Basics Part II: Break the spring or make it stronger.
In economics courses a lot of professors take the approach of telling stories. For instance, why does a supply or demand curve shift. Country X makes dingle fops, the main material used is copper; but country Y now makes whirly jigs so now copper costs more. Supply cost goes up. Demand stays the same but the supply of materials changes, so now the cost goes up because the supply can't meet the demand. You get the idea.
In the next couple of days we meet a long term trend crossroads. Where the converging lines meet something is going to happen. I will be the first to admit, I am not the greatest in analyzing charts. I am not sure whether or not the price is going down or up. I don't even know at what rate this change is going to happen. But what I am good at is looking at a big picture and connecting the dots. So let me tell you two stories.
Story one: A stronger spring. Bitcoin is still being mined hence the supply keeps increasing. However, unlike a normal commodity the supply is being halved over a longer period of time. So over time you could say the supply is decreasing. The demand for Bitcoin comes in waves however so there is a fluctuation in the price. (As we see every day with rising and falling prices) Low volume means that coins aren't being bought or sold as fast, but as long as people keep buying the price due to demand can't fall below a certain point. With a value added product, the price also keeps increasing. With each improvement, value is added to the coin, but only when people find it useful. Since Bitcoin was created, very few people have found it less valuable than before. Also we see exponential growth of new funds entering the space. Therefore we have always seen an overall upward trend in the cost.
Story two: Break the spring. Bitcoin is still being mined and despite the cost miners are okay with losing money. The supply keeps increasing but the demand goes down. People lose interest so weak hands sell first, strong hands stay the course for a bit, tried and true HODLers also lose faith and take their money out of the equation last or lose it completely. Now there are hundreds of thousands of mining rigs that have no purpose and all the while supply keeps growing but the demand drops completely off the charts. In this case, this is how we see a fall way way down the rabbit hole and never recovers.
Now in both cases there are obvious reasons that bitcoin could go up or down. What then becomes more likely? The supply now is created much slower than during the first years of inception. Secondly, institutional money is ever on the cusp of entering the market. My speculation is that they are doing it on the down low as to get the best prices possible. So other than market sentiment what would possibly drive bitcoin down to a new low? Answer this mathematically for yourself and you'll have your proof of what bears say. Now you can also on the other hand look at when you think the next flood of money will come into the space and plan your exit point at the end of the run.
Now what are the dots? Money supply, time, mentality, growth, adoption, sentiment, use case, supply, demand, and added value. Arrange correctly and at your own risk because you might not like what you find.
In the next couple of days we meet a long term trend crossroads. Where the converging lines meet something is going to happen. I will be the first to admit, I am not the greatest in analyzing charts. I am not sure whether or not the price is going down or up. I don't even know at what rate this change is going to happen. But what I am good at is looking at a big picture and connecting the dots. So let me tell you two stories.
Story one: A stronger spring. Bitcoin is still being mined hence the supply keeps increasing. However, unlike a normal commodity the supply is being halved over a longer period of time. So over time you could say the supply is decreasing. The demand for Bitcoin comes in waves however so there is a fluctuation in the price. (As we see every day with rising and falling prices) Low volume means that coins aren't being bought or sold as fast, but as long as people keep buying the price due to demand can't fall below a certain point. With a value added product, the price also keeps increasing. With each improvement, value is added to the coin, but only when people find it useful. Since Bitcoin was created, very few people have found it less valuable than before. Also we see exponential growth of new funds entering the space. Therefore we have always seen an overall upward trend in the cost.
Story two: Break the spring. Bitcoin is still being mined and despite the cost miners are okay with losing money. The supply keeps increasing but the demand goes down. People lose interest so weak hands sell first, strong hands stay the course for a bit, tried and true HODLers also lose faith and take their money out of the equation last or lose it completely. Now there are hundreds of thousands of mining rigs that have no purpose and all the while supply keeps growing but the demand drops completely off the charts. In this case, this is how we see a fall way way down the rabbit hole and never recovers.
Now in both cases there are obvious reasons that bitcoin could go up or down. What then becomes more likely? The supply now is created much slower than during the first years of inception. Secondly, institutional money is ever on the cusp of entering the market. My speculation is that they are doing it on the down low as to get the best prices possible. So other than market sentiment what would possibly drive bitcoin down to a new low? Answer this mathematically for yourself and you'll have your proof of what bears say. Now you can also on the other hand look at when you think the next flood of money will come into the space and plan your exit point at the end of the run.
Now what are the dots? Money supply, time, mentality, growth, adoption, sentiment, use case, supply, demand, and added value. Arrange correctly and at your own risk because you might not like what you find.
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