Market sentiment has already dropped off substantially in just a few days. Fear and greed is at 18, which we haven’t seen since July. I think it’s reasonable considering the state of the stock market with the fed on the cusp of tapering, Evergrande just continuing to persist, risking contagion in the credit markets and oh yeah let’s just throw in a new variant that’s hyper-transmittable. Should be a fun little twist to the end of the year.. yay. I really do think we could chop sideways for some time or simply just bounce around in a range until the macro economic landscape changes (also I have 0 idea so don’t listen to me)
What I do know is that what Bitcoin does in the short-mid term will depend on the fed’s decision, tone and stance on tapering and how the broader market reacts to this. Everyone should be paying attention to this, yes it’s great to “buy the dip” and not worry about anything. Yes this is a good long term strategy but you should always be aware of major economic events like this. It impacts all of us drastically and by doing this you can make sure you take advantage of pivotal moments to better your financial life.
Consider that the stock market hasn’t seen one correction this year (a drop of 10-20% from highs). Yes the NASDAQ saw a 10% correction earlier this year but not all major markets. This is a statistical certainty it will happen just a matter of when. Don’t be naive and just disregard this because Bitcoin is a risk-on asset so it’ll be one of the first ones to go (in the short term of course)
We’re getting literally like 5x the amount of bad news all at once. Fed tapering earlier than expected, CPI being released next week (which is almost certainly going to be a higher reading than last month, which will just further push the fed to taper, more covid, end of year rebalancing and wash-sale shenanigans, horrible payroll numbers, and then China being China.
I think the sheer speed of Friday’s drop is not to be scoffed at. I mean yes we’ve seen much worse drops but a nearly 20% drop in like 2 hours is not nothing. A 15% drop in 10 minutes is crazy, especially considering the market we’re at now compared to the past. Yes I know it was liquidation cascade and stop loss hunting to clear out the high order book bids. Overall it was necessary, we had far too much leverage and optimism for way too long. Definitely a positive going forward.
That being said I’m loving seeing the sentiment swing from hype to extremely negative. Not on here of course since most of us actually know what we own and have done our own research. I’ve been seeing a ton of, “We’re now in a bear market for the next 3 years”, “I’m selling it all before it’s too late”. The more and more people start to say things like this the more I’ll begin doubling down. Once a large majority is bearish that’s when I want to be balls deep. Remember the past 3-4 months when everyone was guaranteeing that we were going to be at 100k by the end of the year no questions. It never plays out how you think it will. Also we knew for months that the leverage was never flushed out. It was bound to happen. I could still feel myself feeding off the hopium and I know it. When this happens just show some caution. Try to be neutral in the short term. Just keep your head on your shoulders and think rationally. Continue to buy the dip and if you believe in Bitcoin average in with more on these amazing discounts.
Fight the urge to follow the herd.
Be aware of outside factors that can influence Bitcoin
Whatever the crowd is shouting, you should probably do the opposite or at least consider that they have no idea
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