PEOPLE TEND TO PANIC WHEN THE PRICES FALL
and in Cryptocurrencies, when the prices go down, they go down strong!
The Panic is because people usually doesn't get the time to put the logic into the matter, that's why i'm going to make it very didactic, more orientated to those apart from the financial and trading world. (This could be helpful for those anxious traders though)
Anyway, let's make it clear and simple.
Think of you as an investor with let's say $ 100,000,000 USD and you got to bought BTC at its lowest mid July, so you bought at $ 1,826 USD a total of 54,764.5126 BTC
You held and last week (just SEVEN weeks later) you saw BTC topping $5,000
You start thinking on that psychological level first, $5,000 USD is a huge milestone for BTC and for the market itself! Which topped over 180 Billion.
You then think of your 54,764.5126 BTC which you bought for $100,000,000
Your BTC worth now
$272.179.627,60
That's 172.18% ROI in just SEVEN WEEKS!
You as a rational investor you are, are going to say "Sh*t! 172% in less than 2 months" that looks pretty similar to what happened from April to June when BTC prices went from 888.2 USD to 3,003 USD in about 11 Weeks that was about 230%
But BTC have lost dominance.. So you take all that into account and the most rational think, the most logic action to make is to TAKE PROFITS
Just like that.
China banning ICO's were just like a catalyst that triggered the sell-off, with a perfect timing to get along with a beautiful round number like $5,000.
Everything on the table saying to you "DUDE, SELL, TAKE YOUR PROFITS, AND WAIT TO GET IN AGAIN".
The SELLOFF
You start selling at the same time as other rational investor taking they're profits, get prices down, the trend is threatened, then smaller investors start getting notice and probably realizing that prices may reached a limit, too many ATH's in too many consecutive days, they start selling too.
We are bearish now, people are trying to get the profits they can at the best price the can, people panicking thinking everything is over will get out of their positions at any price!
That's the dip.
Prices of BTC are falling too hard too fast, you're seeing in it in prices you didn't in maybe a month or more, "MAN I SHOULD BUY SOME" you'd say, but you got to raise cash!
Where do you get your cash? That's right your ALTS! Most of them have seen a rally in the past days also, some of them overvalued some of them not, but still you need cash to get back into your BTC and ETH positions at a better price.
Why? Because you now it's usual an end of a year rally for financial markets and CryptoMarket shouldn't be the exception, spoiler alert It is not the exception.
So you start selling your ALTS to get cash to get back to a better price of BTC.
The AFTERMATH
You now have a BTC that found a strong and consistent support, and at the same time ALTCOINS undervalued some more than others of course.
But that environment makes it desirable for Investors, the new ones to get in, and the older ones to raise the holdings.
That's why you can expect even bigger prices than before and a market cap also bigger than before.
The cycle will start again and a buying wave will hit again taking the prices to a NEW HIGHS AGAIN! And so on...
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