Bitcoin Crash Of 2022

You could say that bitcoin crashes a lot and that it booms frequently, too. If you consider a 25% fall in value a crash, which in equity it is, then crypto does crash frequently.

A real crash for a booming financial instrument, however, is 70%-85%, which in scale puts a normal established market to shame, and a bubble market crash that is just 50% can be consider mild.

To me a “real” bitcoin crash is 75% and I’ve been expecting one since the beginning of last year. This expectation was well on its way when unexpectedly, at least for me, it reversed.

For market cycles to repeat, the underlying trading psychology has to remain constant and in the case of bitcoin and crypto’s second rally later in 2021, the advent of the China social clampdown and the Afghanistan crisis injected new life into crypto and spun it up to all-time high levels. To me that has just meant a delay in the pullback to this cycle’s bitcoin’s lows.

I don’t like to predict with prophetic certainty, preferring to show both sides of the argument and say which side I’m on. I’ve been a bear since the initial highs and very skeptical since bitcoin cleared $30,000, preferring to trade DeFi from there on until the $60,000s. It’s all here on Forbes so you can read me trimming and tacking over the last few years.

Right now I find it hard to see a bull trend for the bull case anywhere and the bear case is obvious.

Here are some charts I contemplate:

This chart is a projection from before Christmas and is playing out:

Yes, this is my own brand of voodoo gibberish, but not a bad “lucky chartist nonsense guess” a month out.

At the same time, this was another map of where the direction of travel might take us:

We are nearly on the first level of potential trend low but I think we won’t stop there. So right now this is what anyone who gives charts a moments credence will be looking at:

The bullish hope is that bitcoin will pop off this level and ride on up. I still see the bottom at or under $20,000. Frankly I see the bottom at above and around $12,000 but I do not hold such predictions as anything but fragile estimates.

To me bitcoin under $20,000 is the place to start dollar cost averaging. If I’m wrong and there is no next leg down for the market, the game to play is in with the junior cryptos, the Polygons and Avalanches etc., because they will pop much more.

In my hypothesis, the crypto euphoria is dead and next comes the panic. This will not be the end of crypto, far from it, it will just be the low of this cycle and a great opportunity and one with a long period to embrace it and load up for the next multiplying event.

The last crash went from $20,000 to $3,000 and off up to $69,000, so there is no reason bitcoin can’t pull back to $15,000 and go on to hit $100,000 or $200,000. You might say, that is what crypto does.

Most people should dollar cost average through the whole cycle and some will and they have stronger nerves than me. I prefer to buy when it’s low and sell when it’s high, rather than do the opposite, which so many people get trapped by.

That low is coming (unless some such disaster as Russia invading Ukraine kicks off) and then after some months of languishing when there will be nothing but skeptics gloating, up will go crypto on its way again on another wild ride.

It’s what crypto does.