Each week, I send a weekly rundown to subscribers of my newsletter, Crypto is Easy.
In a recent rundown, I ran a poll asking whether bitcoin’s price will drop below $50,000 any time before December 31, 2021. Choices were “yes,” “no,” or “I choose not to respond.”
70% of respondents said “no.”
My answer?
I choose not to respond.
A drop below $50,000 would seem reasonable. Any price down to $40,000 would not surprise me. We’ve seen bigger drops in more bullish circumstances than we see today.
If that happens, on-chain data suggest the market would recover within months. Something like July 2015, March 2020, and a few other times when the market conditions were strong but the price dropped a lot, quickly. Everybody freaks out and two months later, we’re back to even and off to the races.
At the same time, today’s market has a ton of momentum. Don’t dismiss the possibility bitcoin’s price shoots up quickly, soon—possibly to its market cycle peak.
Think it Can’t Happen? It’s Already Done That
All previous market cycles ended roughly the same as this one’s playing out, as you can see in this trading chart:
You have a steady rise into a modest drop / complacency lull (shaded green) followed by a crazy, fast, powerful zoom (marked in black).
You might point out the slope of the previous curves are steeper than today’s. That’s an optical illusion from the way the lines appear on this chart.
Once you isolate the price movements over the months that came before that final zoom, you see a similar pattern all four previous times—the price went generally sideways and up for months before the complacency lull.
Not literally the same movements step-for-step, but along the same general path. Check it out:
Look at today’s price movements over roughly the same time frame:
You can’t tell me that’s so drastically different from what we saw in the lead-up to those previous zooms. Similar contours. Similar timeframe. Same general path.
Game over?
Does that mean we have to go straight to the market cycle peak once the market gets over this lull?
No. Far from it.
But if you dismiss the possibility, you do so at your own peril. You can make up for bad timing. Complacency kills.
Good morning! Every time somebody says bitcoin’s price can’t do something, it gets slightly more likely to do the thing they say it can’t do. Enjoy your day!
— Mark Helfman (@mkhelfman) November 20, 2021
Of course, that assumes this is a complacency lull. It could be normal volatility or the start of a bigger drop.
Yes, I know, 50/50 analysis, “could go up, could go down” but if that’s your conclusion from what I just wrote, you’re missing the point.
When the price goes up, too many people get too bullish. When the price goes down, too many people get too bearish. The moment you say “that’ll never happen,” there’s a good chance it already has happened at some time in bitcoin’s history—or at least something similar.
While the analysis may be 50/50, the decisions never are. No matter what happens from here, I buy or sell only when my plan tells me to.
Today, that means not buying. Tomorrow, who knows?
Either way, this market moves at extremes, faster and harder than you expect. Prepare accordingly.
Mark Helfman publishes the Crypto is Easy newsletter. He is also the author of three books and a top bitcoin writer on Medium and Hacker Noon. Learn more about him in his bio.
Originally published in Cryptowriter.