🅱️ (₿) Fuel The Rally... Bear Market Psychology Explained

2023年1月21日

After hitting $23,333 bitcoin has moved above September 2022 and is now at its highest level since August 2022.

The $25,209 is the August peak and last barrier, after this level we would see bitcoin trading at its highest price in more than 7 months. The good news?

This is only the entrée, we have yet to get the main course.


How does market psychology works?

The shorters are in a big conundrum right now because of the long bear market that made them so wealthy, here is the thing.

First "you" (meaning they, they shorters/bears), decide what the market "has" to do... "It must go down", "It has to go down because of this or that"...

The market doesn't have to do anything, it moves according to its own rhythm and flow, yet human psychology is such that as you are playing your ego and emotions get in the way.

The long-term bear action conditions your behaviour, your thinking is clouded, so bears cannot see straight anymore.

Now the time for reversal comes...

Bitcoin went down for years and reversal signals start to show up.

Everybody starts to prepare and spill out that a reversal is about to take place.

The first step of the shorters/bears is to laugh it out and double down on their play.

Each time bitcoin goes up, the more convinced they become that it must/has to fall the next day.

What for us work as bullish confirmation, for them becomes clear that it has gone far enough...

Because it has to drop at some point just because... Just because it has been doing so for so very long. So they've become conditioned.

I know this because most of us have been in the same situation before, in the past, but on the bullish side.

The conundrum, hold on.

Bitcoin goes higher and higher and we start to celebrate.

The bears are no longer convinced, now they are anxious and foaming through their mouths but they have to double and triple down because the ego is already in charge and logic and intuition is completely out of the way.

The negative vicious circle is now in place.

They continue to push down, fuel for another raise.

The higher it goes, the more they bet that a crash is imminent but the crash never takes place.

The not so fun part... As soon as they give up, become convinced that the bulls have won, cover their shorts and adapt and change and now, they go LONG.

As soon as all the shorters and bears LONGs are in... Bitcoin is already at $31,000 and ready to crash for several weeks.

The initial corrections lasted only for a few days, so they wait thinking that for sure it will "continue up", after the first weeks they give up and reverse back to short.

Once all the shorts are set in place, bitcoin back at 21K... Magic, one huge candle pushes prices back above $28,000 and that's the end of the bears game.

This is human psychology at work and there is no way to avoid it, there is a group that will always play this game.

One can get stuck in a vicious negative cycle and end up being the fuel for this amazing, once in years bullish recovery wave.

Namaste.