The bull market has been in full swing for what seems like ages now, it's been over a year since Bitcoin broke its previous all-time high of $20 000 not adjusted for inflation obviously but in nominal terms. During this new phase of price discovery, money flows into the sector like there is no tomorrow.
Not only from institutions but from retail investors too, and that inflow of capital is hardly backed by anything rational. All the capital does is chase narratives and momentum.
I understand that this is the nature of markets and I accept it but I really am not a fan of bull markets. When all that discussed is the price, it quickly becomes tiresome and a distraction to the goals I think are far more important.
Independence from the state, self custody, financial education, secure storage, and all that comes with taking custody of your funds. All that is thrown to the wayside for the sake of the maximum amount of gains over a short period.
If we have a look at the Bitcoin chart over the last year we can see that after breaking the all-time high the rage has sat between 30 and 70k.
Sure we could see a blow-off top with breaks over $100k, but I think bitcoin will eventually correct probably breaking below 30 before settling in the 40-50k range for the next cycle build up. I think 40 -50k is fair value for how the network has progressed and the technology put in place to leverage that value.
Sitting in and around the trillion-dollar market cap is an achievement Bitcoin needs to solidify for a certain time period.
Shifting further out the risk curve
Since Bitcoin still has room to run, so too do investors get overconfident. They've made money this year, and continue to do so and with that confidence comes on more risk. As Bitcoin's price ranges ossify, these yield chasers go further out the risk curve looking for more volatile assets to try and make more returns.
This results in what many call altcoin reason, where people spin off their profits into all kinds of shitcoins to try and go for broke or leave broke.
This brazen investment tactic is fueled nay spurred on by an army fo social media shillers willing to punt any shitcoin willing to pay them in a pre-mine or a few stable conis.
I don't see the chance of a supercycle happening so I do think we will have a similar cycle to previous years.
As the numbers we are dealing with this time around are far larger, as the leverage we have in the system is gross, as new participants come in who never had a drawdown in their career come in, this pushes bids way over to valuations that are far behind anyone's expectations.
But what goes up must come down and when it does it will be a purge of pain. The market only corrects when it thinks it can cause the most pain and I don't think we're there yet.
Leveraged trading, illiquid NFT flipping, DOA funding, and DEFI Ponzi's are big but they will get bigger, they will sucker in more people before this is all over.
If this is your first time around these parts and you think you can't lose, oh you're in for a real treat.
The calm of the bear market
Once the bear market comes I can then see what the floor value of my portfolio is, I can use the dry powder I have to average down the overpaid dollar-cost averaging I've done and start to build on a more realistic valuation.
Unrealised gains are not going to help anyone and while I don't see myself realizing any gains, I would like to know what fair value for my portfolio is worth so I can then make decisions on how to rebalance.
Making life decisions on bull market pricing is only going to leave you in deeper doo-doo when the correction comes. I may sound like a wet blanket, but I have to say bear markets are far more enjoyable as pragmatism and focus on building takes over rather than irrational exuberance.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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