“The main and direct reason for every economic bubble that collapses without warning is due to unqualified people entering the game, especially when they think that the market will win for everyone.”
Morgan Housel in his book Psychology of Money
Many studies have been conducted that explain the cause of any economic collapse due to a price bubble that rises without warning and then collapses, such as the rise in real estate prices in 2006 by a rate of 120%, then a real estate collapse in the following year by a rate of 40%, and the Internet bubble in which stocks rose. The Internet in 1998 was cut by 1000% for some stocks, then it collapsed the following year at a rate that amounted to a loss of 60% of the capital along with the entire profit that was achieved, and in the years that most of us have lived through, we can give the example when Bitcoin rose to 70k, then it collapsed in the year. Which was followed by it to 18k, or its rise a few days ago to 49k, then its collapse to 41k with the possibility of further decline.
Many economic veterans and financial giants explained what happened, but what most convinced the investors’ minutes was Hussle’s idea, which says that the entry of new participants into the market and the entry of people who may not know about the market changes the behavior of the market, and this scares the market makers, which makes the market makers hostile and they leave. Then the herd leaves for fear of the leader leaving, and the market collapses on top of the newly entered. The idea may seem stupid at first glance, but it took years for its validity to be proven and written until we were able to propose it.
Latest technical developments?
In light of the Securities Commission (SEC) accepting private investment funds in Bitcoin, the price is still declining until this moment, and this confirms our fundamental analysis that was mentioned in an article entitled A Big Game That May Affect the Price of Bitcoin. To say that, until this moment, we are subject to the effect of the securitization that gold has been exposed to since… Not many years have passed, and it has been exposed to new beginnings as new participants entered the game.
Latest news and its impact on the price:
- Bitcoin trading operations increased according to official reports issued by ETF funds that allowed Bitcoin trading to reach numbers exceeding $10 billion during the past days, which led to the withdrawal of available liquidity from the market and caused a stagnation in the movement of gold, and this I saw through the decline and rise in liquidity in gold and investment funds. With similar numbers on Bitcoin, but this decline is because buying Bitcoin is not real, meaning that what is actually being purchased is a financial voucher that bets on the price of Bitcoin, and this is what I explained through my previous article entitled The Big Game, so we may see an increase in momentum and a decrease in volume, which is the effect of the entry of new traders with the result Securitization is what causes the correction.
- In light of the approaching Halving, Bitcoin, based on its usual behavior over the past years, and based on our concept as economists about the effect of reducing the stock return, and this is similar to Halving, we expect a correction that will take place through testing the efficiency of the remaining currencies and the traders of these currencies, noting that all Halving has been testing and extracting inept coins.
in conclusion:
Given the time factor, the effect of securitization, and the entry of new participants, we expect the correction processes to continue for this week and the following week, regardless of any news that may be a media catalyst, and this is what makes the reality of other elements such as gold, silver, and American indices dormant, as Bitcoin has officially become investable in a way. Legal on the largest global stock exchanges.
Technical analysis of price
“The market is a probabilistic environment, and this is a fact that mathematics tells us, not an opinion.”
Mark Douglas
In our previous analysis in an article entitled Bitcoin and the Hit of a Lifetime, we noted that any rise without completing a correction process means an unsafe rise, and an unsafe rise is a rise that may lose any movement gained within moments, and this is exactly what happened.
Looking at the weekly chart we notice:
- The highest volume levels are still at the level of 37.
2.Elliott’s correction wave ends at level 37.
3.Fibonacci waves end at 37.
Conclusion:
We still expect a price correction towards 37, or sideways trading for a long period between 43 and 40.
at the long term
Completing the correction and closing above 37 opens the way for Bitcoin to target new record price levels of 50, 60, 70 and then 100 at the end of 2024.
In conclusion, dear reader
Bitcoin is high-risk, but within a portfolio containing (gold, silver, and stocks), its risks are limited in light of the presence of other sectors. As for the concept of hierarchy, Bitcoin is considered the safest possible compared to currencies that are still trying to prove their efficiency, such as Matic, or currencies that have proven their efficiency, but they are in the last stage. Like Solana, so dear investor, divide each sector well and know that in the end, a good analysis is your financial analysis of what suits you, and a good division is one that is based on what you have and not what the market has.
