To understand the current market drop, it's crucial to consider the psychology behind the actions of market makers. There are two primary types of traders in the market right now:
1. Long-Term Holders (Type 1): These are traders who bought Bitcoin at its peak two years ago around $69,000 and are still holding onto their positions.
2. Momentum Traders (Type 2): These traders buy Bitcoin when they see the market rising rapidly, typically riding the waves of bullish trends.
Market makers exploit both types of traders. They do so by orchestrating a drop in price, creating volatility to trigger panic selling. This is done to force Type 1 and Type 2 traders to either sell their positions or risk losing profits. Once these traders are out, market makers begin driving the price upwards again, making Bitcoin more expensive to buy. At this point, when the market surges again, traders are forced to buy at higher prices, potentially getting trapped for another few years, as the cycle repeats.
This situation can be likened to a game of musical chairs, where market makers control when the music stops. They know exactly when to initiate a shift in the market dynamics to maximize profits.
How can we be certain of this pattern? There are two key indicators to watch:
1. Price Threshold: Bitcoin will likely never return to the starting point of the recent rally. On November 5th, Bitcoin was priced at $67,481, and we should not expect to see Bitcoin dip back to that level.
2. BTC vs. Altcoin Correlation: Monitor the relationship between Bitcoin and altcoins. Currently, Bitcoin has dropped by 7.99% from its all-time high over the past five days, while altcoins have experienced deeper declines, ranging from 15-20%. This suggests that the current drop may continue, but as the gap narrows, a reversal is likely, with the potential to reach a target range of $100,000 to $110,000.
By carefully observing these indicators, we can anticipate the market's next moves and the eventual upward trend.
