Bitcoin Bull Markets are built on FOMO [fear of missing out]. To FOMO into an uptrend, you need to feel you are missing out and strong bearish convictions will make you miss out. Rekt Capital says, Bitcoin bear market bottoms take months to settle.
To illustrate their point about bear market bottoms, Capitulation and Consolidation. Rekt Capital, Shared a long-term Bitcoin chart they first shared back in June. According to the Three Macro Triangles, BTC is now in the Downtrend Acceleration phase in an effort to form a generational bottom.
Bitcoin, is currently trading for $16,663/BTC with a Market Capitalization of $320B at press time, up 5.7% on the week’s trading chart but down 76% from its all-time high of $69,045 reached on November 10, 2021.
BITCOIN FEAR AND GREED
Four years ago, in November of the previous BTC cycle, the price of Bitcoin lost more than 50% in the space of one month, from 12 November to 10 December 2018. The current collapse seems in some ways reminiscent of that of four years ago, except that it is significantly smaller, because the percentage loss is practically half. Moreover, during both previous cycles, the minimum price touched during the post-bubble bear market was 85% lower than the previous all-time high. Should such an eventuality also occur during the current cycle, the minimum price could be $11,500, a level much lower than the $15,500 touched this November.
Therefore, the comparison with past cycles for now seems to indicate that the price of Bitcoin is holding up better this time than in the past. However, it is worth mentioning that in November 2018, the collapse was due to a massive sale of Bitcoin on retail market that caused its value to plummet, while this time, such a massive sale has not occurred. In other words, what caused the collapse is the fear of the collapse of some of the most important infrastructures of the Crypto markets, not the fear that Bitcoin might have problems per se. Therefore, unless the value of the fear and greed index falls further in the coming days, less fear than that which caused collapses greater than the one currently underway in the past seems to be warranted.
According to former Bitcoin.com, and current CEO of blockchain development house Laguna Labs, Stefan Rust, the current collapse of Crypto Markets may finally see ETH’s market capitalization overtake that of BTC.
Rust said:
“Bitcoin seems to be declining faster than Ethereum’s ETH. The latter seems to be holding, and most likely the reason behind that is the fact that ETH is finally fully deflationary. It is burning more than it is a minting. At the same time, ETH transaction volume has grown over yesterday, and the transaction fees are pretty high right now.
Does this mean we are likely to see the first flippening? As we max out the bottom and turn around into a recovery, Ethereum – which is now deflationary – has huge transaction, volume, and developer engagement. And this is across a number of applications and different Protocols. As such, yes: this current Crypto shakeout could finally prompt the fabled flipping when the market capitalization of Ethereum takes over that of Bitcoin. It’s an exciting time.”
Wall Street Institutions and Centralized Exchanges are selling people paper Bitcoin, You give them money, they say you own bitcoin, but presumably you don’t. FTX/Alameda Research fiasco alone increased the new supply of Bitcoin by 25% this year by selling people fake paper. Now think of all the other shady brokers doing the same thing. Paper Bitcoincreated by rehypothecation and outright fraud as in the case of fraudulent exchanges like FTX kept Bitcoin price down. FTX alone created 80.000 paper BTC, about 25% of yearly production.
Croesus posted on Twitter, BTC bought by FTX Users goes into Alameda’s hot wallets through a backend script. Alameda sells BTCs in exchange for Alt-coins – Net effect: People who bought BTC on FTX actually had their money used to bid up alt-coins. SBF made it known that one of his goals were to push Crypto through Government regulations. I find it ironic that he may hit that goal unintentionally because of the magnitude of the fraud he orchestrated and the downright mess he has left behind for the Cryptocurrency Industry.
This FTX cascade, is a huge pain for FTX users but an important lesson for all parties, like Regulators, Service providers and Crypto users. This black swan event is supporting the bottoming process of this bear market. Bitcoin and Crypto in general will recover from this catastrophe. If a true “blow-off-top” never transpired to top the bull market, then is “true capitulation” really necessary to bottom the bear market? One might think the shallowing of volatility of a maturing asset would be demonstrated in diminishing returns coupled with diminishing risks.
From LinkedIn: FTX crypto ‘contagion’ worry spreads
Coinbase shares were sinking Friday after analysts downgraded the company’s stock and warned about “contagion risk” following the shock collapse of rival cryptocurrency exchange FTX. Bank of America changed its Coinbase rating from “buy” to “neutral,” saying that while it’s “confident” the company is not “another FTX,” Coinbase will take a hit as investors step back from cryptocurrencies. Analysts at Mizuho Securities also lowered their price target for Coinbase stock, saying the FTX scandal was a sign of a “deteriorating industry.” Coinbase stock is down about 85% year-to-date.
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Coinbase CEO Brian Armstrong told the Financial Times that he is “just as bullish on crypto as ever.” What happened at FTX, an offshore digital asset group, could “never happen” on the U.S.-listed Coinbase, he added.
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The lending unit of major crypto unit Genesis halted redemptions following FTX’s collapse, saying withdrawal requests exceeded “current liquidity.”
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The U.S. House Financial Services Committee will hold a hearing into FTX next month. Some $1 billion of customer funds are reported to have vanished from the exchange, which saw its valuation sink from $32 billion to zero.
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