Which Animal Is Dominating The Market?
2021 is over, we've entered a brand new year recently. If we look back to 2021 and compare expectations with reality, you have to notice a few things.
2021 started as a bull year and everyone was expecting another bull cycle to happen. Predictions have been flying all year long, along with plans regarding when to take profits. I've seen some very dumb one, determined not by levels, but months as they thought crypto trading is an exact science and everything is going by the book. I'm wondering what those, who said will take profit in July, August and September say now, as things did not work out as planned.
Everyone knows it's been a bumpy year with ups and downs and we know by now that cycles are not the same anymore. 2021 was the confirmation year for that.
What is interesting to note is the banter (or should I say fight?) on social media platforms about what market we are in at the given moment. Opinions are always controversial, some say bear market, some are convinced it's still the bull market. Who's right?
What Is a Bear Market? A bear market is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment. source
That's the textbook definition of a bear market and if we look at the Crypto Total market Cap, we had an 57% drop in May 2021, which qualifies for a bear market.
Bear markets are often associated with declines in an overall market or index like the S&P 500, but individual securities or commodities can also be considered to be in a bear market if they experience a decline of 20% or more over a sustained period of time—typically two months or more. source
So they say two months or more. If I measure the distance in time, between the top and when the market started moving, there are 10 bars on the weekly, which means 70 days, more than 2 months, therefore it qualifies for bear market (according to definition).
This is the recent one. In this case the decline was around 35% and it's been 49 days since then, but we're still not out of the woods, it's possible to spend more time here as I don't see the market blowing off the roof yet. Some say this is a double top but it is not confirmed yet. If this is indeed a double top, then we're going to see lower levels and it'll take some time to recover from there, that's a no brainer.
There's always a few scenarios on the table, three to be precise, up or down or sideways. The market (or the market makers) will decide where it wants to go and our job is to adapt our strategy to every situation. I don't see the point in focusing on defining the market type. High volatility makes it very different from the stock market and I don't think you can apply everything to the pixel in crypto. If the bull cycle is going to continue, then I guess we have a different model that is spread to two years, which has never happened before.
It's fun to participate in polls on Twitter and read comments about why people think we are in either of the markets, but I think it's more important to focus on what the market gives us and what we want to do next.
I'm curious to see what 2022 will bring us, how this bull run is going to end and when. It's obvious by now that the old 4 year cycles are not the only ones we're going to get. With more participants in the market, institutions with deep pockets included, things are going to change in the near future.
Just as the bull cycle is not the same anymore, I suspect the bear market is not going to last 4 years either. Obviously this is pure speculation, the market has to yet confirm or infirm what I'm anticipating.
Posted Using LeoFinance Beta
