We are constantly bombarded by diagrams, growth charts, and other forecasts aiming to predict the upcoming changes in the exchange rate. However, these graphic subtleties apart, let us not forget another essential element of the forecasting art - psychology.
The astonishing growth rates of both blockchain industry and BitCoin made them a common topic over the course of the past year. This meant that more and more people first just watched and then joined the BitCoin movement. Sure enough, most of these people were driven by the conventional desire to make big bucks quickly. Just think about it: BitCoin keeps growing. From time to time, an insignificant, almost unnoticeable corrections occur, but they are more than compensated for by the value growth that invariably follows.
As a result, we get an army of crypto trading noobs who are absolutely unaware of how a trader's psychology works.
BitCoin's growth is developing in accordance with the Elliott wave theory, and each wave, apart from a top, has a bottom. The higher the wave, the higher the following tops and the lower the bottoms. Professional traders are well aware of this and basically use this pattern to make money. However, those people who have just entered the gray are completely unprepared for such rapid jumps.
So, here are the clues to our problem:
- a large number of newbies who believe in neverending growth and are driven solely by the desire to make money;
- an ordinary correctional wave (most probably due to the upcoming holiday season - traders take profits) and a mass panic that follows it (according to recent data, lots of people in the U.S. used their mortgage money to buy BitCoins).
Put these two variables together and add another coefficient to the equation - a fear of loss and subsequent liability - and you get a mass offloading of Bitcoins, which is exactly what is happening.
By the way, it is exactly this noob behaviour pattern that allows experienced traders to not only get a good profit and celebrate the holidays on a large scale but also buy BitCoins again at a much lower price later - and earn even more. This is how they act:
The wave theory dictates that a dip is almost always followed by a rise. If we use psychological analysis again, we can predict that the next rise will happen very shortly (most probably at the end of this year or in early January: the underlying reason for taking profits will be gone, and people will once again bring their hard-earned money to trading and currency exchanges).
What kind of advice can be given in such a situation?
If you trust in BitCoin and do not consider yourself a trading noob, then don't panic and simply close all the cryptocurrency rate monitoring tabs that you have open in your browser. Go out for a walk and visit your family, and only open those tabs again in the new year. We are sure you'll get a nice surprise :).
Merry Christmas and Happy New Year!