 | A key aspect of a bear market is that the market crabs for a long time and that every pump gets faded. This price action has a clear psychological effect: It trains people to mistrust any rally and to believe that the prices will not go up and likely go lower. Hence, they dont buy or even sell low. If you ask me, most people in this space are trained to mistrust any rally. Positive posts here are often met with heavy skepticism and with reasons as to why a rally will fail ("But look at the macro environment!"; "Inflation just entered the room"; "We will just see these same prices again in 2 days!"). Retail interest is low. And people are shorting the lows, as evidenced by there being over 1 billion of liquidations yesterday. To be fair, so far these views have been correct as crypto has been dumping and crabbing for almost a year now. However, I think that this recent pump could very well be the start of the real rally. And by real rally I mean the rally that is perceived as another sucker's rally yet actually drags us out of bear territory. I predict that we are (soon) starting the disbelief stage of the Wall Street Cheat Sheet below. I will present a few key arguments for that. 1) Just about every crypto bottom indicator has flashed Whether it is the Pi Cycle indicator, the Hash Ribbons indicator, or the Puell Multiple indicator; they all flashed and based on historical data, the bear market bottom should be in. These indicators have done a great job predicting major bottoms in the past and have not failed us yet. Do they provide a guarantee (during this crazy economic environment)? Of course not. But they do provide relevant data. This is not the main point I want to make but it is good to keep in mind. Hash Ribbons indicator predicts the bottom is in 2) The Dollar (DXY) is losing its parabolic trend and a key indicator just flashed 'sell' The strenght of the dollar relative to other key currencies is absolutely key given the strong inverse correlation between the DXY and crypto. It is necessary for the DXY to dump to give crypto breathing room becuase only then will risk-on assets flourish. The DXY is losing its upwards trend and a key indicator that correctly identified the 1985 and 2002 top flashed again. Note that it flashed a little early in 1985. DXY losing its parabolic trend Another perspective of the DXY losing its parabolic trend A key indicator that has been very accurate in the past produced a sell signal 3) The (institutional) adoption during the 2022 bear is out of this world During past bear markets, many people feared that crypto would go to zero. The situation now is very different, as we know that crypto will be huge. It is more a question of how much pain we have to endure before that happens and which projects become big. Why? Well, every day there is bullish news of adoption. Here is a list with examples of instutitonal adoption over the past ~6 weeks:
There are more reasons as to why I believe we are entering the "sucker's rally". For instance, inflation is topping (e.g. Oil down more than 30%, energy prices down, lots of energy reserves in Europe for the winter, US CPI will decrease, US rate hikes will decrease). Another example is how the chart looks. But I will keep this short. I am curious what you think. Importantly, I dont expect us to just fly out of here to all time high. Moreover, I know that there are no guarantees for the future, but if you ask me, the future is looking bright and we are close to crawling ourselves out of this hole, unless something very unexpected happens. [link] [comments] |
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