Debunking Popular Bull Thesis'
This post is to address objections to my bear thesis below:
USD is Dying
If your long BTC bet is designed to be a short USD bet then the rational thing to say here would be your bet short US interest rates. You're basically long inflation and being long inflation is being short interest rates because low interest rates are inflationary and higher ones are deflationary.
So if this is the trading thesis, the logical exit signal for this thesis has fired. If you're short interest rates and they've went up 2,000% - that's the thing you were looking for to exit.
The relationship between interest rates and bull/bear markets is not as simple as many make out. Here's a detailed look at what we can usually expect.
The 4 Year Bear Cycle
4 years has passed three times in the history of BTC. This is not enough to observe a pattern that you can reliably expect to continue.
If it was, then the theory would have failed anyway. In 2021 when BTC was making a new high people were saying $100,000 and a bull run to 2025. Instead, it made a nominal new high and dropped 70%. Now people are saying the 4 year cycle ends in 2028, but this seems a lot like curve fitting. The theory failed.
Whatever happens next, it's no longer valid.
The ETF
There are various points that can be made against an ETF being a default bullish thing. The most obvious one is to point out an ETF launched for BTC in 2022.
More stuff;
Over-supply of the Asset:
When a new ETF is introduced, it often needs to acquire a significant amount of the underlying asset to replicate its index or benchmark. This increased demand can lead to a surge in the asset's price initially.
However, if the asset supply is limited or doesn't increase to meet the demand, it can result in a scarcity of the asset, pushing prices higher temporarily. This might be unsustainable, leading to a potential correction when the initial buying pressure subsides.
Liquidity Concerns:
The creation and redemption mechanism of ETFs can lead to increased liquidity demands on the underlying asset. If the market for the asset is not deep enough or if there are liquidity constraints, it may result in increased price volatility and potential downward pressure.
Short-Term Trading Dynamics:
Traders and investors might anticipate the buying pressure associated with the creation of new ETF units, causing a short-term spike in the asset's price.
Once the initial buying activity subsides, there may be a lack of sustained demand, leading to a correction in the asset's price.
Market Sentiment:
The introduction of an ETF can also be interpreted by market participants as an indication that the asset is overvalued or has peaked in its growth potential. This sentiment shift can lead to selling pressure and a bearish trend.
Divergence from Fundamentals:
If the ETF attracts speculative trading or momentum investors who are not focused on the asset's fundamentals, it can create a situation where the asset's price becomes disconnected from its intrinsic value. This could result in a correction as the market adjusts to reflect the actual value of the asset.
Bears Have Been Wrong Since 15K
This isn't an argument. All different forms of analysis can't be fit under the umbrella of "Bears". These are individuals with different methods and skill levels.
With all due respect to the bears at the low, it was a little naive. The bad news was very likely to trigger some sort of short squeeze. Just look how high the short interest was at the time.
Now we're at an all time low in the BTC shorts.
So, these bears that have always been wrong you speak of .... they're gone. They got whipped. Have quit or reversed and turned into evangelistic bulls.
Furthermore, bears being wrong before is a weak argument. When it comes to the end of major uptrends there are very few rules that apply to 100% of them but one of these rules is bears were always wrong before. Bears always being wrong before is a dead cert to be a true statement at any given market high. It's not an argument. It's a truism.
You've Always Been Wrong
People dismiss my thoughts saying I've been wrong before. It's a more valid statement. I've been wrong before and I'll be wrong again. That's the very nature of making forecasts on the unknowable future.
I feel people view things a bit unfairly, though. Right at the low I did post the short squeeze thesis. By early 2023 I was long absolutely everything. Had clearly stated my bear thesis was failing and I'd plan levels to short higher.
During the run up I was wrong for a small window of time around 30 - 35K. When this zone broke I knew my bear thesis had failed and I bought into the next low targeting 55K.
Considering I was short from the high to the low and explained in detail the case for a low while bear mania was in place, I feel this isn't an egregious amount to be wrong on.
BTC is Up X% Since X
This bubble was up X from X. That bubble was up X from X. Bears were always wrong before. It's the same argument. If someone says "This might be a bubble", "But look at the incredibly unusual parabolic gains" isn't a debunk. If those gains had not happened, there'd be no suggestion of a bubble.
BTC is designed to be deflationary so will go up.
Absolutely not a rebuttle to a thesis BTC can drop 90%. Since the very inception of BTC this has been known and none the less BTC has dropped over 80% more than any other trading asset people have heard of. You don't have to be super clued up on the underlying workings of things to make the observation, "BTC has a history of drops over 80%".
Saying the same thing that has always been in place during these 80% + drops is the thing to prevent it happening now ... makes no sense.
----
Note - None of these things are me saying I know what will happen. I brand myself "Persuadable by price". We're actually very close to the level I'd be happy to flip to bull. Today we hit the upper limit of where I'd like to be a bear. If that zone fails for a bear move, I'll be a bull. Happy enough with that.
All I want to do here is highlight how flimsy these arguments are, because people are stating them like they've infallible truths that must come to pass.
