If we rely on Twitter to make a judgment, Bitcoin is definitely a supernatural element that can do everything. It is practically a pseudo-religious phenomenon. It is the story of a world on the brink of collapse, the evil conspirators (the dollar, the banks and the governments), the savior (Bitcoin) and the group of enlightened sages. In fact, there are people who literally have a profile picture with their eyes projecting light. Why is the price of Bitcoin falling? Ah, a minor and temporary problem: A blackout in Kazakhstan. That brought down the Hashrate and voila. Here’s an explanation. Buy the Dip! Simple and effective.
Now let’s get off Twitter for a moment and take a look at investor behavior. Definitely, right now, there is a climate of great uncertainty. The economic recovery has become quite difficult. Inflation, bottlenecks, shortages, new contagions, global debt, the trade war and a fairly overvalued stock market combine with announcements from the United States Federal Reserve about a change in monetary policy. Exactly, we will begin a process of monetary tightening. In other words, the FED will begin to withdraw liquidity from the system. Ouch! When? This year.
Indeed, many bitcoiners are discovering that the code is not eaten and they sold a bit of their holdings to buy real estate, indulge themselves, pay taxes, and diversify a bit. They understand very well that “free money” has a lot to do with the hikes in recent years and a change in monetary policy will obviously slow things down.
Each announcement of the Reserve has an impact on investors. Y nervousness makes people conservative. That means they avoid risky (volatile) assets in search of greater stability. In this way, have the certainty of being able to meet the obligations (debts). Of course it is not the end of the world. The markets normally exaggerate in these cases. Sooner or later, optimism will return and the price will rise again. We have to be very patient during this first quarter of the year.
Now, let’s talk about the most popular crypto news of the week.
In this market, it is not easy to determine the minimums. Because it is not easy to make an objective assessment. In the case of a stock exchange, we can use sales to get a general idea of a fair price for the company. However, in the case of Bitcoin, things are more complicated. It could be assumed that last year’s low is a fairly secure support. There is fear, but we did not go crazy either.
Although it is true that, due to the uncertainty, there is a lot of nervousness, the investor fully understands that 2022 will be built on 2021. Growth may be slower this year due to cuts by the Reserve. However, there is nothing to tell us that there will be no growth. After all, the raised cuts are not very aggressive. In fact, despite small rate hikes, the environment will remain quite flexible.
The behavior of the whales on this support has been consistent with this interpretation. The market is discovering its price in times of uncertainty. But he has not gone mad. At least not yet.
The press is very good at inventing reasons. Of course, bad news usually comes together. Obviously pessimism generates pessimism. And suddenly, bad news adds to the unlucky atmosphere. But such news in an upward cycle would go unnoticed. Or not? We must understand that markets are irrational. That means that they are made up of human beings full of emotions. Investors around the world are very nervous due to a rather uncertain economic climate. It is not by chance that prices decide to go down at this time.
They do not have a fool’s hair. They understood that To keep the community engaged in such a competitive environment, they have to reinvent themselves frequently. That shows the skill of the project leaders. This vision tells us that they are thinking ahead and not just quick profits. Bravo!
Bitcoin is an increasingly stable asset. Something very good in my opinion. However, it is proving very boring for many retailers. Bitcoin infected many with the fever of greed. And greed is insatiable. The new love is now the smaller projects that due to their lack of liquidity promise big profits. That is, it seems, the new dynamics of this market. Ironically, Bitcoin is becoming the institutional crypto.
In practice, Bitcoin and Ethereum are not rivals. In the same way that gold and oil are not rivals. Investors have learned to see them as the leaders of different sectors. You could say that Bitcoin is the “Digital gold”. A store of value to buy and wait. The most serious and consolidated investment asset in this space. And Ethereum is kind of Tech stock. Or, say, the consumable of a new world.
Bitcoin, in many ways, is a finished product. Ethereum, on the other hand, is a process. We do not know for sure the exact shape of that new world to come. However, we know that it is an inevitable future. Today’s Internet is very different from the Internet of the 90s. But, in the 90s, we knew very well that the Internet was inevitable.
Where will we be in the next 10 years? It is very difficult to know now. But you don’t have to be a rocket scientist to know that Bitcoin and Ethereum are at a bargain price. Faith in the future tends to lead us to action. That is, today’s faith can certainly turn into a self-fulfilling prophecy. Yes, we are experiencing a brief and mild period of doubt. But obviously it is a temporary phenomenon. Patience! Fortune rewards patients.