression. Remember, more complex rainbow graphs ≠ better analysis.

So, all-in-all, I would say we are definitely headed to a $100k till EOY, all we need is some patience and conviction.