The stress of a bear market is that you watch your net worth shrink before your eyes—sometimes sharply, sometimes like a slow-motion financial car crash, and you have no idea what is the right thing to do, or whether to keep believing in yourself s Choice.
Few people tell you that when you are in a bull market, the pressure value does not decrease, especially when you experience a bull market for the first time.
The winning and losing of this game is bigger. In a bear market, your loss depends on your initial investment amount, while in a bull market, your income is actually unlimited. When you watch the net asset value continue to rise, you have to decide when and at which point to cash in the profits, and understand that once you do this, the future profits will not belong to you.
This is a decision that everyone in a bull market has to make, and almost no one can make the perfect decision.
However, we have seen some anomalies in Bitcoin, it is unique, it breaks the traditional rules, and the price changes over the years make us feel that there is no need to rush to sell, it will always break through the previous high after a period of time.
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1. What Makes Bitcoin Different?
As of this writing, Bitcoin is going through an incredible bull run, and anyone who has ever bought the asset is now in a profit.
Just look at the returns: Bitcoin is the best-performing asset over the past 11 years, gaining 270% in dollar value in the past 90 days alone. Is this sustainable?
Logically, there is no such thing as a "sustained rise". But is it possible that we are experiencing something unprecedented?
First, Bitcoin is an "asset". The term is used because Bitcoin does not fall within our traditional definitions of securities, commodities, and other things. However, when you consider some of the properties of cryptocurrency itself, it also fits into some of these categories.
We all know that Bitcoin is a currency with a built-in payment mechanism, and has now become a store of value in the digital age, that is, gold 2.0, but it is more secure, portable, divisible than gold, and applicable to everyone.
This has never happened before in human history, and there is no comparable historical data, so it is difficult to determine where we will go from here.
Idealists will lead us on the road to Utopia, while pessimists will lead us to disaster and destruction. In fact, neither of these scenarios will happen, and it is more likely that it will become a digital settlement tool in the global financial system. This may take years, if not decades, to achieve.
After all, from here on out, we’ll always be passing value in numbers, not handing each other hunks of yellow metal with Elon Musk-designed jetpacks. We are always moving, and money is always the product of the latest technology.
Of course, this involves another "killer selling point" of Bitcoin: a truly limited supply system.
It is true that gold is scarce, but as time goes by, gold is constantly being discovered, and the technology for mining gold is constantly improving. The more the price rises, the more gold will be mined faster.
The supply of Bitcoin is a fixed number, 21 million. No one can change that, no matter who you are, and you won't be affected by the price. This means that if you want to own some bitcoins, besides being a miner, you have to find someone else to buy them.
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2. Bitcoin’s place on the world stage
Even the black fans of Bitcoin have to admit that Bitcoin is a limited, divisible, and safe asset in a certain way, and everyone has a fair opportunity to earn, buy, and hold it.
The existence of such a thing is sure to be good for everyone. Frankly speaking, the macro environment in which people in many countries live is not optimistic.
There are now hundreds of quotes, transcripts, and graphs online that clearly illustrate the big problems facing the financial system today. However, these distract people from the main problem: many people have begun to adopt bitcoin, and some have even moved to bitcoin from other hard assets such as gold.
The list of public companies and high-net-worth individuals holding Bitcoin is long and long, as Mike Novogratz, CEO of Galaxy Investment Partners, said: "I am shocked that so many institutions are now trying to Add Bitcoin to their portfolio."
Novogratz, a long-term Bitcoin bull, has always been clear that institutional money will eventually flow to Bitcoin. So why is he still "shocked" by the number of people seeking investment? It can only be said that this number exceeded most people's expectations.
this point is very important. At present, 78% of Bitcoins are in an illiquid state, and the constant circulation is only about 4.2 million. Therefore, even on a global scale, the opportunities for companies to convert some of their cash into Bitcoins are very limited.
Which brings us back to the previous article: the only way for the average person to get Bitcoin is if someone is willing to sell it to you.
The problem is, Bitcoin creates a strange paradox. When it becomes more valuable, people are actually less likely to sell it, especially when they really understand what they're holding. In turn, this creates higher prices, causing the same problems to recur.
It’s a classic deflationary spiral, and while it’s not a good thing from an economic standpoint, nowhere is this more apparent than with Bitcoin.
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3. Ordinary rules do not apply to Bitcoin
Arguably, no analyst predicted the moves we've seen over the past few weeks. More than once, analysts have pointed out that certain indicators indicate that Bitcoin has been overbought (the price of the asset has risen to a level that cannot be supported by fundamental factors), and the market will undergo a correction, and may even be a very large correction.
I don't intend to disparage anyone who relies on technical analysis, the problem is that the bitcoin market is too small right now and applying the same tools to this brand new, limited supply asset will often fail.
To me, Bitcoin's movement all comes down to a balance of two forces: "the level of demand for Bitcoin and the extent of the recession in the overall financial system" versus "a dynamic combination of market rules and changing public psychology" .
Market rules still exist, people can set stop loss, take profit, leverage, options, etc., just like any other asset, which can sometimes quickly affect the market. People also react immediately, regardless of the fundamentals of the asset.
For example, the other day Bitcoin dropped thousands of dollars in a matter of minutes, most likely because a few traders (or a large one) dumped some coins for fiat profits, and the price dropped enough to force some over-leveraged liquidation of longs, causing prices to fall again, creating a new cycle.
In other markets, this can cause panic, with those without sufficient trading experience selling more, causing prices to fall even further. In the Bitcoin market, as the current potential demand is still not saturated, the low-priced Bitcoins were immediately snapped up, and the price returned to the original level before being overly disturbed.
In different periods, the result will be different. The question is, will we see these "different times" in the near future? With so many institutions, corporations, funds, and high-net-worth individuals vying for a place in the bitcoin market, it's clear that any low-priced bitcoin won't stay in the market for long.
That means normal market rules don't apply here, at least not yet.
So, does this mean that the Bitcoin price will grow infinitely?
If so, this brings up a harsh reality: the conditions around us will be dire - a truly catastrophic scenario. A rise in Bitcoin means a relative devaluation of the dollar, people's wealth is wiped out, and endless monetary policy stimulus, all of which will cause a constant stream of trouble for everyone on the planet.
World-wide demand is simply astronomical for a fixed supply of Bitcoin, so the question of whether Bitcoin will continue to rise does not depend entirely on Bitcoin itself, as early Bitcoin adopter Max Keiser stated: "Bitcoin tops depend on dollar bottoms."
