Markets are affected by narratives. When it comes to crypto, bitcoin narrative has an outsized influence on investor behavior.
2018 started with claims that btc would reach 50-70k by the end of the year.
Then we saw the great correction. Right at that point the anti btc pundits started going on tv to claim btc was worthless, the bubble had burst, etc. The crypto verse narrative there was “the more they hate btc the more bullish I get”.
Then there was a unified effort to slow down investor interest from advertising channels. Google and Facebook banned crypto ads. This further reduces the demand for crypto. Again we saw some pundits to come out and bash crypto, followed by supporters who started predicting 25k year end prices. In the wider community the narrative changed to “buy the dip” and “hodl”.
The skeptics continued their constant bashing, saying btc is centralized and that it’s all a pyramid scheme. Legal actions followed from SEC on a number of cases. The narrative among supporters changed to “we need an ETF” once that happens then moon!
ETFs didn’t materialize then they didn’t materialized again. The market stabilized at around 6k for BTC. Narrative changed to “volatile asset? Look! BTC is more stable than the stock market!”
Then the hash wars happened and the bottom fell out. So much that the market hasn’t seen a consistent green board in days and that’s like months in crypto years.
The critics aren’t as loud now but the narrative has changed to “btc was overvalued and we have seen a good correction to more reasonable prices”.
The point of all this is that mainstream narratives matter, they fuel baseless speculation and despairing capitulation—the two extremes of markets.
As a result the fundamentals that underlie actual assets separate from markets to their greatest levels at these two extremes.
Only when the market narrative has completely exhausted all the reasons for the bull run, do you see the foundation of the next upswing being laid down.
Where will the next bull run take us? Honestly I don’t know. Nobody knows, but the if the parabolic price history is of any guidance, it will be to the new heights we never thought were possible.
It is always the darkest before the dawn.
*this is not investment advice. Please do your own research.