Bitcoin Volcano Metaphor
Looking at Bitcoin’s price chart, it appears Mt. KillYourPortfolio is erupting yet again. This marks the third time an eruption has occurred since Bitcoin’s all-time high.
This calls into question what exactly they mean when they said: “futures would bring stability to the crypto market.” Is this like the time they said Soylent Green would solve world hunger; damn Malthusians.
NOTE: Mt. KillYourPortfolio, as in, when Bitcoin goes down it tends to take the entire crypto market with it… thus “killing” your crypto portfolio.
With that said, while the first big eruption of 2018 and the consequent second medium-sized eruption clearly spilled hot red lava all over the hopes and dreams of HODLers, this third eruption still has a chance to stop mid-stream.
Of course, crypto loves patterns, and the pattern thus far in 2018 has been to pour hot lava all over anyone foolish enough to stand too close to an active volcano (or more-so, not to get out of the way when they started to see smoke; AKA HODLers).
On the plus side, each volcano so far has been getting smaller, and thus one has to wonder if perhaps a new pattern will emerge after this eruption. Even more on the plus side, patterns like this have in the past led to exponentially bigger volcanos at some point down the road. For example, 2014 eventually turned into 2016 – 2017.
Anyone who insists on ignoring the warning signs in an absurd fashion that goes beyond greed and becomes dark comedy, is likely to end up getting covered in lava every other month. They may find themselves rewarded in some distant future (or over the next few months).
If you would like to learn how to spot volcanos before they erupt, I suggest keeping an eye on the daily candles and a few important indicators like MACD and RSI.
When you see those big red lava candles start to break under the 12 day ema and 26-day ema on the daily chart, and you see the daily RSI move toward overbought on the daily chart, especially after about a month’s worth of nice lush fertile green candles, it is a good sign that Mt. KillYourPortfolio is about to cause another BTC eruption thus covering altcoins and HODLers in a sea of red. This takes great effort on the part of bears and comes at great expense, but being able to short the market helps make it feasible, which is why you see more of it in 2018 with the advent of futures contracts then you did in past years.
Remember, selling or shorting the top when you start to see smoke is an option, but for those who end up covered in lava this time, try not to panic.
I’m not saying it is too late at this point (in fact, it could very well be part way through the eruption), but let’s be honest. The longer you wait, the more of a gamble it is. The reality is smart money who saw the smoke and helped start the fire ran away over a week ago and is already safely out to sea and is simply waiting for the smoke to clear so they can come back and restart the cycle.
NOTE: If you do happen to try to bunker down in Pompeii while the Whales escape safely to the sea, remember, if things don’t turn around quickly and the magic Consensus rally doesn’t come to save us, then it is likely just a month or less of being petrified before the green lush and fertile grass grows again and another volcano starts to form. Remember what happened the last few times we went to $6k unless we get another 2014-like event, and even if we do, it is really just a matter of patience. There might be an effort to thin out the population, but it is pretty clear Pompeii is destined to be populated once again. If you have been hit in the face with lava a few times already, you owe it to yourself to be around for that. #BitcoinVolcanoMetaphors
In plain English: Bitcoin has been doing a rather absurd fractal-like pattern since the start of 2018. It seems the pattern is “whales” push up the market for about a month (or 3 weeks), and then they pump the breaks while the bears take over and smart money shorts crypto and profits from futures contracts, Bitmex contracts, etc. Rinse and repeat. Blame market cycles and taking the path of least resistance; we would all do the same if we could. That said, look how each volcano looking thing in the price chart created from this pattern is getting smaller and smaller with each bottoming out at $6k-ish. There is potential that this will be the last one (as the range is tightening) and there is potential that the same exact pattern won’t just play out yet again. Whatever happens, when the panic subsides, we’ll all want to pray to Vulcan that the institutions and whales lift us up rather than crushing everyone like “they” did in 2014 – 2015. But, even if it is like 2014 – 2015, history tells us it is just a matter of time until everyone decides that crypto and blockchain are the future again. So don’t panic. That said, if you see another volcano pattern forming, consider playing it the same way you would have played the other ones historically in retrospect. That is, HODL up the green side, and run when you start to see smoke. That has worked in 2018. It was not advisable in 2015 – 2017. In those years it was wise to HODL and buy the dip. With luck, it will start being like that again soon and we can stop paying for that pump of 2017 over and over.
TIP: A bit more plain English here: if the pattern plays out as it has, it is possible that what looks like it might be recovery in this current phase is actually redistribution (and I don’t mean the socialist kind redistribution, although the wealth most certainly is being redistributed, I mean the capitalist kind of redistribution; in both cases it is the wealthy taking from the poor, but only one requires the force of a state to ensure, the other is a naturally occurring kind where people offer freely and others take freely). i.e., I’m not saying “don’t buy the dip,” but I am saying, “do what fits your strategy, tastes, and tolerances but also, prepare for another leg or two down before what is potentially an accumulation phase.”