I love the smell of capitulation: Here’s a comparison to the last time we hit capitulation, and the one tiny thing that could determine how bloody things could get.
3 min read
Capitulation….that point where no matter how low the price dips, people will come out and tell you “it will probably go even lower”.
Even people who used to be bullish.
The confidence in the market and in the price holding up has faltered. And now it’s no longer “we’ll probably crab at $30K” or “$28K still has good support”.
That has changed to “I’m just waiting for the drop below $20K” or “it might even dip below $10K”.
And how many times has the suicide hotline been posted now? I almost know the number by heart now.
Here’s what the last capitulation looked like.
I remember when we dropped below $4k in 2018.
While it’s beginning to smell a lot like the same capitulation, this doesn’t mean it’s the full bottom yet.
It was reeking capitulation when we dropped below $4K, and we still continued all the way to $3.2K. But at the same time, the drop was fueled by a Bitcoin selloff from the Hash war.
We aren’t fueled by any huge sell-off from a Hash war this time. But there is the fuel from inflation fears, and a little of CEL fear added to that.
And a better log chart, shows that if we follow 2018, we probably still have a tiny bit more bottom to make.
Log chart comparison of capitulations, with moving average ribbon.
When we capitulated in 2018, it seemed like the drop was never gonna end. Any optimism was gone. Even when we dropped below $3.5K, people were talking about “it will probably go lower than $3K”.
Even bulls were saying that.
In fact the difference between bulls and bears, is bulls believed it would drop to only $2K, while bears believed it would drop to $200.
Today, it’s starting to look like we have 2 camps: the bulls who believe the bottom will be somewhere below $20K…maybe around $15k. And the bears who believe it will go even lower than $10K.
But let’s not forget about one important thing.
The market movers, the whales, big players, with their quants and bots, are still playing the market, and they are still interested in making money. And just like after every major crash we’ve had in the past, there is a period of accumulation. Because people never run out of desire to make money, especially not in this crazy and volatile market.
Volatility and chaotic markets offer the biggest opportunity to make money. And right now, this one is deep in fear and with lots of blood on the street.
And perhaps, like the stock market, everyone is holding their breath right now for one little thing: whether this week, Jerome Powell will talk about .50 or .75 basis points.
That could be the difference in how bloody the rest of June will be. And if crypto will go much lower or not.
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