Hello Short Maestro yapping session time. Today I will be explaining why the term "Oversell", often used on any market such as stocks, real estate, etc.. does NOT apply on Cryptocurrency markets.
"What is this guy talking about"? You are thinking. But let me explain. Trust me it makes sense if you read everything. This is important, a lot of people do not understand and lose money. It is the truth, a fact that traders intentionally ignore to cope with their losses.
So to start: What is "Oversell"? On dictionary, it means you sell more than you actually have. Such as airliners selling more seats than they really have. On crypto, it means there's more selling than an ideal, efficient market. Also known as "Undervalued". An undervalued asset implies that the real value, or the value that an efficient market recognizes as fair price, is higher than the current price. Usually caused by irrational events.
Example: Stocks going way below their fair price because of a bad economy, everyonoe panic sells but the intrinsic value of the company is the same. When economic crisis is resolved, the stock pumps back because.. the company itself had no issues.
Or someone sells multiple housings at a very cheap price, because they need liquidity immediately. The conditions of these housings are the same, the intrinsic value also the same, yet they were sold at a lower price.
Notice how both examples involve assets with intrinsic value. This is the key point. 99% of crypto does not have any value. This is not an opinion. The fact that the top trending coins are memecoins prove this. They literally don't do anything.
Not only the memecoins, most altcoins are also useless. Nearly every retail trader who buys these "shitcoins" don't even read what it actually does. How many people have actually read the Bitcoin Whitepaper for example? It's like 9 pages. Takes 10 minutes to read. A summary of Bitcoin, written by the legendary Satoshi Nakamoto himself. It's basically a "I made this new thing, it's cool and useful, check it out, here's a brief explanation of what it does".
But I can bet that even the traders who bought so much Bitcoin with their entire life savings didn't read it. They don't care. And we are talking about Bitcoin, the biggest crypto in the world. Imagine what's going on with shitcoin buyers.
If you feel like this is you, then you shouldn't be trading. Just keep collecting wage. At least that is guaranteed profit. Save money on bank. Trading is not for you.
Anyways, the point is, "Oversold" means "Undervalued", which implies that the current price is lower than the intrinsic value. But since all the shitcoins have uuh, like 0 value, "Oversold" is not a thing. As soon as every shitcoin is launched, the moment it is sold to the public, it is overbought. There is no oversell. A pump is not guaranteed and is purely due to manipulation or gambling.
Look from a more relatable perspective: What is the motive for buying crypto? Why are you really buying all these shitcoins? You know for yourself right? You bought it. Answer? Speculation. Buy low sell high. Meaning... The coin doesn't really have to pump continuously, for a trader to profit. They just have to sell higher than their buy price.
Do you get what I am talking about now? I hope you do. So it is no surprise that a coin could go -99%. It is not manipulation. In reality, the coin doesn't even have to actually exist. The entire purpose is all speculation and gambling. Everyone just wants a platform to bet on, and the coin acts as a placeholder to justify the gamble as an investment.
