The market has shifted from dull to uncertainly bullish. Crypto markets have been lackluster since May.
Prices are stagnant, airdrops are disappointing, infrastructure projects are exhausting, and regular investors are inactive. Crypto Twitter is now more about politics than cryptocurrencies.
The market remains uncertain, but this uncertainty is more bullish than bearish. Let me explain.
External uncertainty
First, the Ethereum ETF is finally online and the data is beginning to be released.
On the first day, the ETH ETF’s trading volume reached $1 billion, accounting for 25% of the BTC ETF’s trading volume. It is expected that the ETH ETF’s trading volume will be between 10% and 20%, which indicates that this is a bullish signal.
But will this trend continue? Will inflows exceed Grayscale’s outflows?
This is the main uncertainty for ETH right now, causing the price of ETH to fall. But over time, this uncertainty will gradually diminish, and Grayscale will hold less ETH.
If every day we hold this price level it will be a bullish sign.
Next up is the US election. Will Trump win? Will he declare Bitcoin a reserve asset at the Nashville conference? Is Kamala really willing to change the Democratic Party’s stance on cryptocurrencies?
Too many uncertainties.
The market doesn't like uncertainty; it wants answers. However, I believe that the United States will eventually change its negative stance on cryptocurrencies, which is a natural process in the development of technology.
Third, MtGox creditors. Will they sell their BTC, or will they hold on? Or will they sell BTC and buy other crypto assets?
We don’t know yet. This uncertainty has a negative impact on cryptocurrency prices, but one day we will realize that it doesn’t matter. Just like the German sale of BTC, the Mt. Gox incident will pass, leaving behind the selling pressure we have been worried about for years.
So, what is my point?
It is often said that the markets are driven by two forces: fear and greed. However, I believe that fear is more powerful than greed.
Loss aversion is a powerful force in investing, making fear a more dominant driver than greed. The pain of losing money is stronger than the excitement of making money, making us overly cautious. This fear leads to early selling or makes people unwilling to invest even when there is a good opportunity in front of them.
In markets, this means that fear often drives decisions more than the appeal of potential gains, leading to conservative and overly bearish reactions.
Over time, our fear will decrease and FOMO will set in. The current external uncertainty is temporary. Grayscale will eventually run out of ETH, Mt. Gox creditors will sell what they want, and even if Trump loses and the Democrats remain against crypto, we will be able to continue to prosper as we have for years under this anti-crypto government.
However, external uncertainty is only part of the bullish sentiment. There are also things going on within cryptocurrencies.
