For months on end now Saturday or Sunday used to see Europe have a coffee and sell, America have a burger and sell, and Asia have their morning noodles and sell.
Then, for the past few weeks, they reversed, surprising everyone with some recent Saturdays or Sundays seeing morning buys.
This weekend, however, they neither bought nor sold. Is Europe running out of coffee? Do American’s have no burger? Are Asians fed up with noodles or what’s going on?
We asked some priests and they said something about the weather, something about sell away and go May, something about bears, and some other mystical nonsense.
We’re not sure we buy any of it, but it looks like some interesting things are happening. Ethtrader is currently seeing a permabull that has gone permabear and is spamming the bear case with some volume, completely in line with our prediction.
We have no crystal ball, but the current cycle is hardly the first one. It is pretty much exactly what happened in bitcoin around 2015 or so when buttcoiners had daily fun at trying to argue with everyone that bitcoin was worthless.
When the bitcoiners then eventually turned bear, the buttcoiners turned bullish in a typical fashion, something that is kind of happening in eth, but now it is some eth traders rather than methcoiners.
Not that much of the above necessarily means anything, but some “old” ethereans are apparently returning. They find an utterly depressed ethtrader and some of them seem to be amused. Go take a break, their advice, find some perspective for the trenches can be rough.
And it has been a pretty rough now nearly eight months. Not recently, however. Had you asked someone last year that bitcoin would hang out at around $8,000 now, they would have believed not.
On the other hand, had you told them eth would be still at around $470, they probably wouldn’t have believed either. What, one year on and still at current prices? You joking mate.
Up and down, but eth remains at around where it was now many months on and with all that development, activity, awareness, adoption and so on.
A puzzle it would be if we had not seen the movie before. It’s a cycle, and we think the main reason for these cycles is mining. That puts constant pressure on the price, so if demand even by a little bit doesn’t meet miners’ sell off, price falls.
Eventually miners’ relentless selling means some of them go under, like Hashflare did a few days ago. At that point, what miner remains does so because he or she gotten a bit smarter and starts holding off any sell pressure, so living on reserves.
The thing is, however, if Bitmain does truly have just 4% of bitcoin’s hashrate as they claim, then you’d think there are many miners making independent decisions so plenty would keep on selling to try and keep above water.
Eventually an equilibrium is reached, but that may correspond with a pretty terrible sentiment price wise. No moon, when bull run, this is useless, lost so much, will it ever recover, months for 10x are you crazy, this is rubbish, it don’t do anything, and many other varieties.
The sugar rush for some has turned into a depression with some withdrawals symptoms, so they reminisce the good old bull days and how it was all amazing.
They forget, of course, that at the top we were all pretty fed up with it all, just as many of them have forgotten, if they were around at all, how similar the sentiment in ethereum especially looks to that of bitcoin around 2015 and to ethereum around December 2016.
They also probably think it will always be thus, but there are some very fundamental reasons as to why it probably won’t.
One such reason might begin in a couple of months when ethereum reduces issuance by some 30% if they do delay the difficulty bomb which they sort of have to. In the surface it appears like nothing, and it may well be nothing, but there are good reasons to think it will be very much something.
If we go back to our miners, the reverse occurs if demand rises even slightly above miners’ sell pressure. At that point price starts rising, and if there is some underlying reason rather than just speculation or news, which probably follows price rather than causes it, the price rise continues as long as demand remains above that of miners’ sell-pressure.
A secondary aspect here is holders, traders, etc. They have joined miners now for months in selling. When the market gives any indication of really turning, they hold off any selling not least because there is no longer anyone left to sell as they have already sold their coins to those that want them, the strong hands.
A small rise in demand thus is precipitated by further withdrawal of supply by market participants, leading to slow growth initially that cumulatively increases until eventually it moves in a very straight line up.
When issuance is reduced, as in supply, a rise in demand automatically happens as long as demand remains constant. Thus bitcoin’s issuance reduction by 50% in 2016 led to the bull run in 2017. Same for its 2012 halving with the bull run in 2013.
Obviously there may also be other reasons as to why those bull runs might have occurred, but what is interesting to note is that every-time the market did not quite price them in.
The reason might be because obviously there is no sure formula of issuance reduction equals bull run. Past movements do not necessarily predict future ones.
Thus no one believed halving would have much of an effect until it did in both instances. That’s generalizing. Many did believe it would have an effect, but it didn’t quite reflect on the price.
You see in a period like now, in accumulation, millions of dollars have to come in every day just to keep the price where it is. That price has remained somewhat sideways for now a few months suggest some balance may have been reached.
That might not be the case, price may move further down, but if it keeps sidewaying then what the outside world sees is an asset where nothing is happening, what even some traders see is a depressed atmosphere and for some who the price action got to them they might even be seeing only cons and no positives.
And yet what some others might be seeing is a period of accumulation. Millions of dollars are betting price will rise while it sideways to just maintain the price at the level it currently is, and they may be right or they may be wrong, only time will say. Plenty are, however, building up a position.
They might be rewarded very well for it or they might see significant loses, but it is unlikely any of them expects any real price movement any time soon.
The bull run is still fresh in everyone’s mind. Plenty seem to think it will happen overnight, but good things take time and patience.
It is unfortunate that when opportunity presents many can not see it. The opposite, many actively and very loudly dismiss it, are almost angry at it.
Not that they are necessarily wrong for they may even be right, who is to know such things, perhaps there is no good opportunity, perhaps the opposite.
Yet probably many would have seen bitcoin at $20,000 or ethereum at $1,400 and might have thought it expensive. Now they might perhaps be thinking it cheap.
It is a ruthless cycle that sees most short term traders lose money, whether here or in the stock market. Any gain during the bull run they probably lost all during the bear run, then they cry about how it is all rubbish.
It is an interesting species in fact the one that for months while the price was going down remained utterly bullish, and once it finally stopped going down, goes bearish.
Emotions, the trickiest mistress if there ever was one. Thankfully intellect tends to have the upper hand, at least when it is consciously utilized, for if emotions were our masters we would be all but naught.