The DESTRUCTION of Crypto Sentiment- 2022
#CoinDCXpathbreaker
Crypto market is witnessing destruction. Investor sentiments & Portfolios are All-Time-Low, while Losses & mental breakdowns are at an All-Time-High.
Traders have lost their life savings due to the whole Terra fiasco & it seems there is nothing left to be done. I will not get into theories or charts now (since every chart looks the same, with the exception of LUNA)
Realised Price through On-Chain data
Here we see the BTC realised price. This is the average price that BTC has been transacted at, It is also a “fair value gauge” for when looking at long term bottoms.
Currently Realised price sits at $24,500. A capitulation to that area would mark close to a potential bottom on the macro chart.
It is worth noting that in 2019 we stayed below realized price for over 4 months, however historically trading below the realized price is the best time to buy for the long term.
On-Chain Dormancy
There is some very interesting data with BTC on-chain analysis. This metric is called the On-Chain Dormancy.
Dormancy has remained pretty low, this means most of the selling is from recent buyers, for now, it seems long term holders are HODLing strong.
What it means is, there is no sign of capitulation from above participants at current prices.
Understanding RECENCY BIAS
Once things go up, we tend to believe things will continue going up, and also other way around.
Technically BTC hasn’t closed on the weekly below range low. Nobody is buying. Understand that there is an inverse relationship between supply and sentiment. High sentiment:Low liquidity (nobody is selling, people wanna be part of a trend) — Low sentiment:High liquidity (people selling).
The local trend is clearly to the downside, the primary trend up (monthly chart) is more neutral than bearish imo.
Those experiencing euphoria are now indeed the bears and euphoria doesn’t last for a very long time. I am not ruling out a multi year bear market, but these moments are often a good moment to accumulate the blue chips. Be smart, wait for confirmation and plan ahead.
DECIMATION & DESTRUCTION
It can be super frustrating talking about the VIOLENT DIPS on days when a lot of you have just faced massive losses due to their exposure to $LUNA, but if I don’t talk about this during the tough times, it will mean nothing on the GREEN DAYS.
What happened to $LUNA was something that happened way too quickly and in a way that could not have been predicted. Everyone thought its TOO BIG TO FAIL
Whatever conspiracy theories are out there, most of the market players, including myself, had no clue that this would, rather COULD happen. I have been through this events multiple times in my trading journey and this is why I advise everyday to know how to limit your capital exposure. Dont go and jump with your 100% capital & life-savings.
As a trader your most important job is to manage risk. Everyday I think what would happen if the entire crypto market collapsed, and I build my systems around that idea. I want my capital to be exposed to the best regimes on every market and even then I know how much risk I have open at all times.
Risking everything on a single coin can work great in a bull market, however eventually people get caught doing this because they don’t know when to leave the market as their gambling addiction does not allow them to be patient.
We as traders are not here to make large amounts of money as fast as possible as that comes with the most amount of risk. We are here for the long term, to be exposed to the most amount of bull seasons and leave when those seasons end.
Yes we probably will not be those traders, that turn $1000 to $1 Million with just a single bet , but remember that those traders that show those moves are the ones who survived the DESTRUCTION, and they will most likely give it back to the market faster than they made it. We want to be the traders that produce consistent income over time.
FEAR & GREED INDEX
The FEAR SENTIMENTS continues to haunt the market, as prices takes a death spiral amid the Terra system collapse. Regardless of the reasons behind the bitcoin selloff, the risk factor does always need to be accounted for while taking any new positions. The current extreme fear environment does not support any dose of optimism among the speculators at this time, clearly.
As per the graph, rarely ever in bitcoin’s history, has the sentiment been any worse than at the current moment. While soaking in an extreme pessimism at 10–12 points on the sentiment scale, this has the potential to become a far end of the capitulation and seemingly 6 months of constant declines in the bitcoin market.
As the volatility factors intensify, so does the risk of being on the wrong side of the trend, facing the chances of losses. However, the territory bitcoin has found itself into right now, has historically brought reversals. This index does not assure the prices can not go any lower. Nonetheless, historically, that sentiment depths is when bitcoin had generated the best buying opportunities.
An overall SHAKEOUT of retail crypto investors is taking place right now, which often marks more favorable buying opportunities for the long-term. Of course, this has been the theme seen in the charts over the course of the past weeks and months.
As discussed multiple times in the past, BTC losing $32,000 was a death sign in the coming days. This has also resulted in the fear/greed index — even though the Index is NOT a timing indicator, like RSI, Stochastic RSI, MACD, Cross of Moving Averages.
…
Sign up for an account on CoinDCX in few simple steps & immediately start using the Crypto Investment Plan on CoinDCX
The CIP will help you avoid the noise of the market and accumulate coins for the long-term without taking a huge hit due to price volatility 🌝
- Investment plan starts as low as ₹200-₹5000
- Plan is weekly and amount is directly deducted from main wallet
- No need to convert funds to USDT or other coins