USD is Dying
If your long BTC bet is designed to be a short USD bet then the rational thing to say here would be your bet short US interest rates. You're basically long inflation and being long inflation is being short interest rates because low interest rates are inflationary and higher ones are deflationary.
So if this is the trading thesis, the logical exit signal for this thesis has fired. If you're short interest rates and they've went up 2,000% - that's the thing you were looking for to exit.
The relationship between interest rates and bull/bear markets is not as simple as many make out. Here's a detailed look at what we can usually expect.
The 4 Year Bear Cycle
4 years has passed three times in the history of BTC. This is not enough to observe a pattern that you can reliably expect to continue.
If it was, then the theory would have failed anyway. In 2021 when BTC was making a new high people were saying $100,000 and a bull run to 2025. Instead, it made a nominal new high and dropped 70%. Now people are saying the 4 year cycle ends in 2028, but this seems a lot like curve fitting. The theory failed.
Whatever happens next, it's no longer valid.
The ETF
There are various points that can be made against an ETF being a default bullish thing. The most obvious one is to point out an ETF launched for BTC in 2022.
More stuff;
Over-supply of the Asset:
When a new ETF is introduced, it often needs to acquire a significant amount of the underlying asset to replicate its index or benchmark. This increased demand can lead to a surge in the asset's price initially.
However, if the asset supply is limited or doesn't increase to meet the demand, it can result in a scarcity of the asset, pushing prices higher temporarily. This might be unsustainable, leading to a potential correction when the initial buying pressure subsides.
Liquidity Concerns:
The creation and redemption mechanism of ETFs can lead to increased liquidity demands on the underlying asset. If the market for the asset is not deep enough or if there are liquidity constraints, it may result in increased price volatility and potential downward pressure.
Short-Term Trading Dynamics:
Traders and investors might anticipate the buying pressure associated with the creation of new ETF units, causing a short-term spike in the asset's price.
Once the initial buying activity subsides, there may be a lack of sustained demand, leading to a correction in the asset's price.
Market Sentiment:
The introduction of an ETF can also be interpreted by market participants as an indication that the asset is overvalued or has peaked in its growth potential. This sentiment shift can lead to selling pressure and a bearish trend.
Divergence from Fundamentals:
If the ETF attracts speculative trading or momentum investors who are not focused on the asset's fundamentals, it can create a situation where the asset's price becomes disconnected from its intrinsic value. This could result in a correction as the market adjusts to reflect the actual value of the asset.
Bears Have Been Wrong Since 15K
This isn't an argument. All different forms of analysis can't be fit under the umbrella of "Bears". These are individuals with different methods and skill levels.
With all due respect to the bears at the low, it was a little naive. The bad news was very likely to trigger some sort of short squeeze. Just look how high the short interest was at the time.
Now we're at an all time low in the BTC shorts.
So, these bears that have always been wrong you speak of .... they're gone. They got whipped. Have quit or reversed and turned into evangelistic bulls.
Furthermore, bears being wrong before is a weak argument. When it comes to the end of major uptrends there are very few rules that apply to 100% of them but one of these rules is bears were always wrong before. Bears always being wrong before is a dead cert to be a true statement at any given market high. It's not an argument. It's a truism.
You've Always Been Wrong
People dismiss my thoughts saying I've been wrong before. It's a more valid statement. I've been wrong before and I'll be wrong again. That's the very nature of making forecasts on the unknowable future.
I feel people view things a bit unfairly, though. Right at the low I did post the short squeeze thesis. By early 2023 I was long absolutely everything. Had clearly stated my bear thesis was failing and I'd plan levels to short higher.
During the run up I was wrong for a small window of time around 30 - 35K. When this zone broke I knew my bear thesis had failed and I bought into the next low targeting 55K.
Considering I was short from the high to the low and explained in detail the case for a low while bear mania was in place, I feel this isn't an egregious amount to be wrong on.
BTC is Up X% Since X
This bubble was up X from X. That bubble was up X from X. Bears were always wrong before. It's the same argument. If someone says "This might be a bubble", "But look at the incredibly unusual parabolic gains" isn't a debunk. If those gains had not happened, there'd be no suggestion of a bubble.
BTC is designed to be deflationary so will go up.
Absolutely not a rebuttle to a thesis BTC can drop 90%. Since the very inception of BTC this has been known and none the less BTC has dropped over 80% more than any other trading asset people have heard of. You don't have to be super clued up on the underlying workings of things to make the observation, "BTC has a history of drops over 80%".
Saying the same thing that has always been in place during these 80% + drops is the thing to prevent it happening now ... makes no sense.
----
Note - None of these things are me saying I know what will happen. I brand myself "Persuadable by price". We're actually very close to the level I'd be happy to flip to bull. Today we hit the upper limit of where I'd like to be a bear. If that zone fails for a bear move, I'll be a bull. Happy enough with that.
All I want to do here is highlight how flimsy these arguments are, because people are stating them like they've infallible truths that must come to pass.
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