Why next Bitcoin cycle can be the last cycle. – Cryptoroman
I am not obtaining these numbers from any source, is just a wild guess, ideally the store of value market cap should pump once until is big enough to fit the demand for saving of the society in which point it will pump and dump at the same rate and goods and services value will be stable relative to them, if at any point society increases the saving culture it will grow, if saving decreases it will decrease, notice nobody should put wealth on the store of value market thinking it will grow just by being there but for later spending, if they want to increase their wealth they will need to outperform the society by providing better goods and services than the average people do.
There is a reason why life seems to be more expensive now and middle class is disappearing, the financial system is a group of markets in which people put their wealth not for storing it but “make it grow”.
I explained how wealth can’t be created and as a market grows it has to take wealth from other markets, making everything else cheaper in comparison.
You may think that’s a contradiction as things look more expensive now, but they are not, they are cheaper but only for the people that got in the financial system markets before the “break even” area of this enormous pump and dump scheme, we pass the break even zone a while ago we were born in negative, is either you get into those markets now or you keep losing more.
You will notice the “investor” mindset society has built normalizing the system, we are told from young that working is for poor people and successful people don’t work for money but money work for them, for sure money will “work” really well for me if i had bought bitcoin at $1, now try at $5 million, see how rich you get.
But the are good news, this system has a flaw, it is finite as wealth is, there is a ridiculous amount of wealth that is held that is way bigger of the saving demand of the society, as initial investor are incredible rich they are very incentivized to spend their wealth on goods and services and therefore popping the bubble, why are they not doing so?
Simple, like any ponzi scheme there is always some kind of incentive to prevent “investors” from taking profits so that it keeps growing, in this case “investors” are waiting for another rally on the markets as there are some methods out there to “guarantee” it happening essentially taking wealth from whoever is not in the market.
If such rally doesn’t happen or if doesn’t compensates enough for big whales to hold their profits, they will consider leaving as they know other whales are considering leaving and is unsustainable without further rallying.
They need to exit just before everybody else to take the bigger piece, but their wealth is so gigantic that they may not be able to spend as fast, they are looking for a so called “safe heaven” so that they can put it in there and slowly spend through generations or “make it grow” even more.
Right now gold is considered the ultimate safe heaven as it is the best non ponzi store of value, if the SF/price hypothesis turns to be true the future of bitcoin will be priced in way early as a lot wealth would be moved into such safe heaven, because for sure gold mathematically will be a better store of value for a few more years, but not anymore if everybody knows it.
Bitcoin will rally based on SF, less miners selling pressure and FOMO, at some point bitcoin will confirm the macro trend, confirm the SF correlation with gold, people will be using TA, fractals and many things to predict the cycle top and take profits.
Bitcoin will make a high that will surpass people’s expectations just before a big pull back that will seems to indicate the start of the new bear market.
That’s it, here we go, what a rally! news will be calling for the top by analysis “experts”, there would be big selling pressure as people would be taking their fiat profits or losses, some kids will finally buy their lambos, traders will be opening their leveraged short positions, everybody is all the sudden great traders, now everybody knows they need to accumulate as much as possible during bear market for the 2024 new bull run so that we can all moon.
So bad everybody is forgetting one important key for a bear market to happen, fear. There is not fear in the market after the confirmation cycle, bears were obliterated, all there is is greed and bulls acting like bears so that they can buy cheaper, is like if we all were whales manipulating the market, who will continue the downwards trend if there is no fear? If we all know it will rally on 2024, the only reason to sell is to buy cheaper.
People is waiting in the sidelines for lower prices to buy and hodlers would not sell not matter what, the lower it goes, the closer it is getting to “the bottom”, selling for buying cheaper is too risky at some point, would be better to just start dollar cost averaging in, that is exactly what everybody will do, that will be the bottom and as whales realizes that all they are doing by dumping is losing money and traditional markets are full of fear, they will start DCA way faster breaking previous all time high, this will break macro market structure, shorts stop losses will trigger followed by a immense flash pump and equivalent flash crash on traditional markets, this will shock the world.
Quickly it will pass the “break even” imaginary mark where profits are a thing of the past and losses starts to be taken in order to avoid further losses, specially from big players that can’t afford losing billions and governments as they will use their “wealth transfer machines” to buy all they can with their citizens money.
Almost any retailer that took fiat profit would refuse to immediately re-buy as they will feel stupid by doing so, the same reason people didn’t buy low in previous cycles as they just saw lower prices previously and ends up buying the most based on fomo at ATH, or refuse to sell during bear markets as they missed the chance to sell the top holding their losses until the bottom where they finally sell based on fud.
Other people will think they are making a killing by trading this upwards without realizing they are doing the equivalente of trading the dollar for stacking Venezuela bolivars.
Mining will become ridiculously profitable, asic miners and gpus prices will go to the roof, there would not be enough hardware for mining such big reward, so energy cost will increase multiple times to compensate, this energy cost will gradually decrease as more people starts mining and after halvings reward cuts.
Is hard to tell how much time this pump will take from start to finish, or any specific price targets, no to even consider inflation here. There may be liquidity problems slowing it down.
And yet again, just like in the past, greed will be punished and whoever did hodl would outperform almost any trader out there.
After such pump most of the stored wealth will probably go directly to the goods and services market and ponzi schemes as people tries to keep “growing” their money, the rest will be kept in bitcoin.
As bitcoin doesn’t have a mechanism for discouraging spending (like promises for future gains) people with huge gains may start buying goods and services as the store of value market cap deflates to what it is supposed to look like, and while most people lost most of their life savings during the wealth transfer, making it back would be a lot easier now and middle class will rise again as their work will be correctly priced now.
I think this is more likely to happen that everybody expected scenario, but it stills pure speculation, at the end nobody really knows exactly what will happen, do your own research and proper risk management before taking any decision.
This is not by any meaning financial advise.
Let me know your opinion about my price prediction, do you think it is likely, unlikely, impossible? Thank you for reading.
Every sat is appreciated :).
Published at Sun, 10 Nov 2019 00:29:22 +0000
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